When Vicki Campbell walked into the Telstra store, she just wanted a cheaper phone plan. The $30 a month she was paying was unaffordable on her disability pension.
Telstra sold her a new smartphone, a tablet, and a two-year contract for $90 a month.
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Telstra posts profit slump
Increased competition in the mobile space is being blamed for Telstra's half-year profit slump.
She told the sales representative she was "computer illiterate" and did not know how to use a tablet. No problem, said the representative – she would add a help-line service to the contract for an extra monthly fee of about $15.
Ms Campbell, 59, is one of many vulnerable Victorians who are being treated badly by the big phone companies, a new report released today says.
The Financial and Consumer Rights Council report, Rank the Telco, slams the big three – Telstra, Optus and Vodafone – for having hardship practices worse than power companies, banks, even debt collectors.
The council conducts regular surveys of the practices of large companies including utilities and banks. It says today's telco industry behaves worse than any industry it has ever assessed. Of the three companies, "across all measures and overall, Vodafone came in at last place".
The report's criticisms include:
- Telcos frequently pushing complex, unaffordable and unnecessary deals on to low-income customers and those on welfare, leaving contracts bloated with "unneeded and unsuitable products and upgrades".
- Expensive multi-device bundled contracts are being sold to customers who cannot afford them after a "bare-minimum credit assessment".
- 24-month lock-in contracts pose the biggest risk to customers. Companies are required to undertake a credit assessment before issuing them, but financial counsellors surveyed believe in many cases this is not being done correctly.
- When customers fall behind in their repayments, they face "long call-wait times, non-responsiveness, and, often, a lack of empathy from customer service staff". Customers are often unable to get past front-line call centre staff to talk to the company's hardship team.
- Financial counsellors find dealing with telecommunications companies' hardship teams much harder than in other sectors. Some reported being unable to get through to a real person at all.
- Customers who claim they have fallen behind on payments because of family violence meet "disbelieving or dismissive responses".
Many financial counsellors surveyed said they often came across clients who had been sold multiple phone plans, despite being on Centrelink.
"Telstra needs to ask the customer's source of income, and if it's solely Centrelink, be aware that a $200 per month plan will cause hardship," wrote one.
"Vodafone gave a two-year contract to my client with no income, on a temporary visa – no access to Centrelink payments and no right to work. Are they crazy?" wrote another.
When financial counsellors did help customers to cancel unaffordable contracts, they often found the phone companies signed them up again months later.
"They don't care about selling products that low-income people can't afford, especially in-store," wrote one counsellor.
Several counsellors claimed in-store salespeople were driven by commissions that encouraged them to sell inappropriate contracts to people on low incomes.
"The mobile phone has become an essential item for all Australians and it is time that we recognise that a mobile phone is no different to water and electricity," said Peter Gartlan, the council's executive officer.
The report is based on a survey of the Financial and Consumer Rights Council's network of around 200 not-for-profit financial counsellors based around the state.
"We're surprised by the results of the report, but we take it very seriously as we pride ourselves on serving our customers," a Vodafone spokeswoman said.
"Vodafone's complaints ratio is around 20 per cent lower than the industry average, and has been on a sharp downward trajectory over the past three years – declining almost 75 per cent since the beginning of 2014."
The ACCC's executive general manager of infrastructure regulation, Michael Cosgrave, said the ACCC was often petitioned by the telecommunications industry about improved services for customers.
"This report suggests that at least with the most vulnerable of consumers, they still have some work to do."
When Ms Campbell went back to the store and said she did not want the tablet and could not afford it, she was told she would have to pay a contract break fee of about $300 – a fee she could not pay.
They don't care about people like me," she said. "The take advantage of people who are computer illiterate, and on pensions or Centrelink."
A Telstra spokesman said: "We have the most extensive range of assistance programs in the industry for low income, vulnerable and disadvantaged customers.
"We know that connection to phone and internet services is vital for our customers when they are facing hardship, it's for that reason we have such an extensive range of assistance programs in place to keep our customers connected.
"We have received the report and are currently reviewing the findings."
Optus refused to comment.