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Investigation finds telco sales practices can drive consumer debt

25 February 2019

Residential consumers made 7,411 complaints to the Telecommunications Industry Ombudsman about problems managing their telco debt between 1 January and 31 June 2018, representing 10.2 per cent of complaints received during the period. These figures were highlighted in the organisation’s latest Systemic Insight: “Sales Practices Driving Consumer Debt”, published today (Wednesday 27 February, 2019).

The findings include some providers failing to assess a customer’s ability to pay, sales staff focusing on achieving sales more than whether a product is suitable for consumers, or selling consumers multiple devices without checking they can afford the additional costs. These practices increase the consumer’s risk of financial difficulty.

In publishing the Systemic Insight report, Ombudsman Judi Jones said, “Smartphones and internet data services are an important part of daily life for most Australians. The telecommunications industry should ensure it offers credit responsibly because financial over-commitment is a problem that can cause considerable consumer detriment.

“Consumers can now use their telco plan to pay off accessories such as drones, headphones, and smart watches. If a consumer went to a bank and asked for a $3000 loan, the bank checks the consumer’s capacity to repay that loan. Our recommendations in this report call on providers to consider how they can improve selling and credit assessment practices to ensure fair outcomes for their customers.”

The Telecommunications Industry Ombudsman encourages providers to take timely action and implement the recommendations in the report, building on work being undertaken to address problematic sales practices.

Recommendations for telcos:

  1. Before agreeing to sell a post-paid plan, make reasonable enquiries about a customer’s financial situation. Assess the customer’s ability to meet minimum charges over the plan’s contractual term.
  2. Deliver regular staff training in recognising and supporting vulnerable and disadvantaged customers, as well as ensuring sales training includes a focus on ethical selling.
  3. Implement extra safeguards where customers are purchasing multiple or additional post-paid plans. At a minimum, safeguards should include a) removing or reducing automatic credit pre-approvals for customers solely based on their past payment history, and b) asking whether the customer will be the principal end user for each post-paid plan. If the customer will not be, explain they remain liable for all of the costs of the plan.
  4. Prohibit account representatives from signing up for post-paid plans without the account holder’s knowledge.

ENDS

NOTES TO EDITORS

For all media enquiries please contact Sarah Carnovale on 0437 548 540 or mediaenquiries@tio.com.au 

About the Telecommunications Industry Ombudsman

The Telecommunications Industry Ombudsman (TIO) provides a free and independent dispute service for small business and residential consumers who have an unresolved complaint about their telephone or internet service in Australia.

Residential consumers and small businesses should contact www.tio.com.au or 1800 062 058.

The Telecommunications Industry Sector

The Telecommunications industry regulators are the Australian Communications and Media Authority (ACMA) http://www.acma.gov.au Media enquiries to (02) 9334 7719 or media@acma.gov.au and the Australian Competition and Consumer Commission (ACCC)  https://www.accc.gov.au Media enquiries to 1300 138 917, media@accc.gov.au After hours 0408 995 408.

Government and the regulators set policy and regulations for the telecommunications sector.

Communications Alliance is the peak body for Australian communications industry http://www.commsalliance.com.au Media enquiries to Sefiani Communications, (www.sefiani.com.au) 61 431 478 558.

The Australian Communications Consumer Action Network (ACCAN) is Australia’s peak communications consumer organisation representing individuals, small businesses and not-for-profit groups as consumers of communications products and services. http://accan.org.au/index.php Media enquiries to 0409 966 931 or 02 9288 4000.

The Telecommunications Industry Ombudsman acknowledges the traditional custodians of the land throughout Australia and their continuing connection to land, culture and community. We pay our respects to Elders past, present and emerging, and extend our respect to Aboriginal and Torres Strait Islander Peoples from all nations of this land.

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