‘They did not need, did not want and could not afford’: ACCC takes Optus to court for alleged ‘unconscionable sales’
The ACCC has commenced Federal Court proceedings against Optus, alleging the telco engaged in “unconscionable conduct” by selling goods and services to hundreds of consumers “that they often did not want or need, and in some cases then pursuing consumers for debts resulting from these sales”.
In a statement on Thursday morning, the watchdog alleges a number of these consumers were “experiencing vulnerability and/or disadvantage, such as living with a mental disability, diminished cognitive capacity or learning difficulties, being financially dependent or unemployed, or having limited financial and legal literacy,” and many of the impacted consumers were First Nations Australians from regional and remote areas or people from culturally and linguistically diverse backgrounds.
“We allege Optus’ conduct disproportionately impacted consumers experiencing vulnerability and/or disadvantage, and that these practices were incentivised by the commission-based remuneration for sales staff. In some cases, we allege Optus took steps to protect its own financial interests by clawing back commissions to sales staff but failed to remediate affected consumers,” ACCC Chair Gina Cass-Gottlieb said.
“This case concerns allegations of very serious conduct, as our case is that Optus sold goods to consumers experiencing vulnerability which they did not need, did not want and could not afford.
“We also allege that Optus’ unconscionable conduct continued after management became aware of deficiencies in its systems that were being exploited by sales staff, and despite this, failed to implement fixes.”
The conduct included Optus allegedly “putting undue pressure on some of these consumers to purchase a large number of products, including expensive phones and accessories, and not undertaking coverage checks to inform the consumer whether they would have Optus coverage where they lived”.
It is alleged that Optus then engaged debt collectors to pursue many of these consumers, “despite knowing that they were subject to inappropriate or fraudulent sales conduct”.
The alleged conduct involves 363 consumers from two Optus Darwin stores, 42 consumers from the Optus Mount Isa store and 24 individual consumers from store locations across Australia.
“We are taking this action against Optus and seeking consumer redress in relation to the hundreds of consumers affected by this alleged unconscionable conduct,” Cass-Gottlieb said.
In Optus’ two licensee-operated Darwin stores, the ACCC alleges “nearly all staff allegedly engaged in inappropriate sales conduct, encouraged by senior store management, during a two-year period to June 2023”. The watchdog alleges “Optus staff manipulated credit checks, oversold and overpriced accessories, and sold consumers phones and plans they could not afford at the Darwin stores”.
Likewise, the ACCC alleges Optus acted unconscionably “by pursuing debts for at least 42 consumers from Mount Isa and remote areas of the Northern Territory, despite some senior executives knowing that those debts related to contracts for goods and services which were fraudulently created by a staff member at a licensee-operated Optus store in Mount Isa, without the knowledge of the affected consumers”.
The alleged conduct includes claims that sales staff “manipulated credit check results without the consumers’ knowledge” to sell goods and services that they could not afford, while failing to explain the terms and conditions of contracts in an understandable manner.
Despite knowing about this alleged conduct, “Optus pursued debt collection activities in many cases, and referred and sold the consumers’ debts to third party debt collection agencies,” the ACCC claims.
“Many consumers suffered financial harm, incurring thousands of dollars of debt and non-financial harm, such as shame, fear, and emotional distress about the debts or being pursued by debt collectors,” Cass-Gottlieb said.
“Thankfully many consumers were supported by financial counsellors, carers and other advocates who gave their time and effort to support consumers to eventually seek resolution of Optus’ conduct.
“We will take appropriate enforcement action against breaches of the Australian Consumer Law, and we pay particular attention to conduct that disproportionately impacts consumers who are experiencing vulnerability or disadvantage.”
An Optus spokesperson told Mumbrella: “Optus acknowledges the ACCC’s media release.”
“We are currently reviewing the claims made by the ACCC and will respond in more detail in due course.”
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