The Federal Court has directed Telstra to pay a $50 million fine for knowingly ripping off Indigenous customers in remote communities across the Northern Territory, South Australia and Western Australia.

Consumer watchdog, the Australian Competition and Consumer Commission (ACCC), reached a settlement with Telstra last year in which the telco giant agreed to pay a $50 million fine as well as implement other reconciliatory measures. The Federal Court formally approved the settlement on Thursday.

Between 2016 and 2018, five Telstra-licensed providers knowingly sold phone plans to over 100 vulnerable Indigenous customers who could not afford to pay them off.

Some customers were living on government benefits and spoke English only as a second or third language. Many accumulated huge debts as a result, with one customer racking up a bill of more than $19,000.

In some instances, Telstra allowed these debts to be sold to third-party debt collectors.

The $50 million fine is the second highest penalty ever imposed under Australian Consumer Law, and ACCC Chair Rod Sims says it was “appropriate given the nature of the behaviour … which was truly beyond conscience”.

“Sales staff in these Telstra-branded stores used unconscionable practices to sell products to dozens of Indigenous customers,” said Sims.

“This conduct included manipulating credit assessments and misrepresenting products as free, and exploiting the social, language, literacy and cultural vulnerabilities of these Indigenous customers.”

Telstra chief executive Andrew Penn says the company fully accepts the court’s decision and is now vowing to rebuild trust.

“This brings an end to what has been a deeply challenging and disappointing chapter in our history and one in which we are already taking steps to fix,” Penn said.

“Again, I want to apologise to all of the Indigenous customers affected by this … We should have listened more carefully. We should have been more attuned to what was happening. We should have picked this up earlier.”

Penn said many of the measures agreed upon in the settlement with the ACCC are “well underway”, including setting up a First Nations hotline in Darwin.

In April, Reconciliation Australia revoked Telstra’s Reconciliation Action Plan after undertaking their own investigation on the matter.

Telstra has since taken steps to waive debts and is continuing to offer remediation to customers impacted by the rort who may have not yet come forward.

Financial Counselling Australia (FCA) also welcomed the Federal Court’s decision.

“This conduct should never have happened in the first place. The ACCC has now sent a clear message to corporate Australia and other telcos, that this sort of behaviour is not on. It causes harm to individuals and families,” said FCA coordinator Paul Gartlan.

FCA chief executive Fiona Guthrie AM said financial counsellors had worked for three years to see the ACCC action succeed.

“Today’s announcement is an important milestone but it’s not the end of our campaign to see mis-selling in the telecommunications industry stamped out.”

By Hannah Cross