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· Posted on
May 18, 2021

Telstra gets whacked with near-record fine for some unethical behaviour

Telstra's record fine set a precedent for unethical behaviour in Australia - but what exactly did Telstra do?

What's the key learning?

  • Businesses create incentives to encourage results - but when those incentives are purely financial, it can lead to unethical behaviour.
  • Telstra knew its systems of incentives led to unethical sales but decided to turn a blind eye

WHAT DID TELSTRA DO?

Telstra has been hit with a $50 million fine for selling mobile phone plans to Indigenous Australians, which left them with major debts. This is the second biggest fine in the history of Australian consumer law. Ouchh!

If you're wondering that's:

  • 7,812 Big Macs
  • 757 Tesla Model 3's
  • A 1 bedroom apartment in Sydney?

Telstra sold post-paid mobile plans to 108 Indigenous consumers - despite knowing these consumers did not understand the details of the plans and could not afford them.

As a result the judge said that Telstra’s bonus system led to “improper sales practices” by its staff.

SO, WHAT IS THE KEY LEARNING HERE?

Businesses use financial incentives and perks to encourage staff to achieve certain milestones. But when these incentives are purely financial - it can misalign staff and customers.

Telstra was aware that its licensees paid financial rewards to sales staff - and that that this system had the potential to encourage improper sales practices.

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