The Federal Court ordered that Telstra pay $50 million in penalties for selling mobile contracts to more than 100 Indigenous consumers in Australia.

The $50 million penalty imposed against Telstra, the #1 telecom operator, is the second highest penalty ever imposed under the Australian Consumer Law.

Telstra admitted that between January 2016 and August 2018, it breached the Australian Consumer Law and acted unconscionably when sales staff at five licensed Telstra-branded stores signed up 108 Indigenous consumers to multiple post-paid mobile contracts which they did not understand and could not afford.

The unconscionable conduct occurred at licensed stores in Alice Springs, Casuarina and Palmerston (NT), Arndale (SA), and Broome (WA).

“Sales staff in these Telstra-branded stores used unconscionable practices to sell products to dozens of Indigenous customers who, in many cases, spoke English as a second or third language,” ACCC Chair Rod Sims said.

ACCC said this conduct included manipulating credit assessments and misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers.

Telstra’s board and senior executives failed to act quickly enough to stop these illegal practices when they were later alerted to them.

Telstra’s sales staff at the stores failed to explain the potential costs of the contract to the consumers and falsely represented that consumers were receiving products for free.

Telstra’s sales staff also manipulated credit assessments, so consumers who otherwise may have failed its credit assessment process could purchase post-paid mobile products. This included falsely indicating that a consumer was employed when they were not.

Telstra has since taken steps to waive the debts, refund money paid and put in place measures to reduce the risk of similar conduct in the future.