Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Hansard source

This evening I rise to speak out on behalf of the thousands of small businesses that are currently caught up and experiencing great personal, financial and legal distress through something that is called the ‘telco scam’. This scam has involved unscrupulous telecommunications companies going to small businesses, offering them what they claim to be ‘a deal too good to be true’ that would see a reduction in their telecommunications costs—‘free’ equipment, as it is described—whitegoods and even a home entertainment system all bundled together in a contract that is supposed to be in the interests of the customer. What has happened on far too many occasions is that all of this has ended in tears and in financial hardship and, sadly, in far too many cases, in litigation. In Sydney’s courts there are at least 29 cases relating to this scam on one day in the Downing Street complex.

Tonight I am calling on the financing companies who are sitting behind this scam. They are benefiting from small businesses being lured into entering into telecommunications contracts believing that they are signing up for telecommunications services while they have actually been duped into signing up for financing contracts. There have been cases where telecommunications companies have folded and are not in a position to continue to provide telecommunications services to their customers. As the small business has sought alternative telecommunications providers and has tried to formally cancel the contract with the now defunct telecommunications provider, they are told that there is a financing company involved and, to their surprise and bewilderment, that they have outstanding financial obligations.

This scam has seen people enter into equipment financing contracts unknowingly—and I am trying to find words that are careful, Mr Deputy Speaker, because there are litigation matters before the courts at the moment—but, by any measure, this is hardly honourable conduct. By any measure this has been small businesses duped into entering into financial obligations not presented to them by the telecommunications company representative. The representative, in fact, was representing the deal being put to them as somehow involving free equipment and free entertainment and audiovisual technology and free whitegoods as part of a bundled deal of telecommunications services that included these free items.

What has happened is that these ‘free’ items are not free. These free items have grossly exaggerated and inflated prices attached to them and are being financed through financing company agreements that the small-business is told they have entered into without their knowledge. There are a number of companies involved around the technology leasing space and in the equipment leasing service area, some of them involving some big companies, some of which I have spoken with. But all of them seem to be acting with great haste to try to prosecute recovery action involving these small businesses while the very contracts on which that recovery action is based are being challenged by the ACCC in comprehensive court proceedings that have been going on for almost two years now.

I say to those financing companies: back off. Back off from heavy-handed litigation designed to spook small businesses into paying funds that may well not be able to be recovered if the ACCC action finds that these contracts are illegal and unenforceable. If that action proceeds and if these contracts are found to be unlawful and action is being taken that has caused grave financial harm to those small businesses and families—some of whom have been declared bankrupt in the name of thousands of dollars and in some cases tens of thousands of dollars and in other cases hundreds of thousands of dollars around leasing arrangements that they did not know they were entering into, that were not presented to them in that light, that were supposedly for free equipment and free technology—there will be repercussions.

My advice to those financing companies is: back off. My advice to the ACCC is: thank you for your investigation but do, please, get on with it. My empathy—and I hope all of the support that this parliament can offer—goes to the many thousands of small businesses terrified about the litigation that they are now subjected to, and I say to them: we hear you and we feel the pain. We are concerned about the financial consequences of this litigation and I hope through our actions as a parliament and through the ACCC we can bring you some comfort and not to see your assets, your home, your businesses and, in many cases, your personal wellbeing shunted to the wall prematurely on the basis of very, very dubious contracts that I do not think will pass the test at all.

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