Australians who lost income or could not reach critical services during last week’s Telstra outage may be entitled to compensation of up to $100,000, but the industry’s ombudsman has urged the company to offer payments across the board to avoid customers having to apply individually.

The nation’s largest telco also faces the spectre of a class action over the failure, according to a network of law firms, and a push from consumer advocates for fixes to what they call the country’s “woefully inadequate” compensation laws.

The outage on Wednesday cut hundreds of people off from Triple Zero, knocked out train services in Victoria and NSW and brought down payment systems across the country.

The disruption rolled into a secondary outage on Thursday, continuing to cause Triple Zero connection errors and leaving V/Line regional trains in Victoria suspended for a second day. This masthead first revealed the outage was likely to have been caused by a server that had reached the end of its supported life almost a decade ago and was never replaced, despite newer devices costing less than $30,000.

Hayder Shkara, director of the Justice Network, an alliance of 11 boutique law firms, said the outage was far more than an inconvenience for those who rely on a connection to earn a living. He said the sheer number of people affected opened the door to a co-ordinated legal action. “There is a potential for a class action, as so many people have been affected by the outage,” he told this masthead.

However, compensation is not automatic and customers must prove they suffered a real loss, he said.

Telstra, Optus and other telcos largely exclude themselves in their contracts from liability for indirect, economic or consequential losses caused by outages. The main exception is Triple Zero failures, which carry penalties of up to $30 million per breach. That carve-out means a business chasing lost profits may face not just an evidence burden, but a contractual barrier, though consumer law obligations can operate regardless of what a contract says.

A case where someone could not reach Triple Zero in a genuine emergency, and was harmed as a result, would be a separate and far more serious legal matter, likely running through the courts rather than the ombudsman and carrying damages well beyond its $100,000 ceiling.

Police are investigating the death of a person in regional South Australia on the day of the outage, with a report to go to the coroner, though the death has not been linked to the failure.

Telecommunications Industry Ombudsman Cynthia Gebert said the true scale was not yet clear because customers must first try to resolve a complaint directly with their telco.

The ombudsman can handle claims from individual consumers, as well as small businesses and not-for-profits, and can order compensation of up to $100,000 for financial loss, and up to $1500 for unusual stress or inconvenience. Gebert urged Telstra to consider a standard payout for those affected.

“When an outage impacts multiple customers, we encourage telcos to consider setting a standard compensation offer,” she said. “It’s important for telcos to also consider the individual circumstances of customers who experienced more substantial impacts above what a standard offer captures.”

Australian Communications Consumer Action Network chief executive Carol Bennett warned Telstra against a token response: “Telstra should be proactive and offer customers a genuine, generous compensation package,” Bennett said. “They should not provide a meaningless gesture like extra data, which has been used before and falls well short of what people are owed after losing access to essential services, including Triple Zero.”

Bennett said the burden of proof on customers was unreasonable. “Consumers don’t have clear guarantees about network reliability in the first place, and now many are being asked to prove financial loss from an outage they had no way of preventing or predicting,” she said.

“Self-regulation isn’t working.”

She said the penalty and compensation regime should be modernised to reflect the real cost of outages.

Telstra would not say how many customers had applied for compensation, but said it had published forms for consumers and small businesses to seek payments, including a loss-of-business claim form for small operators. Affected customers must lodge a complaint themselves, through the telco’s online form or, for small businesses, by calling a dedicated line. Telstra said every effort would be made to review and resolve complaints as quickly as possible.

Telstra chief executive Vicki Brady apologised again in an email to customers on Monday. She said Telstra invested significantly in the resilience of its network and would complete a full investigation, and warned customers to be wary of fraudsters posing as Telstra staff.

The telco also faces a formal investigation by the Australian Communications and Media Authority into whether it met its obligations, carrying civil penalties of up to $30 million per breach.

A Senate inquiry into the outage, the third investigation called into the failure, will on Friday examine whether any underinvestment in technology by Telstra contributed to the outage.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

David Swan is the technology editor for The Age and The Sydney Morning Herald. He was previously technology editor for The Australian newspaper.Connect via X or email.