Optus fined $1.1m for misleading HFC customers

23 May 2018
00:00
News
Daily News

Australia's Optus has been fined A$1.5 million ($1.1 million) for allegedly misleading customers during their transition from Optus' legacy hybrid fiber coaxial (HFC) network to the national broadband network (NBN).

A federal court has ordered wholly-owned Singtel subsidiary Optus to pay the penalties in response to legal action from the Australian Consumer and Competition Commission (ACCC).

The court found that Optus told around 14,000 of their HFC customers that their services would be disconnected, in some cases in as little as 30 days, if they did not move to the NBN.

But under the terms of its deal with the state-owned company conducting the NBN rollout, NBN Co, Optus was not entitled to force disconnection within such a short timeframe.

Under the terms of Optus' deal with the government to sell its HFC network to NBN Co and migrate its fixed line customers to the NBN, Optus was entitled to receive migration payments for each customer moved from the HFC network to an NBN based service.

Optus had made obtaining these payments part of its annual financial targets and referred to the payments as a “bounty”, the court heard. The operator's employees were thus under pressure to ensure migrations as quickly as possible.

Optus was also found to have misled consumers into thinking that they had to sign up for Optus NBN services, rather than having their choice of retail service provider. As a result of this conduct, Optus was estimated to have benefited by around A$750,000 ($568,000).

Optus has already paid around A$833,000 in compensation to affected customers for disconnecting their services.

“Businesses should not make false representations which distort customers’ decision making. This is particularly important when many Australians are moving to the NBN for the first time,” ACCC chairman Rod 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 behavior will be met with ACCC action.”

Related content