Making finance headlines today is telecom giant TPG Telecom Ltd (ASX: TPM), the name behind the growing telecom brand and owner of iiNet.

According to a market release, TPG is facing the Australian Competition and Consumer Commission (ACCC) in Federal Court over misleading advertising relating to a $20 ‘prepayment’.

According to the ACCC, TPG made customers pay a $20 fee to cover the costs that might be incurred but are not necessarily included in their plan. The fee is non-refundable and the ACCC says TPG kept at least $10 when the customer cancelled.

“A reasonable consumer would expect that this $20 payment would be refunded if it was not used, but in fact it is non-refundable,” ACCC Deputy Chair Delia Rickard said. “It is unacceptable that TPG only disclose this forfeiture in fine print.”

Making matters more interesting, Mr Rickard says TPG would top-up the prepayment fee via a direct debit when a customer’s prepaid balance fell below $10.

“Since March 2013, the ACCC estimates that TPG is likely to have retained millions of dollars paid by consumers in prepayments that were forfeited,” Rickard said.

The ACCC is seeking penalties and compensation for TPG customers.

What Now?

According to its Annual General Meeting (AGM) presentation today, TPG has 1.9 million broadband subscribers and made around $397 million in profit last year. It’s also planning to merge with Vodafone Australia, owned by Hutchison Telecommunications Ltd (ASX: HTA), as part of a $15 billion deal.

Therefore, even if the ACCC is successful it seems it might be ‘business as usual’ for TPG in 2019 and beyond.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).