Singtel’s Optus served A$100 million fine by Australia’s Federal Court for “appalling” actions against disadvantaged consumers

[SINGAPORE] Australian telecommunications company Optus Mobile was served a A$100 million (S$85.1 million) fine by the country’s federal court on Wednesday (Sep 24) for selling phones and contracts to disadvantaged consumers.

Justice Patrick O’Sullivan said in his ruling that the company’s conduct was “clearly unconscionable and can only be described as appalling. It is, by any measure, extremely serious”.

Catriona Lowe, deputy chair of the Australian Competition and Consumer Commission (ACCC), said: “Optus’ conduct in this case was truly appalling, and we welcome the substantial penalty imposed by the court and the deterrence message that it will send.”

Optus admitted in June to unconscionable conduct after court action brought against it by ACCC, and agreed to the fine quantum for having broken Australia’s consumer laws.

The company admitted to selling phones and contracts to more than 400 disadvantaged consumers in 16 of its stores between August 2019 and July 2023.

ACCC said in a statement: “In many instances, the consumers did not want or need, could not use or could not afford what they were sold, and in some cases, consumers were pursued for debts resulting from these sales.”

Optus is a wholly-owned subsidiary of Singtel and Australia’s second-largest telco after Telstra. It is now under intense pressure after the Sep18 outages of its emergency hotline services led to at least three deaths.

‘Significant emotional distress and fear’ 

ACCC said that many of the affected individuals were particularly vulnerable or disadvantaged in that they had mental disabilities, diminished cognitive capacity, learning difficulties, limited financial literacy, or were unemployed, or did not use English as a first language.

Some of those affected were also First Nations Australians residing in remote areas of the country.

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Optus staff are said to have, for example, put pressure on those affected to buy large numbers of products, failed to explain relevant terms and conditions, disregarded actual Optus coverage in the areas where the buyers lived, and misled consumers on the free items included.

ACCC’s Lowe said: “Many of these consumers who were vulnerable or experiencing disadvantage also experienced significant financial harm. They accrued thousands of dollars of unexpected debt, and some were pursued by debt collectors, in some instances, for years.”

The company also engaged debt collectors to pursue the affected consumers, even after internal investigations had been launched into the unethical sales conduct, noted Lowe.

“It is not surprising, and indeed could and should have been anticipated, that this conduct caused many of these people significant emotional distress and fear,” she said. 

Justice O’Sullivan added that the senior Optus management “knew or ought to have known of system failures” within the company – including its chief executive officer.

The current chief executive officer, Stephen Rue, was appointed in May 2024, succeeding Kelly Bayer Rosmarin, who was appointed in 2020 and stepped down in 2024 following a nation-wide service outage.

In a statement, Optus said that it has “fully remediated” most of the customers identified, and that it was working with financial-counsellor services to identify and support affected customers.

The company has also entered into an enforceable undertaking to “improve (its) sales practices and better support customers, particularly those who are vulnerable”.

In addition, it has also set up a programme to address its commitments, including making coverage and credit checks, enhancing code-of-conduct training, and changing its sales-incentive programmes.

In May 2021, Telstra was fined A$50 million for engaging in similar sale tactics against more than 100 consumers.