Telecommunications Consumer Protection code doesn't go far enough to prevent phone horror stories
By Brigette Rose
Australians have come to expect a poor standard of service from our phone and internet providers.
Almost everyone you talk to has a horror story about their telecommunications company from bill shock to NBN problems and everything in between.
In fact, there were more than 165,000 complaints to the Telecommunications Industry Ombudsman in the 2017-18 financial year, and 846,454 complaints to telecommunications providers from July to December 2018.
The stories you don't hear often enough are about what telecommunications companies can get away with when it comes to very vulnerable Australians and the unbelievable harm this can cause.
At the Consumer Action Law Centre, we speak to clients on Centrelink who have been offered upgrades only to find their monthly bills doubled or tripled, making their new phone completely unaffordable.
Another client told us he was able to re-contract with Telstra over and over without checks into his credit history or employment status, and apparently no "red flags" raised on his Telstra payment history despite clear payment difficulties.
Recently, the Australian Competition and Consumer Commission (ACCC) confirmed it was investigating Telstra for selling "unaffordable contracts" to vulnerable Indigenous Australian people.
The details of the alleged breaches confirm what many consumer groups and financial counselling services have known for a long time: telecommunications providers' sales practices exploit vulnerable Australians by selling them outrageously expensive phone contracts.
Many customers will never be able to afford these contracts, they instead accumulate thousands of dollars' worth of unpaid bills and become trapped in debt.
Change coming today
So, what's the solution?
The revised Telecommunications Consumer Protection code takes effect on August 1. It was heralded by industry as the answer to protect vulnerable customers.
Disappointingly, the so-called "consumer protection" code does not provide the answer to preventing this harm. In fact, it fails to effectively restrict harmful sales and billing practices.
This comes as no surprise given the code is all but determined by industry itself with consultation that is tokenistic at best.
Ultimately, to stop the deliberate mis-selling of expensive post-paid phone plans, telecommunications companies need to be held to the same standard as other companies that offer credit.
Popular telephone plans cost $1,500 to $3,000 over a 24-month period, excluding excess data charges. Once these charges are added on, debt amounts can ramp up substantially.
These contracts are not unlike a small loan. And just like a loan, unpaid debt from a phone contract can be sold to a debt collector.
Unlike other lenders, however, telecommunications providers aren't required to do a genuine affordability assessment when offering products and services.
The new Telecommunications Consumer Protection code imposes some new obligations, but they're certain to be ineffective.
Providers will be required to obtain some details from new customers and to conduct a credit check, but they won't have to consider the purchaser's overall financial position to determine whether bill payments will cause hardship or difficulty.
The code doesn't even require providers to ask about the purchaser's existing expenses or debts they might have that could make the phone plan unaffordable for them.
Phones are an essential service
It's even worse for existing customers. The code lets providers assume their existing customers' circumstances are the same as when they took out their first contract, and only need to check their past payment history. There is no need to ask whether they are still employed, if they are looking after any dependents, or if anything else in their lives has changed that might affect their financial stability.
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Many consumers prioritise their phone bills over others, including utilities, accommodation and even food, because phones are so integral to social participation. Simply checking the customer's past payment history won't show whether a customer has forgone lunch the week before their phone bill was due, or whether they have taken out multiple payday loans to cope.
These weak and limited checks facilitate the expensive upsell, a tactic we all know of from experience in dealing with telecommunications suppliers. People of course need access to a phone that they can afford. What they don't always need is a high-end service that is the most profitable for the provider.
Telecommunications are an essential service, and it's time providers started acting as utilities. Utilities are established to provide a service to the community, not to make a quick buck from the poor. These companies need to move away from treating customers as a sale and damning families with unsustainable debt.
Given the telecommunications industry obviously can't self-regulate, it's also time for the Government to step up. Other sectors like energy and finance aren't able to write the rules that their companies abide by. Consumer protections are set by the Parliament, not industry itself.
Telecommunications providers should no longer be treated as special by being allowed to write their own rules, and instead be subject to standards the community expects.
Brigette Rose is a senior policy officer at Consumer Action Law Centre.