Telecom pinged record $3.3m for double billing

Telecom will return $3.3 million to customers after it settled out of court with the Commerce Commission over double billing, the watchdog said today.

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 Act when it charged customers twice, the commission said in a statement.

"At this stage it is difficult to determine exactly how many customers were affected by the fault between January 1, 1989 and 30 May 2006," the commission said.

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.

Commission general manager Geoff Thorn said 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," Mr Thorn said.

"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."

He said customers had to be able to trust their bills were correct, and companies were 100 per cent responsible for ensuring their systems were working and billing accurate.

Mr Thorn said 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 was 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," Mr Thorn said.

In the settlement, Telecom agreed to apologise to affected customers and refund the money overcharged.

Once customers have been paid back, any money remaining in the settlement fund would be donated to a consumer organisation.

Telecom also agreed to conduct an internal review and present a report to the commission in July 2007 showing how it had fixed the problem to ensure it wouldn't happen again.

- NZPA