Australian Regulator Sues Singtel's Optus Over Alleged Misconduct Involving Vulnerable Consumers

Dow Jones11-01

Australia's competition watchdog has filed proceedings against Singtel's subsidiary, Optus Mobile, alleging what it called "unconscionable" conduct in dealings with some consumers.

The Australian Competition and Consumer Commission said Thursday that Optus allegedly put "undue pressure" on some customers to buy products and services that they didn't need, without checking if they had Optus coverage where they lived. Some have incurred thousands of dollars of debt from product purchases, including expensive phones, plans and accessories, ACCC said.

The case involves about 429 customers, it said.

Optus allegedly also engaged debt collectors to pursue customers, ACCC said, adding that consumers were "subject to inappropriate or fraudulent sales conduct." Other allegations include manipulating credit checks, refusal to cancel contracts and making false, misleading or deceptive representations that goods were "free" when they were not, the regulator said.

ACCC said many of the affected customers faced vulnerabilities like living with a mental disability, financial difficulties, lacked financial literacy or have lower cognitive capacity. It added that it is seeking "declarations and orders for penalties, non-party consumer redress, publication orders, a compliance program, and costs."

"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," said ACCC chairwoman Gina Cass-Gottlieb.

"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," Cass-Gottlieb added.

Optus is Australia's second-biggest telecommunications group.

In a statement on Thursday responding to the regulator's action, Optus's interim chief executive, Michael Venter, apologized for the misconduct and for the distress caused, calling it "unacceptable." Venter said the company has taken disciplinary action, including terminations, against staff deemed responsible.

Venter added that the company is remediating affected customers, including by providing refunds and waiving outstanding debts.

"We regret that we did not remediate more quickly in some of these cases," Venter said. "We have cooperated with the ACCC in this investigation to date, will continue to do so and are committed to continuing to improve our processes in relation to customers experiencing vulnerability."

Venter is Optus's chief financial officer and is serving as interim CEO until next month when Stephen Rue takes over.

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Comments

  • BK99
    11-01
    BK99
    Knee Jerk reaction !! Very common stuff and nothing to shout about !! In a few day's time Singtel Shares will be back to normal !
    • KienBoon
      Yap. This type of news would cause panicky situation in a way and setting off a chain reaction. Many could have sold away their shares unnecessarily too, hence causing much further decline in share price. However, some are waiting to scoop the shares at lower price. Who is the overall big winner ? I think it should be the longer term investor who believes in the company progress. [Great]
  • KienBoon
    11-01
    KienBoon
    Such news will also cause Singtel to plunge significantly. Equities are really volatile these days. Maybe the very poor mkt sentiment contributed to this as well.  Hope that the mkt storm will subside as soon as possible. Sad indeed.
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