Telstra, TPG and Optus hit with multi-million dollar fines after misleading customers

Three of Australia’s largest telecommunications providers have been hit with multi-million dollar fines after misleading customers about achievable Internet speeds, in breach of consumer law.

Having admitted liability in three separate proceedings instituted by the Australian Competition and Consumer Commission (ACCC), Telstra (ASX: TLS) will pay $15 million in fines, Optus will pay $13.5 million, and TPG (ASX: TPG) will pay $5 million.

The fines are the result of the three companies having made false or misleading representations when promoting some 50Mbps and 100Mbps NBN plans to nearly 120,000 customers.

It was alleged, and admitted to by the companies, that some customers were never able to achieve advertised Internet speeds, and that the companies never alerted those customers to that fact.

It was also alleged that Telstra, Optus and TPG wrongly accepted payments from certain customers for NBN plans when they were not provided with the promised speeds.

Given that the three companies all admitted liability, the Federal Court’s Justice Moshinsky said the court only had to be satisfied that the penalties were appropriate.

Moshinsky said the penalties, proposed by the companies themselves, were appropriate and that the differences in value between the three fines reflected the number of customers affected and the respective size of the contravening company.

ACCC commissioner Liza Carver said fast and reliable Internet was a necessity for Australian households, and consumers needed accurate information when choosing Internet plans.

"These significant penalties reflect the seriousness of the breaches of consumer laws by these large and sophisticated businesses that should be better informed about their obligations towards their customers, particularly given the promises they made to their customers and in undertakings previously provided to the ACCC regarding speed claims for their NBN plans in 2017," Carver said.

"Some customers may have paid for a 50 or 100 Mbps plan believing their NBN connection could support the higher download speeds, even though they would have been better off paying for a lower speed plan.

"It is illegal for businesses to make false or misleading representations to consumers about the performance characteristics, nature, standard or quality of products and services.”

Telstra, Optus, and TPG have each implemented remediation programs and have already contacted impacted customers to provide refunds.

The Court also ordered that Optus re-contact affected customers who have not already responded to previous contact or been credited, to offer compensation within 120 days. These Optus customers can expect to receive an update on their speed data and there will be a dedicated customer service line for them to contact Optus regarding compensation.

TPG was ordered to implement an ACL compliance program, while Optus was ordered to update its existing compliance program.

For Optus, the fine is just the latest debacle after the company was hit by a cybersecurity breach earlier this year.

With the breach exposing almost 10 million current and former customers, the telecommunications company is staring down at least two class action law suits - one from Maurice Blackburn and the other from Slater & Gordon (ASX: SGH).

It is estimated any settlement from the class action could be worth billions, and could eclipse the current record of $494 million paid to 10,000 victims of Victoria’s 2009 Black Saturday bushfires.