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Highlights
- Optus faces legal scrutiny over sales practices
- $100 million penalty proposed for consumer law breaches
- Focus on compensation, internal reforms underway
Optus (ASX:SGT) has agreed to a proposed penalty of $100 million following serious allegations of unconscionable conduct in its sales practices, as revealed through legal action initiated by the Australian Competition and Consumer Commission (ACCC). The telecommunications provider is under spotlight for the mis-selling of mobile devices and service contracts to over 400 vulnerable consumers across 16 retail outlets between 2019 and 2023.
The Allegations in Detail
The ACCC claims that staff at Optus stores sold unaffordable, unnecessary, or unwanted phone plans and devices to customers facing significant disadvantages. These included individuals with mental disabilities, cognitive challenges, limited financial literacy, or language barriers. A large number of the affected consumers were First Nations Australians residing in regional and remote communities.
These consumers reportedly accumulated substantial debts and, in several instances, were pursued by debt collection agencies despite internal reviews by Optus regarding the legitimacy of these sales. The ACCC further alleges that the telecommunications giant failed to implement adequate controls to prevent such exploitative practices.
Legal Action and Agreement
Under the terms of a joint submission, the ACCC and Optus have asked the Federal Court to approve the $100 million penalty. The Court will now assess whether this amount is appropriate, and may also issue additional orders including enforceable commitments.
As part of the proposed agreement, Optus has undertaken to enhance its internal systems and to provide redress to affected consumers, contingent upon the court's endorsement.
Broader Market Implications
This development sends a strong compliance signal across the telecommunications and consumer services space within the ASX200 stocks. It underscores the growing emphasis on ethical sales conduct and robust oversight mechanisms, particularly among companies catering to vulnerable populations.
Looking Ahead
If the Federal Court approves the proposal, this case may set a precedent for how consumer protection laws are enforced in the retail and telecommunications sectors. It also places pressure on other ASX200-listed players to double down on transparency and responsible practices, especially as regulatory scrutiny continues to intensify in the post-pandemic era.
Optus (SGT) now faces the dual challenge of repairing reputational damage and ensuring long-term compliance in a rapidly evolving regulatory landscape.
