Australia’s three largest internet service providers, Telstra, Optus and TPG, have been fined a total of $33.5 million by federal courts after all admitted to making false or misleading claims about their NBN plans.
Telstra was ordered to pay $15 million, Optus $13.5 million and TPG $5 million for violating the Australian Consumer Act (ACL) regarding their 50 Mbps or 100 Mbps fiber to the node (FTTN) plans.
Consumer watchdog the ACCC launched legal action against the trio after making promises to customers warning them if the speeds they had paid for could not be achieved and offering options such as a cheaper plan with a refund. But the companies lacked adequate systems, processes and policies to ensure they would do what they said they would do.
The telcos’ false or misleading statements affected approximately 120,000 customers and were made for at least 12 months in 2019 and/or 2020.
ACCC Commissioner Liza Carver said the significant penalties reflect the seriousness of consumer law violations by “big and sophisticated companies that should be better informed about their obligations to their customers, especially given the promises they have made”.
The ACCC had addressed them about the issue in 2017, and Telstra, Optus and TPG then pledged to resolve the issue.
“Some customers may have paid for a 50 or 100 Mbps plan assuming their NBN connection would support the faster download speeds, although they would have been better off paying for a lower speed plan,” Carver says.
Telstra, Optus and TPG have each implemented recovery programs and have already contacted affected customers to issue refunds.
The court ordered Optus to re-contact affected customers who have not responded to previous contact or who have not been credited to offer compensation within 120 days. These Optus customers can expect an update on their speed data and there will be a dedicated customer service center where they can contact Optus about compensation.
TPG was tasked with implementing an ACL compliance program, while Optus was tasked with updating its existing compliance program.
Telstra already has obligations in connection with the ACL compliance program under a legally enforceable undertaking given to the ACCC after the action by ACCC related to unscrupulous behavior towards Indigenous customers in 2020.
The three telcos were also ordered to pay part of the ACCC’s costs.