Optus hit with hefty fine in Australia for tricking customers into paying for third-party apps
Optus has been hit with an AUD$10 million ($7 million) fine in Australia for tricking customers into buying games, ringtones and other digital content through a third-party billing service without properly informing them.
The DCB service allowed a purchase or subscription to be confirmed and charged to a customer’s bill after just one or two clicks
The Singtel-owned telco was convicted by the Federal Court of Australia, following an investigation by the Australian Competition and Consumer Commission (ACCC), which found it breaching the Australian Securities and Investments Commission Act for billing customers for third party-produced content which they mistakenly bought or subscribed to through its “direct carrier billing” (DCB) service.
The DCB service allowed a purchase or subscription to be confirmed and charged to a customer’s bill after just one or two clicks on a web browser and allowed Optus to earn commissions on items sold through the service.
Optus has since admitted that it knew it was misleading customers since April 2014 by not properly informing them that the DCB service was a default setting on their accounts and that they would be billed directly by Optus for any content bought through the service, even unintentionally.
Despite receiving over 600,000 enquiries about the service, Optus failed to put in place appropriate identity verification safeguards and referred customers who sought to query DCB service charges to third parties. Many customers then encountered significant difficulties in cancelling the purchases and obtain refunds from the third parties.
“In many cases, Optus customers had no idea they were buying anything, and certainly did not need or want the content for which they were being charged,” said Rod Sims, the chair of ACCC.
“Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints. We are pleased that the Court agreed that this conduct is simply unacceptable and deserves a significant penalty.”
More than 240,000 Optus customers have so far been refunded and Optus has paid about $8m in refunds and third-party providers another $13m, according to the ACCC.
The $10m penalty is one of the highest imposed by the Court after ACCC action on a consumer matter and equals the penalty paid by Telstra in 2018 after it admitted to similar conduct.