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Phone providers accused of dodgy credit practices

Phone providers accused of dodgy credit practices

Thousands of Australians have filed complaints after being sold phone plans they couldn’t afford, according to a new report.

The Telecommunication Industry Ombudsman report, called ‘Sales Practices Driving Consumer Debt’, noted examples of consumers being sold unaffordable post-paid plans.

“Consumers themselves rarely complain about inadequate credit assessments; rather this is the language of representatives such as legal centres and financial counsellors,” the report said.

“Consumers usually complain about not being able to repay their telecommunications debt and only when we examine the complaint in detail might it become evident the underlying cause was an inadequate credit assessment.

“This differs from a consumer falling into financial hardship from an intervening event such as illness or unemployment.”

Four problems, four solutions

The ombudsman’s report identified four “common” selling practices that induce some consumers to overspend – and made four recommendations to fix these problems.

Providers conducting credit assessments based on their risk appetite, not the customer’s ability to make plan repaymentsProviders should make “reasonable enquiries” about the customer’s ability to make plan repayments
Staff being incentivised to use high-pressure sales tacticsStaff should receive “regular” training that focuses on ethics, and teaches them how to recognise and support vulnerable customers
Customers finding it easy to obtain multiple plansCustomers should face more questions and checks before buying multiple plans
Representatives on an account being allowed to make additional purchases without the account holder’s knowledgeRepresentatives on an account should not be able to make additional purchases without the account holder’s knowledge

Last year, the ombudsman received more than 167,000 contacts from residential consumers and small businesses.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.



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