People Telecom will issue refunds to customers who were signed up by its door-to-door sales and telemarketers as part of a legal undertaking by the Australian Competition and Consumer Commission (ACCC).
The competition watchdog alleged that for several years the telco’s sales agents had transferred customers from rival carriers without consent, and mislead others in order to signup clients.
It is also alleged that affected customers who refused to pay invoices were referred to debt collectors.
ACCC chairman Graeme Samuel said companies must keep watch over their sales agents.
"The ACCC will continue to hold companies responsible for what is said or done by their authorised representatives," Samuel said.
"Companies should also be sure that debt collection is not pursued where there are real questions over the legality of the contract that led to those debts."
People Telecom sales agents are alleged to have lied to prospective customers by claiming to work on behalf their carrier, and informing them that they are required to change to People Telecom.
Due to its alleged breach of the Trade Practices Act, the company must write to affected customers and offer them an opportunity to cancel their contract without penalty, waive their debts, implement a trade practices compliance program, and place a notice on its website.