PDB service: Telstra offers refunds after customers are hit with unauthorised charges

Telstra Corporation Limited Stock Oversold

Thousands of Telstra customers were unknowingly signed up to subscription services or charged for content including ringtones and games, without having to enter payment details or verify their identity.

The ACCC has today commenced proceedings against Telstra, under a delegation of power from ASIC, alleging that it made false or misleading representations to consumers in relation to its third-party billing service known as "Premium Direct Billing" (PDB). The Federal Court is yet to decide on final orders, with some reports claiming that penalty could total $10 million.

"You may have got on the app thinking, "I've got to put in a credit card or something to sign up, and so until I've done that I haven't signed up", ACCC chairman Rod Sims said. Telstra has admitted that more than 100,000 customers may have been affected and charged.

According to Brady, this was meant for customer's "convenience" but "we did not get that right".

In a statement, the ACCC said Telstra was aware from early 2015 the service led to a large number of people being charged for content without their knowledge or consent.

The ACCC said customers were not adequately told they would be billed directly by Telstra even if they accessed content unintentionally, with no safeguards such as a PIN in place.

In a statement issued on Monday, Telstra Group Executive of Consumer & Small Business Vicki Brady said PDB services had been introduced by a number of mobile providers to give customers a convenient way of charging certain types of online services to their phone bill.

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Sims also said Telstra made it hard for customers to escape PDB services, and as a result: "Customers were often left frustrated and out of pocket as a result of Telstra's conduct".

As part of this resolution, Telstra has ceased operating the PDB service entirely. Those complaints lead the ACCC to take the telco to court, with the end result being that Telstra has cancelled the service effective of March 3.

The service allows Telstra customers to purchase digital content from third-party developers that sell their content outside usual app marketplaces like Google Play or the App Store, with charges automatically applied to Telstra customers' pre-paid or post-paid mobile accounts.

Telstra will no longer support direct billing for services provided by Buongiorno Australia, Netsize, Mobipay Pty Ltd, Ansible and Digital Turbine.

He added that watchdog was aware that some carriers offered similar PDB services, and would take action if it believed other carriers were breaching the law.

Direct carrier billing service or premium direct billing are the same service.

When the ABC reported on Telstra's announcement to halt the services, it wrote that Optus was reviewing its third-party content relationships, following a report by the Australian Communications Consumer Action Network (ACCAN) that revealed 12 per cent of respondents experienced unexpected third party charges on their mobile phone bills.

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