Top telcos fined over misleading NBN speed claims

Australia’s three biggest ISPs will collectively pay $33.5 million in penalties after admitting to making false or misleading representations to consumers about maximum NBN speeds.

Telstra has been ordered by the Federal Court to pay $15 million, Optus to pay $13.5 million and TPG to pay $5 million following legal proceedings brought against the companies by the Australian Competition and Consumer Commission (ACCC).

Each company was found to have made statements to consumers promising to tell consumers within a reasonable timeframe if the speeds they are paying for could not be reached due to the type or quality of their NBN connection.

But Telstra, Optus and TPG have admitted that these statements were false or misleading because they did not at the time have systems, processes and policies in place to ensure this.

According to the ACCC, the false or misleading statements affected nearly 120,000 consumers of the three operators in total and were made over a period spanning at least 12 months in 2019 and 2020.

ACCC Commissioner Liza Carver said the lapses the three operators admitted to represented breaches of Australian Consumer Law.

“Fast and reliable internet is a necessity for Australian households, and consumers need accurate information when choosing the best internet plan to meet their needs,” she said.

“These significant penalties reflect the seriousness of the breaches of consumer laws by these large and sophisticated businesses that should be better informed about their obligations towards their customers, particularly given the promises they made to their customers and in undertakings previously provided to the ACCC regarding speed claims for their NBN plans in 2017.”

The three operators admitted that by failing to notify consumers about underperforming services they had falsely represented to consumers that their NBN connections were capable of attaining the higher speeds advertised.

“Some customers may have paid for a 50 or 100 Mbps plan believing their NBN connection could support the higher download speeds, even though they would have been better off paying for a lower speed plan,” she said.

“It is illegal for businesses to make false or misleading representations to consumers about the performance characteristics, nature, standard or quality of products and services.”

Telstra, Optus and TPG have each implemented remediation programs and have already contacted impacted customers to provide a refund. TPG was meanwhile ordered to implement an Australian Consumer Law compliance program, while Optus was ordered to update its existing program.

Telstra already has compliance program obligations in place following the ACCC’s action in 2020 related to sales practices targeting Indigenous consumers.

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