Digital telco Circles.Life is facing nearly $300,000 in penalties and compensation after exposing consumers to identity fraud when it failed to follow customer identity check rules. 

The telco has been fined $199,800 by the Australian Media and Communications Authority (ACMA) for failing to conduct proper identity checks when transferring mobile phone numbers to its services. 

The company, which was launched in Australia in 2019, has offered to pay more than $100,000 in compensation to consumers who had their services compromised by scammers as a result of its failure to follow the rules. 

An investigation led by the communications watchdog found 1787 industry rule breaches for phone number transfers using Circles.Life SIMs bought between August and December 2021 at retail stores. 

It was found that multi-factor identification rules designed to prevent fraud were not followed by the company, and 42 consumers had their email accounts compromised or lost access to their bank accounts.  

At least seven people experienced financial losses as a result of the fraud. 

Combating identity theft and fraud takes concerted action from all telcos, ACMA chair Nerida O’Loughlin said. 

“It is deeply concerning that Circles.Life did not have proper processes in place for such a long period and that so many people were affected or put at risk of identity theft and fraud,” she said in a statement.  

“It is the customers of other telcos who have fallen victim in this case by having their number transferred to Circles.Life without their knowledge.” 

Within two weeks of identifying the vulnerability Circles.Life Australia had implemented a fix, chief executive Nicholas Demos said. 

“This is a first for us and we are deeply sorry to our customers, and the industry, as we know this represents a loss of trust,” he said in a statement. 

“We have never made an error like this before and we’re committed to ensuring it never happens again.” 

The error only related to SIMs bought in retail stores and the vast majority of the company’s business is conducted online, Mr Demos said. 

Circles.Life responded quickly once it was aware of the problem and appointed regulatory staff to provide support to the affected consumers, Ms O’Loughlin said. 

“Some of the victims have experienced significant stress due to Circles.Life’s failure and we are pleased to see the company is providing recompense to acknowledge the profound emotional toll and disruption often caused by these scams.” 

With AAP

Eliza Sayon

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Eliza is a content producer and editor at Public Spectrum. She is an experienced writer on topics related to the government and to the public, as well as stories that uplift and improve the community.

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