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Fines, warnings and the ACMA’s 2021-22 priorities: The telco industry in May

25 May 2021

#Technology, Media & Telecommunications

Published by:

Louise Almeida

Fines, warnings and the ACMA’s 2021-22 priorities: The telco industry in May

The telco industry has seen a lot of regulator activity in May, including the announcement of a number of large fines and the 2021-22 compliance priorities of the Australian Communications and Media Authority (the ACMA).

50 million reasons to protect your vulnerable and disadvantaged customers

The headlines have been dominated this month by the announcement of a Federal Court order requiring Telstra to pay a $50 million penalty. The penalty was in response to previous findings that Telstra had sold post-paid mobile phone contracts to over 100 Indigenous consumers that didn’t understand and couldn’t afford the contracts. Telstra admitted liability and gave the Australian Competition & Consumer Commission (ACCC) a court-enforceable undertaking. Telstra has said that it has since worked towards waiving debts, issuing refunds and putting in place measures to minimise the risk of the conduct happening again.

All providers should look to introduce and improve staff training in dealing with vulnerable and disadvantaged customers, including identifying these customers and developing strategies to help ensure they fully understand the commitments they are making.

The ACMA has made the protection of vulnerable and disadvantaged telco customers, and compliance with the relevant obligations in the Telecommunications Consumer Protections (TCP) Code, a 2021-2022 compliance priority.

Telstra fined $1.5m for failing to transfer numbers

There is no doubt many telco providers were impacted by COVID-19, especially those who had transferred certain operations offshore. One of the impacts on Telstra was that its offshore team responsible for processing transfer requests was unable to work as usual during lockdowns.

Local number porting allows customers to keep their existing number when transferring providers and is important in facilitating competition between providers. From March to July 2020, Telstra suspended its local number porting operations. As a result, 42,000 services were not ported from Telstra to other telcos or from other telcos to Telstra. The backlog was not cleared until October 2020.

The ACMA has issued Telstra a $1.5 million infringement notice and a direction to comply with the Local Number Portability Industry Code. If Telstra fails to comply, court-imposed penalties of $250,000 per contravention may apply. The ACMA stated it took the impacts of COVID-19 into account when determining the penalty amount and its enforcement actions.

ACMA turns up focus on phone scams and ID checks

Another focus for the ACMA in the compliance priorities for 2021-22 is on phone scams.

The ACMA has introduced new rules to require telcos to identify, trace and block scam calls, and use better ID checks when transferring mobile numbers to other providers. Telcos are required to have rigorous processes for customer verification in place, such as multifactor authentication or in-person identification. The rules are designed to prevent identity theft.

In an early demonstration of the priorities, this month the ACMA has formally warned Telstra, Medion Mobile and Optus for failing to sufficiently verify people’s identities before transferring their mobile numbers.

The ACMA found that Telstra was in breach of the identity verification rules 52 times, Medion Mobile 53 times, and Optus one time.

The ACMA warned that telcos that breach the identity verification rules could face fines of up to $250,000 per contravention but has only issued formal warnings at this stage.

Lycamobile fined for customer data failures

In a busy month, the ACMA has also penalised Lycamobile $604,800 for failing to provide accurate customer information to the Integrated Public Numbers Database (IPND) and failing to comply with ID check rules before signing up customers, in accordance with its obligations. The database is used by emergency services when responding to 000 calls.

The ACMA noted the breaches could put people’s lives in danger, and failing to conduct proper customer ID checks could also prevent police from identifying mobile phone owners during investigations.

Due to the ACMA finding that Lycamobile failed to comply with its obligations over a prolonged period, Lycamobile was also required to conduct an independent audit of its systems and processes and to apply improvements.

Time to prioritise

The above actions demonstrate just some of the multitude of regulations that telcos are required to comply with and the willingness of the regulators to enforce these obligations.

As well as the compliance priorities discussed above, such as the protection of vulnerable and disadvantaged customers and a focus on phone scams and ID checks, the ACMA also announced a further four priorities for 2021 to 2022 this month. While not only relevant to the telecommunications industry, these additional priorities are:

  • telco complaints handling for small business customers, including how long it takes to resolve them
  • 5G and electromagnetic energy (known as EME), including a focus on ensuring emissions meet recently revised Australian standards
  • financial services marketing by SMS, email and phone, again with a focus on vulnerable consumers
  • online gambling, including continuing to disrupt illegal offshore gambling activity by focusing on affiliate websites that advertise or promote online gambling services.

Your business should look at the extent to which these priorities relate to your activities and make compliance with these obligations a priority.

Authors: Emily Booth & Louise Almeida

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Louise Almeida

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