Telecom admits breach - pays back $9.5m

Telecom has admitted to yet another breach of the Fair Trading Act after it misled more than 130,000 broadband customers and was forced to pay back $9.5 million.In a settlement with the Commerce Commission, Telecom and Xtra have admitted the breach, it was announced today.Commerce Commission Fair Trading Auckland manager Graham Gill says that while the telco has taken costly steps to make amends, the Commission is concerned by the number of times it has breached the Act.“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,” Gill says.The latest breach relates to a promotion launched in 1999, in which existing dial-up customers were given the opportunity to migrate to broadband, and retain a dial-up connection without being charged. According to the Commission’s statement Telecom had intended to charge for usage but between 1999 and 2006, those who took up the offer, continued to be billed monthly for their dial-up connection.“Telecom customers who took up the advertised offer continued to be billed monthly account charges for dial-up, resulting in an over-charge to these customers in excess of $9.5 million. This was caused by Telecom staff not following the correct steps when changing a customer from dial-up to broadband,” the statement reads.From March 2007 Telecom began refunding the more than 130,000 affected customers and to date has paid out refunds of more than $9.5 million. Telecom has been unable to trace around 1400 customers.In a statement Telecom accepted it had breached the Fair Trading Act and is pleased to have reached a settlement with the Commission.“On becoming aware of the issue in 2006 Telecom investigated the cause of the problem, and did the right thing for our customers,” says Alan Gourdie, CEO Telecom Retail.“A process was started to identify and credit all affected current or historic customers for any incorrect charging they incurred. This refund process was completed in early 2009.”Spokesperson Emma-Kate Greer says the company has “been on a concerted drive to resolve as many historic issues such as this as far as possible and take our compliance framework and processes to best practice levels.”“Systems and processes have evolved and we’ve put a number of changes in place to ensure this error doesn’t happen again," she says.