The Commerce Commission has laid 10 charges against Vodafone New Zealand under the Fair Trading Act for billing customers after their contract had finished.
Vodafone has labelled the issue a combination of unintentional system and human errors – which it says have since been resolved.
The issue, which covers the period from January 1 2012 to January 2017, saw a group of broadband customers charged for Vodafone's services to the end of a billing cycle despite having given notice that they wished to terminate their service earlier.
Russell Stanners, Vodafone chief executive, said the billing errors were unintentional and the company were disappointed by the Commerce Commission's decision to prosecute.
"We have had an ongoing dialogue with the commission throughout their investigation, and they have acknowledged our cooperation," Stanners said.
"The billing errors in question were unintentional. We launched an extensive and pro-active initiative to put things right by tracking down customers, refunding credits and donating the balance to charity. We have made process and technical changes to avoid repeats of this issue going forward.
"Taking all of this into account, we hoped the Commerce Commission would opt for one of its other enforcement tools, rather than costly court proceedings."
Vodafone said since the error they had undertaken a detailed and extensive project to identify all current and former customers affected by this issue, applied credits to their accounts, and issued refunds.
The communications provider says none of the funds received from the error have been retained by Vodafone, and to date, they have refunded $55,896.71 to 2001 current and former customers.
Vodafone has also made a charitable donation of $86,226.77, which equals the amount still unclaimed by 13,350 customers at 1 June 2018.
Those customers yet to claim have been encouraged to get in touch with Vodafone to get their refund.
"We generate over one million invoices for our customers every month. Ensuring they are accurate is an absolute priority for our business, which is what our billing experience team is focused on every day," Stanners said.