Optus Hit With $100 Million Fine Over Unconscionable Sales Practices
Optus has agreed to pay a record $100 million penalty after admitting to unconscionable conduct in its sales practices that targeted more than 400 vulnerable Australians, including Indigenous customers, people with disabilities, and non-English speakers.
The Australian Competition and Consumer Commission (ACCC) launched legal action in October last year, accusing Optus sales staff of applying “undue pressure” to sell mobile phones and plans to customers who were unable to afford the services or who lived in areas without network coverage.
The misconduct occurred between August 2019 and July 2023, during the leadership of former CEO Kelly Bayer Rosmarin. Rosmarin stepped down following two major crises: the 2022 cyber attack and a national network outage in 2023. She has not commented publicly on the ACCC findings.
Current CEO Stephen Rue, who joined from NBN Co in November, issued a public apology and confirmed the dismissal of staff involved in the unethical conduct. Rue described the behaviour as “inexcusable and unacceptable” and said the company was undergoing a full-scale internal reform, including new credit checks, revised incentive structures, and tools to verify network coverage.
“Optus failed these customers, and the company should have acted more quickly when the misconduct was first reported,” Mr Rue said. “We’re taking responsibility and making sure it doesn’t happen again.”
The Federal Court is expected to approve the $100 million penalty, which Optus has already provisioned for in its financial accounts. The telco posted an underlying net profit of $136 million for the year ending March 31, meaning the fine effectively wipes out its annual profit.
It is the largest penalty ever imposed on an Australian telecommunications provider and the fifth-largest in the history of ACCC enforcement action. The most substantial penalty remains the $438 million imposed on private education provider Phoenix Institute.
The Optus case included serious breaches of consumer protections, with evidence of store managers falsifying documents to create fraudulent contracts. In one extreme instance, a store manager in Mount Isa used forged identification to enrol customers in contracts without their knowledge. The company then sold the resulting debts to third-party collection agencies.
ACCC Deputy Chair Catriona Lowe described the tactics as “predatory behaviour” and said the pursuit of debts despite internal investigations amounted to an egregious failure of corporate ethics.
“Some customers were chased by debt collectors for years after they had been signed up to plans they didn’t understand, didn’t want, or couldn’t use. It caused real emotional and financial distress,” Ms Lowe said.
Telecommunications law expert Andrea Kennedy of Hamilton Locke said the fine sent a strong message to the industry.
“This is a wake-up call. The magnitude of the penalty reflects not just financial harm, but the emotional and psychological toll on some of the most disadvantaged Australians,” she said.
The case echoes similar misconduct found at Telstra, which in 2021 was ordered to pay $50 million in penalties after signing up Indigenous customers to unaffordable phone plans.
Veteran telecom analyst Paul Budde said regulators were now clearly prepared to clamp down on corporate misbehaviour in essential service sectors.
“This is not just a financial slap on the wrist,” Mr Budde said. “It signals to the entire industry that vulnerable consumers are off-limits, and businesses must be proactive in ensuring ethical conduct at every level.”
The Federal Court will deliver its final judgment on the Optus penalty in the coming weeks.
