The ACCC has commenced proceedings against Optus, alleging that it has engaged in unconscionable sales conduct, directly contravening consumer law
The ACCC is alleging that Optus’ sales conduct disproportionately impacted vulnerable consumers
On 31 October 2024, the Australian Competition and Consumer Commission (ACCC) began its case against Optus, Australia’s second largest telecoms provider, in the Federal Court. The ACCC is alleging that Optus has engaged in unconscionable conduct, violating the Australian Consumer Law through its sales practices. The regulator claims that Optus sold unneeded or unwanted telecoms goods and services to hundreds of consumers, many of whom are considered vulnerable. The ACCC is also alleging that in some cases Optus went on to pursue debts resulting from these sales, seeking payment from consumers who were disabled, financially vulnerable or limited in their financial and legal literacy. Further, the case states that many of the affected consumers were First Nations Australians from regional and remote areas or other people from culturally and linguistically diverse backgrounds. Gina Cass-Gottlieb (Chair, ACCC) has set out that the ACCC is alleging Optus’ sales conduct was incentivised by commission-based remuneration for sales staff.
Optus allegedly put undue pressure on consumers to purchase large numbers of expensive products
The ACCC began its investigation into Optus’ conduct after receiving a referral from the Telecommunications Industry Ombudsman about concerns regarding Optus’ sales practices in relation to vulnerable consumers. The case against Optus focuses on its inappropriate sales conduct in dealings with about 429 consumers. According to the ACCC, Optus allegedly:
Pressured consumers to purchase large numbers of products including expensive items such as phones and accessories;
Sold goods and services without undertaking coverage checks in order to inform consumers whether or not they would have actually access to the Optus coverage they were paying for;
Misled vulnerable consumers to incorrectly believe that particular goods were free or included as a part of a bundle at no additional cost;
Failed to explain the terms and conditions of contracts in a manner that could be easily understood, which led to vulnerable consumers not understanding their ongoing payment obligations; and
Sold vulnerable consumers goods and services that Optus knew they could not afford following relevant credit checks and engaging in credit manipulation by bypassing credit controls to sell goods and services.
This conduct was most frequent in Optus stores in rural and remote regions of Australia, including in Darwin where nearly all staff were engaging in an extensive pattern of poor conduct for a two-year period up until July 2023. The ACCC alleges that staff were trained to do so by senior store staff and that when these instances of poor conduct were brought to the attention of senior Optus management, the operator generally failed to remediate the conduct for long periods of time. In a number of cases, Optus did not take action until matters were referred to the Telecommunications Ombudsman for resolution. In addition to these allegations of negligence, when Optus did respond, they often allegedly did so in a way that solely focused on their financial interests. The regulator claims in its case that Optus reduced commissions paid to sales staff rather than providing resolutions for the impacted consumers.
Optus pursued debt collection despite being aware of the allegedly fraudulent sales conduct
Beyond the suspected instances of inappropriate sales conduct, the ACCC asserts that Optus continued to engage in debt collection activities with vulnerable consumers despite knowing about the ongoing investigations into their sales conduct issues. According to the regulator, Optus referred and sold these debts to third-party debt collection agencies. Specifically in the operator’s rural Mount Isa store, debt collection activities were allegedly pursued while senior management were aware that the contracts related to those debts had been created by Optus staff without the knowledge of the impacted consumers. The senior Optus management were also allegedly aware that the majority of the affected consumers were First Nations Australians.
The ACCC pleads that Optus has contravened the Australian Consumer Law, harming vulnerable consumers
Optus’ alleged conduct contravenes the Australian Consumer Law and the ACCC’s best practice recommendations on consumer vulnerability which have been applicable since June 2022. The ACCC argues that the inappropriate sales conduct stemmed from the commissions-based remuneration structures adopted and endorsed by the operator, which encouraged staff to maximise sales volumes. This remuneration structure goes against the ACCC’s best practice guidance, which discourages such structures because of their tendency to encourage the exploitation of vulnerable consumers in order to maximise commissions. In discussing the harms of Optus’ behaviour, the ACCC explains that the impacted consumers have been harmed financially but also non-financially. The ACCC argues that these consumers were caused to feel shame, embarrassment, stress and emotional distress over how they would pay their debts to Optus. This case follows the Australian Communications and Media Authority’s (ACMA) new binding Industry Standard on Financial Hardship, which was introduced in February this year and reflects a years-long focus from both regulators on better protecting vulnerable consumers.
