Australia's largest operator Telstra has shut down its premium third party carrier billing service and agreed to pay an A$10 million ($7.7 million) penalty after admitting that more than 100,000 customers may have been bilked out of subscription fees or charges.
In response to court action from competition and consumer regulator ACCC, Telstra has admitted to making false and misleading representations to consumers in relation to its premium direct billing (PDB) service.
The ACCC had alleged that thousands of Telstra mobile customers were between 2015 and 2016 unwittingly signed up to premium subscriptions or charges with third parties without being required to enter payment details or verify their identity.
A large number of customers were billed for purchases made without their knowledge or consent, leading to Telstra making substantial revenue at the expense of customers, the regulator said.
When customers contacted Telstra to complain many were directed to third parties, even though Telstra knew they were having difficulty canceling their subscription or getting a refund from third party suppliers.
Telstra said it exited the third party PDB service in early March, and has committed to providing refunds to affected customers. The operator estimates that it has so far provided refunds of a least A$5 million, and the ACCC estimates that it could be on the hook for several million dollars more.
“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. It is clear for this specific type of service, we did not get that right,” Telstra group executive of consumer and small business Vicki Brady said.
“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.