Optus is in a bit of hot water and facing a $10 million penalty for misleading and directly charging customers for ringtones and subscription services like horoscopes and games, with the ACCC now commencing proceedings against Optus in the Federal Court.
The ACCC has alleged that Optus has made false or misleading representations to consumers in relation to its third-party billing service known as ‘Direct Carrier Billing’, or DCB. Optus has admitted that it was aware from at least April 2014 that it’s DCB service led a significant number of customers to be charged by Optus for premium content such as ringtones, games, and horoscopes that they did not want and had not agreed to buy.
Optus has admitted that it made false or misleading representations in contravention of the ASIC Act, and has agreed to apply jointly with the ACCC for orders from the Federal Court. The proposed orders include declarations that Optus breached the ASIC Act and for company to pay $10 million in penalties. It is now up to the Federal Court to decide, at a later date whether the orders sought and the including the proposed penalties are appropriate for the contravention.
Optus has admitted and stated that it failed to adequately inform customers the DCB service was a default account setting and that if customers received premium content via their phone, even unintentionally, they would be billed by Optus for it. The company has also committed to offer refunds to customers affected by its conduct, with the possibility of over 240,000 Optus customers affected by this penalty.
“A substantial number of Optus customers were signed up to subscriptions for expensive, often unwanted content, without being required to enter payment details or verify their identity, as occurs with many other online purchases,” ACCC Chair Rod Sims said
“Many customers didn’t realise they were signing up to anything at all, and in some cases family members such as children incurred these charges without the account holder’s knowledge.”
“Despite over 600,000 direct enquiries Optus received over a number of years about this DCB service, Optus chose to continue to generate major profits at the expense of basic consumer protections,” Mr Sims said.
“There was compelling need for safeguards to be put in place to stop customers paying for content like ringtones and games that they did not want, did not use, and had difficulty unsubscribing from, and Optus just ignored this.”
The court action undertaken by the ACCC follows a similar one against Telstra over its Premium Direct Billing (PDB) service, where it was ordered to pay $10 million in penalties. “The ACCC is continuing its investigation into third party billing services by other carriers, and further enforcement action may well follow,” Mr Sims said.
The ACCC states that it understands a total of $31 million has been refunded to around 240,000 Optus customers to date, with the company paying approximately $12 million directly and third party providers refunding another $19 million. The ACCC has urged any Optus customers to check their mobile accounts and, if they believe unauthorised charges have been applied under the DCB service, to contact Optus directly to seek a refund.
$10 million seems like they’re getting off lightly….
The penalty needs to be based on the money they made and they should refund customers and pay at least 3 times the amount they made as a penalty.