In a settlement with the Commerce Commission, Telecom has admitted breaching the Fair Trading Act by misleading more than 130,000 broadband customers, the commission said today.
However, while Telecom had cooperated with the commission in putting things right, the commission said it was concerned at the number of times the company had fallen foul of the Act over recent years.
The latest case stemmed from Telecom's introduction of broadband internet service in 1999, where it offered existing dial-up customers the opportunity to migrate to broadband, although these customers would continue to have a dial-up connection, but not be charged.
However, between 1999 and 2006, due to a number of administrative errors, Telecom continued to bill customers, resulting in an over-charge to these customers in excess of $9.5 million. Telecom admitted it had breached the Act and from March 2007 it began refunding more than 130,000 affected customers and writing to all those customers to advise them of the error.
"Customers trust that businesses will have the correct processes in place and that they will be charged the right price. Although we encourage consumers to check their monthly statement, businesses should get it right," said commission fair trading manager in Auckland, Graham Gill.
"Telecom has cooperated with the commission's investigation and undertaken a costly internal exercise to proactively refund all affected customers. They have also agreed as part of this settlement to introduce procedures to prevent a repeat of this sort of failure," said Mr Gill.
"Nonetheless the commission is becoming increasingly concerned at the number of occasions on which Telecom has acted in breach of the Fair Trading Act.
"Since 2003 Telecom has been the subject of Fair Trading Act convictions, settlements or warnings on at least eight occasions. The commission encourages Telecom to make compliance with the Act a top priority."
The commission has taken Telecom to task over advertising of its mobile network, mobile billing faults, mobile phone deals, double billing, advertising of its broadband packages and the charges for broadband. The issues had been settled both in and out of court.
Telecom's head of external media Mark Watts said the company had not breached the Act deliberately and it was not ignorant of the rules either.
The company would take the commission's comments on board, he said.
"We made some serious errors and we work hard to put them right." Telecom took the Act very seriously at all times and was aware of its responsibilities under it. It had been on a concerted drive to resolve as many historical issues as it could and "to take compliance framework and processes to best practice levels", he said.
Telecom's retail chief executive Alan Gourdie said it was pleased to have reached a settlement with the commission over the latest investigation.
"On becoming aware of the issue in 2006 Telecom investigated the cause of the problem, and did the right thing for our customers." The refund process was completed in early 2009.
Telecom had apologised to all customers affected by this error and regretted breaching the Act, he said. Around 1400 affected customers have not been able to be traced by Telecom to receive their refunds, although the credit has been applied to their inactive account.
