AGL Fined $25 Million for Exploiting Centrelink Customers in Four Year Payment Scandal

Energy provider AGL has been slapped with a record $25 million fine after the Federal Court found the company unlawfully deducted funds from former customers using Centrepay, a bill-paying service for Centrelink recipients. Over a four-year period starting in 2016, AGL’s actions affected 483 individuals, siphoning an average of $1,000 from each person.

What Happened?

AGL’s conduct involved over 16,000 breaches of the law, targeting vulnerable Centrelink recipients who relied on Centrepay to manage their utility bills.

Key Details:

1. Who Was Affected?
   • 483 individuals, many of whom were no longer AGL customers, had funds deducted from their Centrelink payments.
   • These overcharges totaled hundreds of thousands of dollars.
2. How Did It Happen?
   • AGL continued to deduct payments through Centrepay even after customers ended their contracts.
   • This practice violated the National Energy Retail Rules, which are designed to protect consumers.
3. When Was It Discovered?
   • The issue came to light in 2020, though similar behavior had been flagged back in 2013, when AGL received a formal warning and promised to rectify the problem.
   • Despite this, the unlawful deductions resumed in 2016.

AGL’s Response

AGL has faced significant backlash for its actions, including its lack of compensation or apology to those affected. In a statement to the Australian Stock Exchange, the company expressed disappointment over the incident and indicated it may appeal the penalty.

Key Comments:

• Josephine Egan, Chief Customer Officer:
  • Told the court, “It’s very difficult to understand why this happened.”
• AGL’s Statement:
  • “AGL respects the decision of the Court… As the penalty is significantly higher than expected, AGL will closely review the Court’s judgement and consider whether to appeal.”

Regulatory Action

The Australian Energy Regulator (AER) pursued AGL in court, resulting in the largest fine ever imposed on a company by the regulator. In addition to the fine, the court ordered AGL to implement compliance systems to prevent future breaches.

AER Chair Clare Statement:

“We expect retailers to have the policies, systems, and procedures in place to give consumers their money back if they have been overcharged and to provide the protections they’re entitled to under the National Energy Retail Rules.”

How Does Centrepay Work?

Centrepay is a free service that allows Centrelink recipients to allocate part of their payments toward regular expenses, such as rent, utilities, and phone bills.

Key Features:

• Payments Are Automatic:
  • Services Australia deducts money directly from Centrelink payments and sends it to the nominated business.
• Last Deduction:
  • Centrepay is the final deduction made from a Centrelink payment before the recipient receives the remaining funds.
• Registered Businesses Only:
  • Payments can only be made to businesses registered with Services Australia.

AGL’s actions highlight the importance of robust compliance systems for businesses handling vulnerable customers’ finances. While the $25 million fine underscores the seriousness of the breaches, the incident has also raised awareness about the need for transparency and accountability when dealing with Centrepay customers.

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