Optus hit with $10m fine

Optus has been ordered to pay a $10 million fine, one of the highest penalties to be imposed by the Federal Court, for misleading its customers over digital content. 

The Australian Competition and Consumer Commission took action against the mobile firm in October, which admitted it billed and misled customers who had unknowingly or mistakenly purchased games, ringtones and other content through a third-party direct service.

The consumer watchdog says the penalty equals that paid by Telstra last year for similar conduct, and is among the highest to be handed down after ACCC action over a consumer matter. 

ACCC chair Rod Sims said in many cases Optus customers had no idea they were buying anything and did not need or want the content for which they were being charged.

“Optus failed to take appropriate action, choosing instead to continue to charge customers and collect commissions on these sales, even after numerous complaints," he said.

“We are pleased that the court agreed that this conduct is simply unacceptable, and deserves a significant penalty.”

The company admitted it did not properly inform customers that its direct carrier billing 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.

Since the DCB service’s launch in 2012, Optus has earned about $65.8 million in commissions for products sold through the service, and its customers were charged approximately $195 million for the content. 

The telco received more than 600,000 enquiries about the service but failed to put in place appropriate identity verification safeguards, and instead referred customers onto third parties to deal with.

The ACCC understands about $8 million has so far been refunded to 240,000 customers, while third-party providers have paid compensation of $13 million.