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The Australian Competition and Consumer Commission (ACCC) is hoping to secure compensation for TPG customers after the telco allegedly misled consumers about a "prepayment" fee.
The ACCC alleges that TPG misled customers about a $20 "prepayment" made by consumers and that the telco included unfair prepayment contract terms in some plans.
TPG is facing penalties from the watchdog, and may be forced to refund customers potentially millions of dollars if it is found to have misled them.
The situation revolves around a $20 "prepayment" that customers had to pay when signing up to a TPG plan which was intended to cover costs that might be incurred but are not included in their plan, such as overseas phone calls.
However, as found by the ACCC, the prepayment operates as a non-refundable fee and TPG retains at least $10 of the prepayment when a customer cancels their plan.
ACCC deputy chair Delia Rickard says consumers would expect to receive the full $20 back if they did not use functions not included in their plan.
"A reasonable consumer would expect that this $20 payment would be refunded if it was not used, but in fact it is non-refundable," says Rickard.
"It is unacceptable that TPG only disclose this forfeiture in fine print."
In addition, TPG's terms mean that when a customer's prepaid balance falls to $10 or lower, TPG automatically 'tops-up' the prepayment by a direct debit from the customer to return their prepayment balance to $20. This means that customers can't use at least $10 of the prepayment for telecommunications services when they cancel their plan, which is not disclosed.
"Since March 2013, the ACCC estimates that TPG is likely to have retained millions of dollars paid by consumers in prepayments that were forfeited," says Rickard.
The ACCC is seeking penalties and compensation for consumers.
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