ACCC clamping down on Premium Billing Direct payments

Telstra slapped in this week's instalment of 'telco sector brought to heel by regulator'

Telstra's latest run-in with Australia's competition regulator has seen the nation's dominant carrier confess to scamming up to 100,000 customers through premium services to which they did not consent.

At issue is the misuse of Telstra's premium direct billing (PDB) service, which allowed customers to have content billed to their mobile account rather than paying the content provider directly.

Convenience sometimes trumped security, it seems, and the Australian Competition and Consumer commission reckons customers were signed on for PDB services without their consent. In its release, the ACCC says Telstra didn't require PIN security on the member's phone, allowing (for example) children to sign on for services using a parent's phone.

Access to PDB services was an account default without customers knowing, and the ACCC says the carrier knew something was wrong “because it received a large number of calls disputing such charges”.

The ACCC today kicked off Federal Court proceedings against Telstra, and the carrier has admitted to contravening the law and agreed to court consent orders for remedies.

The ACCC's statement features chair Rod Sims saying “Telstra has admitted that it misled customers by charging them for digital content, such as games and ringtones, which they unknowingly purchased. Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from”.

Of the AU$61.7 million revenue Telstra received for PDB services since July 2013, the ACCC says Telstra estimates it has already provided refunds of $5 million.

Sims also said Telstra made it difficult for customers to escape PDB services, and as a result: “Customers were often left frustrated and out of pocket as a result of Telstra’s conduct”.

The rest of the mobile industry can consider itself on notice, since the regulator is monitoring complaints relating to their PDB services and “will take enforcement action … if we believe they are breaching the law”.

Australian Broadcasting Corporation radio news has reported that Optus and Vodafone are also in the ACCC's sights over the practice. ®