Telstra has been fined $10 million by the federal court for misleading customers when they were unwittingly charged for digital content such as ringtones and games by third-party providers.
The carrier was taken to court by the Australian Consumer and Competition Commission in March this year over its premium direct billing service, which was available by default on customers' mobile accounts.
Customers - children in particular - were signed up to third-party content services without their knowledge or consent, and billed without being required to enter payment details or to verify their identity.
Now, the federal court agreed with the ACCC that Telstra had breached laws and it fined the telco $10 million.
“Telstra was aware that children were at risk of inadvertently subscribing on a family member’s phone," ACCC chairman Rod Sims said in a statement.
"The $10 million penalty imposed by the court recognises the seriousness of Telstra’s conduct. In the ACCC's view, such conduct falls below community expectations for appropriate corporate behaviour."
Telstra has now axed premium billing and will refund customers that were impacted.
The telco has already handed back at least $5 million and the ACCC said it expected further refunds to be in the order of several million dollars.
Customers are advised to check their Telstra mobile accounts and if they believe there have been unauthorised charges, to contact the telco on 13 22 00 or fill in an online complaint form to seek refunds.
Australia's consumer watchdog isn't stopping with Telstra, and said it would examine third-party billing services that other carriers in the country offer.
Sims said the ACCC "will not hesitate to take enforcement action" if it believes other carriers have also breached the law.