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The consumer watchdog is taking Telstra to court over claims the telco giant was misleading customers on its broadband speeds.
The Australian Competition and Consumer Commission has started proceedings against Telstra in the Federal Court about the company's representation of its cheaper internet brand Belong.
The commission alleges almost 9000 Belong customers were moved from an NBN plan with a maximum upload speed of 40Mbps to one that had half the speed without being told of the changes.
The migration of customers happened in October and November 2020.
The watchdog's commissioner Liza Carver said Telstra did not notify the customers about the reduction in upload speed and didn't lower the cost of the service, despite the cost charged by NBN to Telstra being $7 a month less.
"We allege 8897 consumers who signed up to a Belong NBN plan between May 2017 and October 2020 were affected by this change and deprived of the opportunity to make an informed decision about their internet service," she said.
"We allege that more than 6300 Belong customers have still not been informed by Telstra that their plan has changed to a lower maximum upload speed, and that Telstra continues to represent to them that the Belong broadband service supplied to them has not been altered."
Telstra has already notified about 2500 of the affected customers between March and April last year and provided them with a one-off $90 credit.
However Ms Carver said Telstra needed to go further in order to rectify the situation.
"In these circumstances, we are seeking a court order requiring Telstra to pay compensation to consumers who, we allege, did not get the service they signed up for," she said.
"We expect a company of Telstra's size and experience to take their obligations under the Australian consumer law very seriously, including those prohibiting misleading or deceptive conduct and false or misleading representation."
The consumer watchdog said it was seeking declarations, penalties, consumer redress, as well as costs and other orders from Telstra.
The telco was ordered by the Federal Court last month to pay $15 million for making misleading representation to customers when promoting NBN internet plans.
Telstra has been contacted for comment.
