Daily Management Review

Australian Telco Firm Penalized For Misleading Customers


Australian Telco Firm Penalized For Misleading Customers
Accused of misleading consumers, a penalty of 1.5-million-Australian dollar (1.14 million U.S. dollars) was ordered against the second largest telecommunications company of Australia by the Federal Court.
Between the period from late 2015 to early 2017 the Australian telecom company Optus had called up about 14,000 consumers and informed them that if they did not sign up to the National Broadband Network (NBN) within a period of 30 days, their internet service would be disconnected. This was tactic use by the company to boost profits and the company made4 about 750,000 Australian dollars (565,179 U.S. dollars) using this unethical and illegal tactic, said a statement from the Australian Competition and Consumer Commission (ACCC) about the incident.
The National Broadband Network (NBN) is a network facility that offers wholesale broadband access to telecommunications companies across Australia and is presently being built and operated by NBN Co. Ltd - which is a government-owned firm.
NBN Co. Ltd. had reportedly given incentives to Optus against the company getting more customers to the new service. Optus is the third largest NBN service provider in Australia.
"Optus pressured customers by misrepresenting the time period in which services could be disconnected," ACCC Chairman Rod Sims said in the statement. Sims noted that the telecommunication firm did not have any authority to cut off internet broadband service in the time frame that the company had told the customer about or the customers would breach the contract.
"Businesses should not make false representations which distort customers' decision making," Sims said.
"It is illegal for businesses to mislead their customers and create a false impression through their communications. Today's penalty serves as a warning to all businesses that such behaviour will be met with ACCC action."
Customers who had bene affected by the actions and misconduct of the telecom company had been paid 833,000 Australian dollars (627,700 U.S. dollars) as compensation since December 2017 when the investigation into the actions of the company had been started by the ACCC.