Optus "deeply regrets" failing to meet expected customer service standards, the company said in a statement.
Deliberate and unconscionable conduct by staff earning commissions on phones and plans allegedly continued after senior managers became aware.
"We are looking at quite specific, deliberate conduct at both the sales level and management level," Australian Competition and Consumer Commission chair Gina Cass-Gottlieb said on Thursday.
In one incident, staff allegedly befriended a woman with an intellectual disability, arranged for her to return without her carer, then sold her multiple products, incurring debts the telco then pursued, Ms Cass-Gottlieb said.
Optus interim chief executive Michael Venter said the company apologised for the misconduct and the distress it caused, and developed policies to prevent it happening again.
"The misconduct alleged by the ACCC is unacceptable, and completely out of step with our company values and we accept that we need to protect all customers, including those experiencing vulnerability, from this type of behaviour," he said.
The company allegedly sought to claw back commissions but did not remediate customers.
Optus said it is issuing refunds and waiving debts.
"We regret that we did not remediate more quickly in some of these cases," Mr Venter said.
Other examples include Indigenous customers not being informed the Optus network did not cover their remote communities.
We've commenced proceedings in the Federal Court alleging Optus engaged in unconscionable conduct in contravention of the Australian Consumer Law when selling telecommunications goods and services to hundreds of consumers, that they often didn't want or need, and couldn't afford. — ACCC (@acccgovau) pic.twitter.com/egMhrY7UFqOctober 30, 2024
The alleged conduct occurred while Optus developed its first reconciliation action plan, released in May 2023, featuring commissioned artwork titled "Connected Communities".
It depicted Optus "surrounded by employees from across the nation who are committed to reconciliation and carrying out their duties with professionalism and integrity".
Licensees of Optus stores where the majority of the alleged conduct occurred are not being pursued as it related to Optus systems, Ms Cass-Gottlieb told reporters.
At two stores in the Northern Territory, senior management allegedly encouraged staff to engage in inappropriate sales conduct against 363 consumers over a two-year period ending in mid-2023.
A regional Queensland store staff member allegedly created fraudulent contracts, with dozens of unaware customers pursued for debts.
A further 24 at other stores allegedly faced undue pressure to purchase a large number of products, some allegedly given false, misleading or deceptive representations that particular goods were free.
The Optus allegations occurred after rival Telstra - the nation's largest telco - was penalised $50 million for similar behaviour in May 2021.
The Australian Communications Consumer Action Network said federal regulations need to end what it called a pattern of behaviour.
"It is a sad day for the telco industry when profits come at the expense of supporting our most vulnerable, and sales incentives drive the exploitation of people who rely on these essential services for their wellbeing and quality of life," chief executive Carol Bennett said.
Minister Michelle Rowland said Telcos had an obligation to act in the best interest of customers. (Mick Tsikas/AAP PHOTOS)
Communications Minister Michelle Rowland said the allegations were very serious.
"Telcos must act in the best interest of their customers, particularly those experiencing vulnerability or disadvantage," she said.
Industry voice Communications Alliance chief executive Luke Coleman said calls for more regulation missed the point of legal action taken against telcos.
"Existing laws are working exactly as they should ... even with these laws in place, industry is taking further action to strengthen consumer protections around sales practices," he said.
The ACCC action stemmed from reports to the telco-funded Telecommunications Industry Ombudsman, which said it expected consumers be treated with respect, dignity and understanding.
"The behaviours we unearthed in our investigations are deeply troubling," ombudsman Cynthia Gebert said.
