21 November 2019

Telstra to buy back debt of remote customers ‘ripped off’ by unaffordable plans

Telstra has pledged to buy back thousands of dollars in debt, improve credit checks, and discipline staff in an effort to rebuild trust with vulnerable customers who feel ripped off.

The telco has embarked on changes to its sales practices amid an investigation by the Australian Competition and Consumer Commission (ACCC) and mounting public scrutiny.

Senior executives made the announcement during an unexpected trip to Western Australia’s far north, a region where some believe thousands could be affected.

The move has been cautiously welcomed by one community-based financial counsellor, though more details have been sought.

One customer is too many
Telstra has claimed those affected represent a small fraction of customers, but in Broome yesterday, Telstra’s executive for consumer and small business Michael Ackland admitted even one person was too many.

PHOTO: Telstra executive Michael Ackland (left) travelled to regional Australia to speak with Telstra employees and customers. (ABC Kimberley: Matt Bamford)
“It is completely in our interests to resolve these issues. There is no commercial upside having customers on plans they can’t afford,” he said.
An investigation by the ABC found dozens of Telstra customers were in serious debt after being sold contracts costing up to $250 a month.

Mr Ackland denied Telstra had been forced to act by the ACCC inquiry and media exposure.

“We’ve been working on these issues for a number of years,” he said.

In a bid to restore community faith, customers sold mobile phones and contracts they could not afford will have debts over $1,000 written off.

More efforts will also be made on credit checks and there will be a greater emphasis on cultural awareness training for staff dealing with Aboriginal customers.

“We’re willing to spend whatever it takes to buy back people’s debt if they’re in a position that they can’t afford to pay it back,” Mr Ackland said.
Reaching out
The telco said it had started contacting customers and financial counsellors.

PHOTO: Caitlyn Roe is one of potentially thousands of Telstra customers in serious debt due to unaffordable contracts. (ABC News: Amy Bainbridge)
After travelling to remote communities in Alice Springs, Mr Ackland said he had prepared to meet with community leaders in the Kimberley.

However, the true extent of the problem is not yet known.

Telstra has refused to disclose how many customers had been adversely affected by the sales tactics, or how much the company expects to pay out.

It is also unclear what action has been taken against Telstra partners already found to have done the wrong thing.

Devil in the detail
Broome-based financial counsellor Alan Gray has raised concerns about Telstra’s practices for several years.

PHOTO: Broome financial counsellor Alan Gray says Telstra’s changes are welcome but believes more detail is needed. (ABC News: Andrew Seabourne )
He said the announcement was pleasing but only a small step towards a solution.

“I have no doubts that [Telstra] genuinely wants to move forward … [but] this is absolutely not a victory,” he said.

“Since the ACCC investigation was made public in June they’re actually talking to us. So I see this as a positive first step.”

With many affected customers living in regional and remote communities, Mr Gray believes thousands more could be out there.

“We’ve really only scratched the surface,” he said.

“I would estimate somewhere between 10,000 and 20,000 people [are affected].”
Mr Gray called on Telstra to publicly commit funds to address the issue.

“I really don’t think we’ll know that they are serious until they publicly announce a large multi-million dollar budget for compensation and affordable home broadband,” he said.

The ACCC is yet to finalise its investigation.

 

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