May 13, 2021

“They conned me into it”: Telstra accused of overselling its products to older Australians

Elderly woman mobile phone

Though younger generations don’t necessarily continue to value loyalty so highly, older Australians continue to, and this extends in many cases to a loyalty to Australia’s largest and oldest telecommunications provider, Telstra.

Many older Australians have a connection with Telstra dating back to the days the company was a highly trusted, government-owned service provider, long before the telco introduced competition in 1997.

Many older consumers even today continue to refer to the company as ‘Telecom’, though the name change dates back to 1995.

Australian Communications Consumer Action Network CEO, Teresa Corbin, told consumer advocates CHOICE that brand loyalty to Telstra can mean older Australians aren’t always getting the best deal, and it can sometimes make them vulnerable to manipulation.

CHOICE has now identified cases in which Telstra has taken advantage of older Australians because of their age, and these unsuspecting clients are stuck with paying higher bills for products and services they didn’t need or ask for.

Two former Telstra staff members have also spoken to CHOICE, and revealed a sales-focused culture with little regard for whether the products they are selling are wanted or needed.

‘Free’ devices end up costly and not needed

According to CHOICE, when Nicola Clement’s father’s health was declining last year, her mother called Telstra to transfer his account to her name. Shockingly, Telstra saw this call as an opportunity to make a sale.

Over the course of the conversation with Telstra, Nicola’s mother, who is 68, acquired two tablet devices which she believed were free.

But when Nicola’s father died, and she was going through their affairs, she found her parents had signed up to a 36-month repayment plan for the devices – and it would cost them almost $300 per device to cancel the arrangement.

Nicola’s mother is now newly bereaved and left paying for devices she neither needs nor wants. One device remains in its box, unopened.

Image supplied: Nola Lehninger, 91, last year was signed up by Telstra for a $15 per month internet plan, despite the fact she does not own a computer or use the internet.

 

“They take advantage of someone who is very old”

In another case identified by CHOICE, Nola Lehninger, 91, last year was signed up by Telstra for a $15 per month internet plan, despite the fact she does not own a computer or use the internet.

Nola does not need a mobile phone, and only ever uses her landline.  

A carer who assists Nola had to make multiple complaints to Telstra before the company agreed to cancel the monthly fees and refund the additional money she had paid. 

But the experience has been scarring.

“Maybe they take advantage of someone who is very old like me,” Nola told CHOICE.

“He conned me into it”

And in yet another case uncovered by the consumer advocates, 68-year-old Leonie Barke said the manager of her local Telstra store upsold her to an upgraded mobile package, which now costs her $175 a month even though she was perfectly happy with her previous plan of $100 a month.

She has been told she is on a 24-month plan and can’t get out of it, something she says she wasn’t told at the time of sale.

“I think he conned me into it. He was on a commission from it, and I think he saw me as a bit of a softy, which I’m not,” she said.

Aggressive tactics

CHOICE has also spoken to David*, who worked for Telstra for more than 15 years, leaving their employment only earlier this year. 

Though David only worked in sales up until 2010, he told CHOICE the sales culture at Telstra is highly competitive and those who achieve the highest sales results are rewarded with attractive bonuses, such as trips overseas.

David said sales staff worked in teams, and there was always fierce competition. Sales progress was tracked and displayed publicly on boards in the office for all to see.

Another former Telstra staff member, James, who left the telco five years ago, said he was reprimanded for not upselling a phone insurance plan to older customers who he believed didn’t need the plan.

 “It’s all sales focused, it’s not even about matching to needs or anything, it’s all profit motive. I know it’s a business, but it has a duty to its customers not to be doing some of these aggressive sales tactics,” James told CHOICE.

Telstra fined

This is not the first time Telstra has been accused of unconscionable conduct.

This morning the Federal Court has ordered Telstra to pay a $50 million penalty, plus costs, for its treatment of 108 Indigenous customers in rural and remote regions of Australia.

It is the second-highest penalty ever imposed under Australian consumer law.

The penalty is being imposed after Telstra admitted it had acted unconscionably towards 108 customers who were sold phone plans they could not afford and did not understand.

In some of the cases, several phone plans were sold to a single customer all on the same day, and they subsequently ran up thousands of dollars in charges.

Some of the customers were pursued by debt collectors, adding to their trauma.

According to an ACCC investigation, the Telstra board and senior executives were unaware of the aggressive sales tactics, but the company had no checks and balances in place to detect or prevent this type of conduct.

“This should never have happened”

Peter Gartlan from Financial Counselling Australia told the ABC the decision was welcomed.

FCA recently surveyed financial counsellors, and found mis-selling by telecommunications companies is a major problem. 

When asked how financial counselling clients are being affected by issues with telcos, at least 80% of the financial counsellors surveyed said mis-selling or overselling contributed to their client’s financial woes.

FCA CEO, Fiona Guthrie, told CHOICE that as long as the telecommunications industry is constructed around a commission-based sales model, these types of problems will continue.

“The whole industry works on a commission-based sales model and as soon as you’ve got commission-based sales, you incentivise poor practices, which take advantage of people’s vulnerability,” she told CHOICE. 

 Guthrie has called on Telstra, and other players in the telecommunications sector, to move away from a commission-based structure. 

“This model is too fraught with danger,” she said.

Corbin told CHOICE that Telstra salespeople have a lot of power when it comes to negotiating with older customers.

“As far as the elderly are concerned, Telstra has stopped caring”

David, who also worked in Telstra’s complaints department, told CHOICE Telstra isn’t meeting the needs of its older customers or properly responding to complaints about mis-selling when they arise.

“As far as the elderly are concerned, I think Telstra has stopped caring. 

“It’s a technology company, and technology is moving forward and I don’t think they have put things in place to make sure that part of their customer base is being kept in touch or being provided the assistance that they need,” he said.

Telstra: We’ve changed

A Telstra spokesperson told CHOICE the company takes the issue of over-selling seriously, but it pointed out it also does work to support older Australians, and it is proud of these efforts. 

 “We have no tolerance for overselling or mis-selling, our model is strongly focussed on the needs of the customer,” the spokesperson said. 

 “We have a balanced scorecard approach that takes into account customer outcomes, compliance and sales results as part of the remuneration model for staff,” they said. 

Telstra said they have made “significant changes in recent years” and that customer experience now contributes up to 40% of staff payment outcomes.

“We take responsible selling extremely seriously and we don’t shy away from the fact that we have made some mistakes previously,” the spokesperson said.

Has this happened to you or someone you know? Share with us in the comments below. 

*Not his real name. For more information you can visit CHOICE.

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