Telecom may have to repay just over 14,000 mobile phone customers about $17 million if the Commerce Commission wins a court case alleging the company breached the Door to Door Sales Act.
The competition watchdog argued in the High Court at Wellington this week that Telecom breached the act in theway the 14,196 mobile phone sales and a two-year connection to Telecom's 027 network were carried out in late 2001 and 2002.
The commission is seeking a court declaration that the agreements were unenforceable by Telecom Mobile, a subsidiary of Telecom.
It says they breached the act and customers were entitled to recover all the money paid to Telecom Mobile under the agreements.
It is also seeking a declaration that Telecom Mobile has no right to compensation for services supplied.
The 14,196 mobile phone customers were gained through two campaigns - 3877 through door-to-door marketing and 10,319 through telephone marketing.
Commission counsel Terry Sissons said Telecom used the door-to-door agents and telephone marketers to find out if people were interested in a new phone deal. If they were, Telecom conducted a credit check and then instructed another agent to send them the phones.
The customers were told in a letter that if they broke the red seal on the box containing the phone, then they had agreed to accept the phone and the terms and conditions of the service agreement. If the product was returned, the phone box needed to be unopened and the seal unbroken.
Sissons said the process breached provisions giving customers the right to cancel the agreements within a month and to recover money paid under the agreement.
Counsel for Telecom Justin Smith said there were no provisions in the Fair Trading Act for the declarations and orders being sought.
