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Telcos face class action over "unlawful" late payment fees

Customers hit with late payment fees by Telstra, Optus and Vodafone are being asked to join a class action, as lawyers deem these fees "unlawful".

Image by Bloomsberries, CC BY-ND 2.0

Telstra could soon be facing a big bill as lawyers launch a class action seeking reimbursement for customers charged late payment fees.

The legal action is being brought by ACA Lawyers which alleges that "late payment fees are an unlawful penalty" and that "customers are entitled to be reimbursed for the fees they have been forced to pay their telcos which exceed the true cost to the service provider".

While the initial action is against Telstra, ACA Lawyers is also proposing to commence class action against both Optus and Vodafone.

Since 2000 Telstra, Australia's largest telco, has charged customers a flat fee when they pay their bills late. It is currently $15 if the outstanding amount is $70 or more. Similarly, Vodafone charges a late payment fee of $10 per late payment, regardless of the amount of the payment. Optus charges its mobile customers a flat late fee of $15 per late payment if the outstanding amount is more than $50, plus 2 per cent interest above the prime lending rate charged by ANZ Bank if the unpaid amount exceeds $100.

The telcos have collected hundreds of millions of dollars in late payment fees, often from the people who can least afford them.

The action follows a similar case against ANZ, Citibank and Westpac to reclaim hundreds of millions of dollars in late fees. According to ACA Lawyers, in the ANZ case "the court determined that the loss actually suffered by ANZ in respect of most of the fees it charged its customers was as little as 50 cents".

ACA Lawyers is seeking registrations from affected Telstra, Optus and Vodafone customers on its website, with the firm expecting the action to take between one and three years.

"The damages we will be seeking on your behalf are the difference between the late payment fees you paid and the actual costs to the telco incurred as a result of your late payment," ACA Lawyers said.

In a statement on the issue, Telstra said:

We will review the claim when we receive it. We believe our late payment fees are reasonable in light of the costs we incur and we will strongly defend any claim we receive.