Federal Court Fines Optus $10 Million for Misleading Conduct

Friday 8 February 2019 @ 11.33 a.m. | Legal Research | Trade & Commerce

In a recent Media Release, the Australian Competition and Consumer Commission (“ACCC”) announced that Optus has been fined $10 million for misleading customers who unknowingly purchased or subscribed to content via the telco's direct billing service.

The Federal Court of Australia (“Federal Court”) found the company misled customers who unknowingly bought games, ringtones and other digital content. The ACCC took this action under a delegation of power from the Australian Securities and Investments Commission (“ASIC”).


The Media Release reports that Optus has admitted they misled consumers and breached the Australian Securities and Investments Commission Act 2001 (Cth) (the “ASIC Act”) when it billed customers for third party-produced content which they mistakenly bought or subscribed to through its “direct carrier billing” (DCB) service. The DCB service allowed a purchase or subscription to be confirmed and charged to a customer’s bill after just one or two clicks on a web browser.

Optus also admitted that it did not properly inform customers that the DCB service was a default setting on their accounts, and that they would be billed directly by Optus for any content bought through the service, even unintentionally.

Optus earned about $65.8 million in commissions for products sold through the DCB service, which launched in 2012. Its customers were charged about $195 million for the content.

The ACCC Action

The ACCC commenced proceedings against Optus in October 2018 (see Australian Competition and Consumer Commission v Optus Internet Pty Limited [2018] FCA 777 (22 May 2018)) with Optus admitting that it made false or misleading representations in contravention of the ASIC Act, and agreeing to apply jointly with the ACCC for Orders from the Federal Court.

From at least April 2014 Optus also admitted that it knew that many customers were being billed for DCB content they had mistakenly or unknowingly signed up for.

Despite receiving over 600,000 enquiries about the service, Optus failed to put in place appropriate identity verification safeguards, and referred customers who sought to query DCB service charges to third parties. Many customers then encountered significant difficulties in cancelling the purchases and obtaining refunds from the third parties.

ABC News reports that:

“… [the penalty] is one of the highest penalties imposed by the court, and matches a fine paid by Telstra last year [2018] for similar conduct…”

Comment from the Regulator

Commenting on the latest decision, ACCC Chair Rod Sims said:

“In many cases, Optus customers had no idea they were buying anything, and certainly did not need or want the content for which they were being charged. Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints. We are pleased that the Court agreed that this conduct is simply unacceptable, and deserves a significant penalty.”

Remedial Action by Optus

To date, the company has refunded 240,000 customers for their unwanted bills, paying approximately $8 million in customer refunds and $13 million to third party providers. The ACCC believes there are likely to be more affected customers that still haven't received refunds given the volume of enquiries.

Optus has committed to contacting potentially impacted customers who complained about the services and have not already received a refund, as well as those customers who Optus identifies as having been incorrectly charged.

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