Three Australian Telcos Fined $33.5 Million for Misleading Internet Customers

A TPG Telecom sign adorns the side of their headquarters in Melbourne, Australia on Aug. 30, 2018. William West/AFP via Getty Images

The Australian Federal Court has fined the three largest internet service providers in Australia $33.5 million (US$22.15 million) for making false or misleading representations when promoting their NBN (National Broadband Network) internet plans.

Specifically, the court ordered Telstra to pay $15 million in penalties, while Optus and TPG agreed to pay $13.5 million and $5 million, respectively.

The ruling was made after the federal court found that the three telcos breached the Australian Consumer Law by making false or misleading statements concerning their 50Mbps or 100Mbps internet plans between 2019 and 2020.

The Australian Competition and Consumer Commission (ACCC), which filed lawsuits against the telcos, said the three companies promised to tell consumers within a reasonable timeframe whether they could reach the speeds stated in the NBN packages they purchased.

And if customers could not achieve the maximum speed, the companies said they would offer options, including allowing customers to switch to a cheaper plan with a refund or cancel their NBN packages.

However, the telcos later admitted that they did not have adequate systems, processes and policies in place to ensure they would do as promised.

A Telstra logo is seen as pedestrians walk outside the Telstra headquarters in Melbourne, Australia, on June 14, 2017. Michael Dodge/Getty Images

“Fast and reliable internet is a necessity for Australian households, and consumers need accurate information when choosing the best internet plan to meet their needs,” ACCC commissioner Liza 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.”

The commissioner also emphasised that it was illegal for businesses to make false or misleading statements to consumers about the performance characteristics, nature, standard or quality of their products and services.

Nearly 120,000 Consumers Affected

The ACCC estimated that nearly 120,000 consumers were affected during the period the companies maintained their false or misleading representations.

Following the agency’s intervention, the ACCC said Telstra, Optus, and TPG had since contacted impacted customers to provide refunds.

It also said the court ordered TPG to carry out a consumer law compliance program and Optus to update its existing program.

Meanwhile, Telstra has already been under compliance obligations since 2020, when the ACCC brought a court action against the company’s unconscionable conduct toward Indigenous customers.