Telstra has admitted to misleading customers, charging up to 100,000 people for signing up to ringtone, gaming, or other digital content subscriptions without payment details or identity verification taking place.
There's gonna be a whole lot of refunds going out for this.
"Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from," ACCC Chairman Rod Sims said.
"Telstra knew that the Premium Direct Billing service it operated led to large numbers of its customers being billed for purchases made without their knowledge or consent. Despite this, Telstra continued to bill customers, making substantial revenue from the service at the expense of customers."
Sims says when customers contacted Telstra to complain many were directed to third parties - even though Telstra knew that they had difficulty getting a refund from third party suppliers, or cancelling their subscription.
"Customers were often left frustrated and out of pocket as a result of Telstra's conduct," Sims said.
Testra's Group Executive of Consumer and Small Business, Vicki Brady, said these "Premium Direct Billing" services had been introduced by a number of mobile providers "to give customers a convenient way of charging certain types of online services to their phone bill".
"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," 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. We apologise to our customers who have been charged for PDB subscription services they did not knowingly request or could not opt out of."
Brady says services have been recognised as an issue for the broader telecommunications industry. Telstra has now ceased operating the PDB service entirely.
Telstra estimates it has provided refunds of at least $5 million, and it will review any future complaints in light of this action and deal with those customers in good faith. The ACCC estimates further refunds may be in the order of several million dollars.
If you believe unauthorised charges have been applied under the PDB service, contact Telstra to seek a refund.
Telstra has agreed to deal directly with complaints about the PDB service and provide refunds where it is apparent that the customer had signed up to PDB content without their knowledge or consent.
Telstra has also agreed to contact and offer refunds to affected customers (who have not already received a refund) it knows have already complained to the Telecommunications Industry Ombudsman or to Telstra directly about subscription charges under the PDB service.
Operating since July 2013, as of October 2017 Telstra earned about $61.7m in net revenue from commissions on premium billing services charged to more than 2.7 million mobile numbers.