Still reeling from the havoc brought about by the massive outages in February and March, Telstra is embroiled in yet another fiasco.

Furious customers are complaining that the company is scamming them of unwanted charges.

Telstra has entered into commercial agreements with subscription service providers wherein providers are allowed to bill Telstra customers for their online purchases through a technically legal payment system called third-party billing. This is a common practice used by major telcos, including Vodafone and Optus.

However, Telstra customers complain that when they accidentally click on a pop-up advertisement or webpage even just for once, their Telstra accounts are automatically billed, even if they had no intention of buying the product or service being advertised.

Vodafone and Optus use a "double click opt-in" process in which customers are asked twice before they continue to a second click to signify their intention to buy. Telstra is the only major telco that uses the "one click opt-in" method, according to initial investigations done by The West Australian, a daily newspaper published in Perth.

The newspaper also reported that the subscription service providers charge customers anywhere from $6 to $15 a week. Customers do not normally notice the charges for months, but one victim claimed that she had unknowingly been billed $4,000 in a span of more than two years.

Although third-party billing has been practiced for years, the Telecommunications Industry Ombudsman reported a 30 percent surge in customer complaints. Aside from the shady charges, other customers have complained that billings continue even if they have opted out of subscription.

A telco insider told The West Australian that it may not be easy for Telstra to give up its current third-party billing practice because it netted 30 percent of revenue from each subscription, resulting in multimillion-dollar windfalls for the company.

Telstra's Response

"We recognize that some customers have had a poor experience with these types of services. To help address this, we are in discussions with service providers about introducing a double opt-in process for subscriptions to help further safeguard customers from unwanted subscription charges," said a Telstra spokesman.

The spokesman explained that Telstra enforces several consumer safeguards so that third-party providers adhere to mandatory policies on advertising, promotion, pricing, buying process and opt-out procedures.

If customers have third-party billing concerns, they should contact the third-party service provider. If customers are not able to reach providers or are not satisfied with their response, Telstra can provide assistance by working back with providers to facilitate refunds, the spokesman added.

Telstra remains stronger than its rivals Vodafone and Optus in more areas but the still-mighty telco risks the exodus of customers if the third-party billing fiasco is not fixed.

Photo: Michael Coghlan | Flickr

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