Origin Energy will face court for allegedly overcharging thousands of former customers on Centrelink by a combined $2.5m and breaching laws more than 77,000 times.
The company allegedly took payments through Centrepay over six years from over 3,400 customers who had closed their accounts and owed no money, including one customer who paid $11,000.
Origin did not inform customers it was overcharging them or refund them within the timeframe required by market rules, the Australian Energy Regulator (AER) alleged on Monday.
The overcharging continued from December 2019 until March 2025, the regulator alleged on Monday. Guardian Australia in May 2024 revealed the company was taking the payments and the regulator has alleged Origin had known its system could allow overcharging as early as 2017.
AGL and Alinta Energy have already been ordered to pay millions in penalties over Centrepay mishandling. Clare Savage, chair of the AER, said in a public statement that Origin’s case was particularly concerning.
“Many customers affected by this alleged conduct were likely experiencing economic vulnerability and could have otherwise used the money they were overcharged to spend on essentials,” Savage said.
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Centrepay gives approved businesses early access to welfare payments before they hit a welfare recipient’s bank account, to ensure individuals always have enough for essentials including rent and energy.
Last year, Guardian Australia revealed serious and widespread failures in the administration of the Centrepay system.
The Guardian showed how the system had been used to bankroll an extreme Christian rehabilitation centre subjecting residents to gay conversion practices and exorcisms, and by home appliance rental companies to massively overcharge Indigenous Australians for low-value goods. The Guardian’s investigation also revealed allegations that at least three major energy retailers had used the system to wrongly take money from vulnerable Australians.
The reporting helped trigger an urgent government review and prompted reforms to Centrepay.
Q&AWhat is Centrepay?Show
Centrepay was established in 1998 under the Howard government as a voluntary bill-paying service for people receiving Centrelink payments to make automatic deductions for essentials like rent and utilities.
It currently has more than 620,000 users. A large percentage of them are receiving disability support payments. Almost a third are Aboriginal people, predominantly women, from remote areas, receiving jobseeker or parenting payments.
Over time Centrepay has expanded to include a range of businesses and services.
There are now more than 15,000 companies approved to access Centrepay, which facilitated 23.7 million transactions last year worth $2.7bn. Each transaction incurs a 99c fee, paid to the government by businesses using the system.
Over the past decade, consumer advocates have raised concerns that several of the businesses registered to access Centrepay may be causing financial harm to vulnerable customers.
The corporate regulator is investigating dozens of companies. At least four that it has already penalised remain on the system.
In May 2024, the government announced a full review of the system to increase compliance, transparency and strengthen auditing processes.
Services Australia, which operates the system, says it is working towards improving delivery.
In 2022-23, contracts ended for 12 Centrepay businesses due to non-compliance.
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Services Australia asked the AER to investigate in 2024 after Guardian Australia revealed the practice was affecting customers of Origin, at the time the biggest Centrepay user in the energy market.
An Origin spokesperson said on Monday that the company had self-reported Centrepay overpayments directly to Services Australia in 2021 and worked with agency to refund customers.
“We regret that we did not manage Centrepay deductions for our former customers as we should have and apologise to all those affected,” the spokesperson said.
Origin also allegedly failed to set up systems to ensure it complied with the rules. The spokesperson said the company has since improved its Centrepay deductions systems.
The company’s market value increased on Monday morning to $19.2bn, in spite of the proceedings.
The AER will ask the court to order that Origin pay fines, declarations, customer compensation and legal costs, make declarations and install an independently reviewed compliance program.
It declined to detail how much it would ask Origin be forced to pay.
Origin’s alleged breaches relate to seven times the number of customers than the 483 welfare recipients allegedly overcharged by AGL, which is appealing a $25m fine.
Alinta Energy in November was fined more than $1m for similar alleged conduct.
The government reformed the payment service in 2024, barring predatory rent-to-buy operators, and has added further consumer protections this year.
– with additional reporting by Christopher Knaus