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Phone providers accused of dodgy credit practices

Phone providers accused of dodgy credit practices

28 Feb, 2019 - 2 min read

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

Nick Bendel

Property & Personal Finance Writer

A property and personal finance writer, Nick Bendel covered property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.