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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.
| Problem | Recommendation |
|---|---|
| Providers conducting credit assessments based on their risk appetite, not the customer’s ability to make plan repayments | Providers should make “reasonable enquiries” about the customer’s ability to make plan repayments |
| Staff being incentivised to use high-pressure sales tactics | Staff 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 plans | Customers 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 knowledge | Representatives 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.
Disclaimer
This article is over two years old, last updated on February 28, 2019. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent credit cards articles.
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