Telstra faces the prospect of a $10 million fine over its Premium Direct Billing service, which allowed customers to purchase online content from third parties and receive the charge directly on their mobile bill.
The Australian Competition and Consumer Commission said that during 2015 and 2016 up to 100,000 Telstra customers may have signed up to subscriptions services or received third-party charges without being required to enter payment details or verify their identity.
Telstra began offering the PDB service in July 2013 and as of October 2017 had earned $61.7 million in commissions.
The telco set PDB as a default on customers’ mobile service; as a result customers could be charged even if they unintentionally accessed content.
“Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from,” ACCC chairperson Rod Sims said.
The ACCC hauled Telstra to Federal Court over the PDB service.
The ACCC said that Telstra had admitted to making false or misleading representations to consumers and had agreed to the $10 million fine. Telstra says it will also offer refunds to affected customers.
The telco ceased to offer PDB on 3 March.
The Federal Court is yet to decide whether the orders sought jointly by the ACCC and Telstra are appropriate.
“In a digital world, increasingly our customers have the option of buying things online that can be charged to their Telstra bill, and for their convenience we aim to make it as simple as possible,” said Vicki Brady, the head of Telstra’s consumer business.
“It is clear for this specific type of service, we did not get that right.”
“A large proportion of customers who decided to subscribe to a service were happy with it, however the number of complaints received over time shows there were issues with the PDB service that needed to be addressed,” the Telstra executive said.
“PDB services have been recognised as an issue for the broader telecommunications industry – Telstra took a number of steps to improve our processes but acknowledge we could have done more and done it faster.”
Brady apologised to Telstra customers who were charged for PDB subscription services that they did not knowingly request or could not opt out of.
Telstra will still allow customers to charge some services and subscriptions to their mobile bills, including purchases from the Apple App Store and Google Play as well as Telstra-provided offerings such as its AFL video streaming service.
Telstra will no longer support direct billing for services provided by Buongiorno Australia, Netsize, Mobipay Pty Ltd, Ansible and Digital Turbine.