Telstra, Optus and TPG taken to court over internet speed claims to customers

Telstra, Optus and TPG taken to court over internet speed claims to customers

Telstra, Optus and TPG have all been taken to the Federal Court by the Australian Competition and Consumer Commission (ACCC) for making allegedly false or misleading representations when promoting some 50Mbps and 100Mbps NBN plans.

The ACCC alleges the three largest internet service providers failed to advise many customers on Fibre to the Node (FTTN) connections when their maximum speeds were below the promised levels, despite promising to do so.

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

“Telstra, Optus and TPG each promised to tell consumers within a specific or reasonable timeframe if the speed they were paying for could not be reached on their connection,” says ACCC chair Rod Sims.

“They also promised to offer them a cheaper plan with a refund if that was the case. Instead, we allege, they failed to do these things, and as a result many consumers paid more for their NBN plans than they needed to.

"Collectively, hundreds of thousands of consumers were allegedly misled by these three big internet providers, Telstra, Optus and TPG, which accepted payments for NBN speeds they could not provide."

Sims described the alleged behaviour as even more concerning given the telcos were well aware of these issues and had earlier given undertakings to the watchdog to provide remedies to affected customers.

"We are very disappointed that these companies do not seem to have taken seriously the undertakings they gave to the ACCC," he adds.

The allegedly false and misleading statements were made by Telstra and TPG from 1 April 2019 to 3 April 2020.

Telstra stated it would test the line speed 21 days after connection and promised consumers “If your NBN connection doesn’t allow you to properly benefit from the speed tier you’re on, we’ll provide you with a maximum line speed, once it’s available, along with alternative options”.

TPG told customers their speeds would be emailed “around three weeks after activation” and that consumers would “have the option to move to a lower speed plan (if available) or to change providers without contract break fees”.

Optus has been accused of allegedly making misleading statements throughout 2019.  

The Sintel-owned telecommunication giant told consumers it would check the speeds and that “options will be provided if the actual speed you achieve is lower than what’s included in your plan or speed pack”.

Despite these assurances to customers, the ACCC alleges all three companies failed to have adequate systems in place to implement the speed checks, notifications and remedies promised to customers.

This is familiar territory for Telstra and Optus, who have previously been hit with legal actions in relation to false or misleading statements.

In 2018, Telstra was ordered to pay $10 million for misleading 100,000 customers who unknowingly purchased digital content.

That same year, Optus was forced to cover a $1.5 million penalty for misleading customers during their transition from Optus’ HFC network to NBN.

The most recent investigation was prompted by Telstra self-reporting elements of the alleged conduct to the ACCC, and by information the ACCC had received in its Measuring Broadband Australia Reports indicating consumers were not getting the speeds they paid for.

“Internet speed is one of the main features consumers look for when choosing their NBN plan, but it can be complex, confusing and time-consuming for them to understand the features of advertised NBN services and they cannot check their maximum speed themselves,” Sims said.

“It is important that internet providers like Telstra, Optus, and TPG give their customers accurate information so they can make an informed choice about the service that best suits their needs and budget.”

All three companies have promised to compensate consumers before their court cases are finalised, and are contacting current and former customers who were affected.

The ACCC is seeking a range of orders, including declarations, injunctions, pecuniary penalties, publication orders and the implementation of compliance programs.

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