Optus Fined $100 Million for Exploiting Vulnerable Customers in Australia

In a historic ruling, Australian telecom giant Optus has been fined AU$100 million (US$66 million) by the Federal Court of Australia for systemic exploitation of vulnerable customers. This unprecedented fine highlights a widespread pattern of unethical sales practices targeting disadvantaged individuals, including those from remote communities, elderly customers, and people with cognitive or intellectual disabilities. The Australian Competition and Consumer Commission (ACCC) spearheaded the case, revealing conduct so severe that Justice O’Sullivan labeled it as “appalling” and a “manifest betrayal of trust.”

Targeting Vulnerable Customers Through Deceptive Practices

The court found that Optus sales staff, incentivized by commission-based pay structures, engaged in high-pressure sales tactics to exploit their most vulnerable customers. Employees sold multiple devices and overpriced plans to individuals who could neither understand nor afford them. In one shocking instance, a man who was deaf, mute, and physically disabled was coerced into signing contracts worth over AU$7,500, despite his inability to utilize the services. Another incident involved a woman with cerebral palsy and ADHD trapped in 24 overlapping contracts, which drove her into severe financial distress.

Even more troubling, some customers were sold services in areas where Optus had no network coverage, rendering the purchased services entirely unusable. The systemic failures within Optus’ credit approval controls allowed staff to manipulate or bypass protections, creating a breeding ground for fraudulent and unethical behavior. These exploitative practices were especially rampant in certain retail locations, such as stores in Darwin and Mount Isa, where internal investigations revealed widespread misconduct, sometimes even encouraged by managerial staff.

Management Failures and a Legacy of Negligence

Further compounding Optus’ violations is evidence that senior management had been aware of these unethical practices for years but failed to take action. As far back as December 2019, management was informed of fraudulent contracts being created at its Mount Isa store, disproportionately targeting First Nations Australians. Despite such grave internal findings, Optus falsified its public responses, misleading both the Telecommunications Industry Ombudsman (TIO) and the public by underplaying the extent of the exploitation.

Justice O’Sullivan strongly condemned Optus’ false claims, describing the company’s inaction as a “complete abrogation of managerial responsibility.” The company even pursued aggressive debt collection against individuals whose debts were created through fraudulent contracts, causing additional distress to already vulnerable customers.

Penalties and Steps Toward Reform

The AU$100 million fine imposed by the court reflects the severity of Optus’ systemic failures. The company was also ordered to pay the ACCC’s legal costs of AU$1.5 million and issue corrective notices across various platforms, including its website, newspapers, and retail stores. To rebuild public trust, Optus has committed to a five-year legally binding undertaking to overhaul its operations. Under this agreement, the telecom will appoint a senior compliance officer reporting directly to its CEO, revamp its sales commission structure to focus on customer service, and enhance training on identifying and assisting vulnerable customers.

Additionally, Optus will reacquire 34 licensee stores, particularly those flagged for misconduct, and allocate AU$1 million to initiatives aimed at improving digital literacy for First Nations Australians. While the company has apologized and pledged to compensate victims, this judgment serves as a stark reminder to the entire telecom industry of its critical responsibility to safeguard all customers, particularly the most disadvantaged.

A Broader Warning for the Telecom Sector

The Optus scandal underscores the need for stringent oversight and ethical practices across the telecommunications sector. This case not only highlights the consequences of unchecked corporate behavior but also sets a strong precedent for regulatory action against companies that exploit vulnerable populations. As the industry moves forward, stronger safeguards, transparent operations, and customer-first policies will be crucial to prevent similar incidents.

As Australia’s second-largest telecom provider faces public scrutiny and financial penalties, the broader industry must take note of this landmark case as a call to uphold integrity and prioritize the well-being of consumers over profit.