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Record settlement returns $3.3 million

12 October 2006/055

Record settlement returns $3.3 million to Telecom customers

An out-of-court settlement reached by the Commerce Commission and Telecom will return around $3.3 million to customers after a billing fault saw them charged twice.

The settlement is the largest ever out-of-court settlement under the Fair Trading Act.

A fault in Telecom’s system meant that when customers changed call plans on their landline or mobile, they were sometimes charged under both plans on the day they swapped over.

Telecom accepts that it breached the Fair Trading Act when it charged customers twice. At this stage it is difficult to determine exactly how many customers were affected by the fault between 1 January 1989 and 30 May 2006.

Affected residential customers will receive an average refund of $1.25, while the average business customer will receive $2.45. Telecom will begin crediting current customers in November. Former customers will be written to at their last known address.

Commerce Commission General Manager Geoff Thorn says the settlement should remind businesses how important it was for them to monitor their systems and ensure they were working properly.

“Companies need to check and double check to make sure they are charging customers correctly,” says Mr Thorn.

“Customers may not notice small errors in their bill, or may not bother to follow up on them, but this case shows how small amounts can add up to very large sums over time,” says Mr Thorn.

“Customers must be able to trust that their bills are correct, and companies are 100% responsible for ensuring that their systems are working and their billing is accurate.”

Mr Thorn says in this instance an out-of-court settlement was appropriate because Telecom had identified the issue before the Commission began investigating, had worked hard to uncover the full extent of the problem, and were prepared to put things right.

“Telecom co-operated fully with the Commission’s investigation and we commend the company for taking responsibility, working to resolve the problem, and compensating consumers,” says Mr Thorn.

In the settlement, Telecom agrees to apologise to affected customers and refund the money they were overcharged. Once customers have been paid back, any money remaining in the settlement fund will be donated to a consumer organisation. Telecom also agrees to conduct an internal review and present a report to the Commission in July 2007 showing how it has fixed the problem and ensured it won’t happen again.


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