Science

Consumer watchdog takes Telstra to Federal Court over false billing charges

March 26, 2018 13:47·
A logo which now strikes fear into my heart

A logo which now strikes fear into my heart

PDB (also known as Direct Carrier Billing) was a service offered to Telstra customers which allowed them to pay for media content and subscriptions like music and applications by adding costs to a customer's bill.

"A large proportion of customers who made a decision to subscribe to a service were happy with it, however the number of complaints received over time shows there were issues with the PDB service that needed to be addressed".

Telstra customers are encouraged to check their Telstra mobile account and, if they believe unauthorised charges have been applied under the PDB service, they should contact Telstra to seek a refund.

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".

Telstra has agreed to refund customers and would make joint submissions in court in relation to the imposition of penalties totalling A$10 million ($7.7 million), the ACCC said in a statement.

Telstra (ASX:TLS) has admitted it made false or misleading representations to 100,000 consumers in regards to its third-party billing service, which enabled mobile customers to purchase online content such as games, apps and videos from third parties on a subscription or one-off basis and have it charged directly to their mobile bill.

'Many Telstra customers paid for content they did not want, did not use, and had difficulty unsubscribing from, ' Australian Competition and Competition Commission Chairman Rod Sims said.

In addition to the possible fines, Telstra agreed to refund affected customers and has already handed back at least $5 million in refunds.

Telstra will alert affected customers over the coming months, but encourages those anxious they have been overcharged to get in touch.

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As part of this resolution, Telstra has ceased operating the PDB service entirely.

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

The telco said it would now handle PDB complaints directly instead of referring them to third parties, and would actively offer refunds to customers that may have been affected.

Mr Sims said the service was active for two years saw Telstra gain a "substantial revenue" of $62 million from 2.7 million customer mobile phones.

Between 2015 and 2016 the third-party billing service signed up thousands of Telstra mobile customers to ringtone subscriptions or games without their knowledge.

"In fact, Telstra had set up a system with the app developer whereby you were billed through your Telstra bill".

Telstra has agreed to deal directly with complaints about the PDB service and provide refunds where it is apparent that the customer had signed up to PDB content without their knowledge or consent.

Telstra was aware that family members such as children were at risk of inadvertently subscribing on a family member's phone.

The ACCC had commenced action against Telstra in the Federal Court under a delegation of power from ASIC. "It is clear for this specific type of service, we did not get that right", Brady says.

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