Embattled telco Optus closes chapter on legacy mobile scandal as court imposes $100m fine

As telco giant Optus faces an emerging scandal involving a deadly triple-zero outage, the Federal Court this week settled a legacy issue with a $100 million fine slapped on the group’s mobile division for taking advantage of vulnerable consumers.

The penalty, previously agreed to by Optus Mobile, brings to an end civil action brought by the Australian Competition and Consumer Commission (ACCC) last year in which the consumer regulator alleged that the company engaged in unconscionable conduct when selling mobile phones and contracts to hundreds of Australians over a four-year period.

Many of the customers caught out were from remote indigenous communities.

The ACCC announced in June that Optus Mobile had agreed to the fine, although it was still subject to court approval which was granted this week.

“Optus’s 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,” says ACCC deputy chair Catriona Lowe.

“During the course of our investigation we heard from many people who had not only experienced significant financial harm, but also emotional distress and fear after being pursued by debt collectors for long periods.

“A company of Optus’s size should have had better systems and controls in place to identify and stop this sort of behaviour.”

Optus Mobile previously admitted it acted unconscionably, in breach of the Australian Consumer Law, and agreed to make joint submissions with the ACCC to the court that a total penalty of $100 million was appropriate.

The conduct by Optus Mobile involved more than 400 consumers at 16 Optus stores between August 2019 and July 2023.

The court heard that many of the affected consumers were vulnerable or experiencing disadvantage, such as living with a mental disability, diminished cognitive capacity or learning difficulties, being financially dependent or unemployed, having limited financial literacy or English not being a first language.

The ACCC says that in many instances the affected consumers did not want or need, could not use or could not afford the phones and contracts they were sold. In some cases, consumers were pursued for debts resulting from these sales.

In handing down the penalty order, Federal Court Justice O’Sullivan said the consequences of Optus’s conduct were “profound”.

“Numerous individuals experienced severe financial harm, emotional distress, and social shame,” he said.

“Particularly damaging was the heightened risk of losing access to essential telecommunications services when faced with inflated service costs.”

On top of the penalty, Optus has also provided the ACCC with a five-year court-enforceable undertaking that it will compensate impacted consumers and improve its internal systems.

While the $100 million penalty has settled one legacy scandal for Optus, the company is facing a new battle ahead after a network upgrade last week prevented people from making triple-zero calls during emergencies.

The outage is said to have affected more than 600 households and authorities have revealed that the outage was linked to several deaths after people were unable to make triple-zero calls.

The outage follows a similar incident in 2023, which resulted in Optus being hit with a $12 million fine by the Australian Communications and Media Authority.