Telstra ‘Legal’ Third-party Billing Scam ‘Defrauds’ Mobile Users

Western Australian mobile ‘phone users have been caught up in an insidious online advertising campaign that is thought to have made millions of dollars for the telecoms provider Telstra. Over two thousand complaints were received by the Ombudsman from customers duped into subscribing for unwanted third-party services such as on-line games.

As the charges are embedded in the users’ regular mobile bills, many were unaware that they had been signed-up and were paying regular subscription charges until the news broke and some investigation was done. These continuous charges ranged from around $6 to $15 (Australian) per week. One victim claims that she lost as much as $4 000 over a two year period before the subscription scan was discovered.

Telstra has a commercial agreement with various subscription service providers that gives them customer ‘phone numbers for advertising purposes. These third-parties then send advertising to the user’s ‘phone in the form of a pop-up. If the user is not paying attention and clicks on the screen, a subscription is automated with a single click. This uses all the payment details gathered for the person’s mobile ‘phone billing. Though more than this, subscriptions are embedded in the Telstra charges and are almost invisible on the bill.

Apparently, this is a perfectly legal practice. The two other main mobile providers Optus and Vodaphone have similar subscription service providers from all around the World, though the difference is that they stress subscription methods must be TWO clicks, in order not to fool an inattentive customer. Then a second user interface is provided, giving a person details of the deal on offer.

Customers who did become aware of the suspect subscriptions tried to cancel them. This proved to be a problematic and drawn-out process, with subscription charges continuing throughout. After a subscription was finally terminated, the user was sent a bill for all the calls and messages that this entailed. One customer who complained directly to Telstra was advised by the customer service worker to take the matter further – the staff member was totally dismayed at the number of similar complaints coming into her.

A telecoms insider advised that the one-click deals had netted multi-millions, with the phone company netting 30% of all the collected subscriptions. Telstra declined to comment when asked about this.

Telstra are currently in discussion to introduce two-click subscribing. This will undoubtedly reduce their revenue from the various third-parties. This revenue shortfall will certainly be passed on to the long-suffering customer in some form, no worries!

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