Indigenous financial groups are calling for mobile phone contracts to be written in plain English after an Australian Competition and Consumer Commission found Telstra was signing people up to unaffordable and illegal mobile phone plans.
Australia’s largest telecommunication company, Telstra, was referred to the Federal Court by ACCC yesterday after an 18 month investigation revealed some employees faked employment and credit card records to sign people up to expensive post-paid mobile phones and plans.
The ACCC’s inquiry found that many consumers didn’t fully understand the contracts and were unable to afford the costs associated with high premium mobile phone plans.
Lynda Edwards, Financial Counselling of Australia’s coordinator of financial capability community of practice, said many contracts were difficult to understand.
Financial Counselling Australia's Lynda Edwards said complex contracts should be written in plain English to ensure all customers can understand what they are signing up to.
“When you have someone that has English as a second or third language it's really near impossible to be able to understand these products," she said.
“They need to be written in plain English so people can fully understand what they’re getting themselves into.”
The Wangkumara woman said telecommunications companies and other organisations had a responsibility to ensure consumers were fully informed.
“Often these products are written in a way that just the average person on the street doesn't understand, Money as our mob knows has only been in our society for a very short time," she told NITV News.
When you have someone that has English as a second or third language it's really near impossible to be able to understand these products. They need to be written in plain English so people can fully understand what they’re getting themselves into.
Ms Edwards said Financial Council Australia had been working with financial groups in the Northern Territory, South Australia and Western Australia when the alarm was first raised - and she fears it could be the tip of the iceberg.
“There was well over 300 cases that was collected by the financial counsellors and their services, but only a small amount of people actually wanted to tell their story to the ACCC,” she said.
“I think we’ll continue to see it for a little while, I am sure in terms of those cases that Telstra will be working with the financial counsellors to resolve those issues.
“Financial counsellors in our remote communities identified that they were seeing a lot of Aboriginal and Torres Strait Islander clients who had these Telstra accounts.
"The products they were getting there was multiple devices and sometimes when they’d take them back to their communities there was no mobile coverage.
“We put the word out…and our counsellors were seeing people with huge Telstra debts and discovering that they were given multiple devices, the phones didn’t work out in communities.”
Managing Director of MoneyMob based in Alice Springs, Carolyn Cartwright said hundreds of vulnerable customers had been locked in contracts - many ending up with debts of thousands of dollars.
Managing Director of MoneyMob Carolyn Cartwright said financial counsellers had uncovered some communities were almost half a million dollars in debt from post-paid phone contracts.
“Three years ago, we started consistently seeing people coming to us with debts, people were coming out of stores with two or three phones, headsets, tablets, speakers," she told NITV News.
"And people were ending up with huge bills and debts and we said, these are all looking similar ‘what is going on here?"
Ms Cartwright said they started liaising with other financial counsellors and services and found a consistent pattern - with debts piling up in Indigenous communities across Australia.
“We began to see the issue to the extent where we were kind of up around the almost half a million dollar mark in debt, just on the APY lands landline, which has a population of around 2000 people.
"We found that the same thing was coming up for them -in Broome and in Darwin. And so we started working together and collating the details of what we were seeing."
It was then that the investigation was sparked when they went to the ACCC with their concerns.
“They were quite shocked about what we were saying. And so they started to look into it,” she said.
Ms Cartwright said she was concerned there may be others out there with historical debts from the practices and urged people who think they may be affected to contact a financial counsellor.
"We believe there's probably still a fair bit of legacy debt out there...
"People who think they have been in this situation where they've been sold a contract that they didn't understand and they've gotten into trouble or that they think that there was something not right about the sale.
"Talk to a local financial counselor coming out of the conversation. Let's check it out and make sure that it really all was as it should."
The company faces a $50 million dollar penalty but the Federal Court is yet to decide if that is appropriate.
Telstra CEO Andrew Penn has apologised and said it was refunding customers and waiving debts.
“While it was a small number of licensee stores that did not do the right thing, the impact on these vulnerable customers has been significant and this is not ok," Mr Penn said.
“We have taken steps to provide full refunds with interest, waived debts and allowed most customers to keep their devices to help make things right.”
