A Slingshot worker provided the company's telemarketers with access to a Telecom database, which court documents say enabled the telco to transfer customers over without their consent or improperly switch them.
In a case brought by the Commerce Commission, the company pleaded guilty to 50 charges under the Fair Trading Act and was fined $250,000 in the Auckland District Court yesterday.
The company has admitted it transferred 27 customers to it without those people's authority, in a practice known as "slamming".
The charges related to those transfers as well as misrepresentations to the customers involved, some of whom were elderly.
Those affected were contacted between 2009 and 2011 by telemarketing company Power Marketing, which Slingshot paid to cold-call potential customers.
An agreed summary of facts in the case said the calls claiming to verify a customer's agreement to switch to Slingshot "were often vague, fast and confusing".
In most instances Power Marketing accessed Telecom's Wireline database, which had billing and address details of Telecom customers.
Some of these details, including customer's Telecom account number, were needed to switch a customer to Slingshot
A Slingshot employee provided login codes for Wireline to PML and neither the telco nor its contractor had permission from Telecom to access the database, the summary said.
"The use of Wireline was the means by which PML [Power Marketing] was able to obtain Telecom customer individual account numbers and information which, in the case of certain customers, enabled Slingshot to switch Telecom customers without their consent, or to otherwise improperly switch them," the summary said.
In the Auckland District Court yesterday Commerce Commission Nick Flanagan said Slingshot's offending was serious and that in some instances switched customers were pursued by debt collectors.
"That caused real heartache for the people involved".
However, Flanagan said that Slingshot was entitled to a discount for co-operating and pleading guilty.
He submitted Slingshot should be fined $250,000.
Slingshot Queen's Counsel Bruce Gray said the company accepted its actions were wrong.
"Slingshot is here today, on the first available opportunity to plead guilty and agrees it should pay a very substantial penalty," Gray said yesterday afternoon.
Slingshot had thought the transfers had been agreed to and Gray said that while the company's oversight of Power Marketing was not completely absent, it was inadequate.
In sentencing Slingshot to pay the $250,000 fine, Judge Russell Collins said the actions of the company had a "real and disturbing impact on customers in the market place".
Slingshot's chief executive Mark Callander, who sat in the back of the court during the sentencing, said afterwards the company had let itself down.
However, he said that Power Marketing did have to wear some of the blame for what occurred.
Power Marketing is defending a separate case with the commission, due to be heard next year.
The vast majority of the 27 people switched over in today's case were Telecom customers.
Telecom said it welcomed the convictions.
"We hope that this court action will be a timely reminder to all telco industry players to act appropriately when marketing services to customers," Telecom retail chief executive Chris Quin said.