Home Industry Market Telstra, Optus, Voda hit with class action on late fees
Telstra, Optus, Voda hit with class action on late fees Featured

Lawyers have announced a class action against Australia’s top telcos for what it says are illegal late fees. It is being financed by a British firm with a record of success in such cases.

Telstra, Optus and Vodafone are targets for a new class action on behalf of customers who have been charged late fees in recent years.

The telco action is being initiated by ‘specialist’ law firm ACA Lawyers. Its specialty is class actions, which are typically initiated by legal firms on a speculative basis, inviting affected customers to sign up at no cost. The firm then hopes for a win or an out-of-court settlement from which they can extract significant fees.

ACA’s move follows a similar action against Australia’s banks by another class action by another ‘specialist’ law firm, Maurice Blackburn. The Federal Court found in February that ANZ Bank's credit card late fees of up to $35 were "extravagant and unconscionable" because the real cost to the bank was around 50¢. That finding has now given Maurice Blackburn the legal underpinning for a class action against ANZ and other banks, which it initiated last week.

ACA no doubt believes that a victory for Maurice Blackburn in that case will greatly improve its own chances of a positive settlement. The firm has said it will initially target Telstra, which last week announced $4.28 billion in profits, but its website says that Optus and Vodafone are also in its sights, with separate actions tom come.

“Telstra customers who have paid a late fee to the giant telecommunication company are set to benefit from a multi-million dollar class action. ACA Lawyers alleges that late payment fees are an unlawful penalty. 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.

The Telstra, Optus and Vodafone class actions are being backed by one of the UK’s leading litigation funders, Harbour Litigation Funding, backed by £180 million in investor funding. Litigation funders make their money by speculatively financing the up-front costs of a class action, in the hope of a handsome return on their investment if the action is successful.

Founded only in 2007, Harbour Litigation Funding has become one of the largest and most successful firms of its type in an increasingly litigious world. The practice of funding litigation on spec goes by the obscure legal name of ‘champerty’ and was once illegal.

It is now part of the modern legal and commercial world, with its supporters claiming it is the ‘lifeblood’ of the legal system. Critics say it is a commercialisation of the legal process and leads to bullying, with targeted companies often settling rather than pay the crippling legal bills and adverse publicity that can be involved in defending the cases.

The firm’s website offers a fascinating insight into the world of modern litigation funding. “Harbour Litigation Funding works alongside claimants and lawyers to bring good cases to a successful conclusion. Claimants can also approach us directly.

“For some companies litigation funding frees up capital for other business purposes. For others, it allows good cases to be pursued that would otherwise not be able to proceed due to lack of funds.”

Class action specialists like ACA Lawyers offer similar arguments. They are modern day Robin Hoods, fighting David vs Goliath battles on behalf of the little people. ACA principal Steven Lewis said the firm’s legal proceedings will target Telstra’s late payments fees, which he argues represents an unlawful penalty because it does not reflect the actual loss to the company caused by the late payment. That is the same argument that is being successfully used against Australia’s banks.

Lewis said the action was about justice for the clients of Australia’s major telecoms companies. He did not mention the millions of dollars in fees his company would get from a successful action.

“Last week Telstra announced a massive profit which is built in part on revenue from late payment fees, often collected from families who can least afford it. Since 2000 hundreds of thousands of Telstra customers have paid late fees in the mistaken belief Telstra was entitled to charge the fee.

“But a recent court decision in relation to credit card fees found that late payment fees charged by banks are unlawful and that clients are entitled to get most of their money back. We will argue this is the same for the late payment fees charged by Telstra, Optus and Vodafone,” he said.

Lewis highlighted the fact that Telstra’s recent financial statement indicates it collected some $272 million for ‘late fees and other miscellaneous fees’ in the 2014 financial year, and said that the company’s accounts for the previous four years indicate the telco may have collected a further half a billion dollars in late and miscellaneous fees over that time. It all looks so easy:

“There is no upfront cost. Harbour Litigation Funding will cover the legal costs of the class action. If the claim is successful Harbour Litigation Funding will be entitled to a percentage of the damages which are awarded.” They sure will.

“We also propose to commence a class action against each of Optus and Vodafone. Funding arrangements for these claims will be announced soon. You have nothing to lose by registering now.”

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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