Telstra Fined for 3rd Overcharging Incident Since 2020

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

Telstra is facing penalties for overcharging customers for the third time since 2020.

The telecom giant has been fined $3 million (US$1.9 million) and refunded $17.7 million to thousands of customers after wrongfully charging them for “inactive” internet services over 11 years.

An investigation by the Australian Communications and Media Authority (ACMA) revealed that 6,532 customers, mainly small businesses, were incorrectly billed around $2,600 between April 2012 and August 2023.

In 2023, the ACMA directed Telstra to fix billing errors for overcharging about 10,000 customers almost $2.5 million over 12 years.

Another investigation in 2022 found Telstra overcharged more than 11,000 customers around $1.7 million.

ACMA Chair Nerida O'Loughlin expressed frustration with Telstra’s repeated billing errors.

“Telstra has a history of incorrectly billing customers, and it’s just not good enough,” she said.

“When many small businesses face economic pressures, unaccounted costs can create very real stress and financial hardship.”

She said Telstra, a big player in Australia’s telecommunications industry, must focus on following billing rules and organising its systems.

“All telcos must have robust billing systems in place to ensure that consumers, including small businesses, are only paying for agreed and active services,” she added.

Telstra broke the rules by wrongly charging customers, violating billing accuracy, and ignoring the formal ACMA directive from 2020 to comply.

Failure to comply with billing accuracy rules in the future may lead to ACMA taking further actions, potentially involving proceedings in the Federal Court.

Telstra Issues Deep Apology to Affected Customers

Telstra told the ACMA the billing problems happened because it didn’t follow the correct steps when deactivating ADSL internet services.

The telco giant has now put controls in place to prevent the issue from happening again, including monthly checks and ensuring customers use ADSL services before billing.

It has also agreed to report to the ACMA about the effectiveness of these controls in six months.

Telstra executive Dean Salter admitted that making billing mistakes “isn’t acceptable” and “deeply apologised” to the affected customers.

He said Telstra self-reported the issue to ACMA and has refunded all but $3 million of the $21 million that needs to be repaid.

“We’ve reached out to our customers to explain what went wrong and what we’re doing to fix it, including refunding them for the incorrect charges with interest … we’ve let these customers down; we apologise for this, and it’s clear we need to do better,” he said.

“These ADSL billing errors occurred because we didn’t follow the proper deactivation process, including when some customers migrated to the NBN, which resulted in some customers being charged for inactive services.”

Customers worried about incorrect billing can review their bills and talk to their internet service provider. If the issue persists and can’t be resolved with the provider, they can file a complaint with the Telecommunications Industry Ombudsman.

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

Canstar Blue Utilities Telecom Expert Tara Donnelly emphasised the importance of customers monitoring their phone and internet charges, particularly during the current economic climate.

“Telstra’s latest billing error serves as a good reminder to customers to keep an eye on their phone or internet charges, especially in our current cost of living crisis,” she said.

“Although prices for both NBN and mobile services are on the rise, customers shouldn’t overlook unexpected changes to their plan costs.”

Ms. Donnelly had advice for Australians worried about increasing expenses.

“Make sure you know exactly what you should be paying, and flag any unexplained charges or price increases straight away. And if you’re unhappy with your current pricing or service, don’t be afraid to look around for a cheaper offer.”