Telstra fined $10m for billing customers for services they didn't want

Telstra has been fined $10 million for automatically charging customers for items they didn't want, including ring tones, games and competitions using a third-party billing service.

Australia's consumer watchdog took the telco giant to court after customers complained about being billed for unknown purchases by the Premium Direct Billing service.

The Federal Court on Thursday imposed penalties totalling $10 million on Telstra for making false or misleading representations to customers in 2015 and 2016.

It comes after Telstra admitted more than 100,000 customers may have been affected by the now-defunct billing system.

Mobile phone customers unwittingly signed up to subscriptions without having to enter payment details or verify their identity, the ACCC said.

"Telstra generated substantial profits by exposing customers to unauthorised charges," ACCC chairman Rod Sims said.

Mr Sims said Telstra knew children were at risk of inadvertently subscribing to content or services on a family member's phone.

"The $10 million penalty imposed by the court recognises the seriousness of Telstra's conduct," he said.

The ACCC said Telstra reaped some $62 million in revenue from 2.7 million mobiles through the service.

Mr Sims said many customers paid for content from which they had difficulty unsubscribing.

Some of the items included Seven Network and Nine Network competitions and ringtones to popular shows.

Telstra shut down its Premium Direct Billing service in March and it has promised to refund impacted customers.

The company estimates it has provided refunds of at least $5 million and it will review any future complaints in light of this action.

The ACCC estimates a further $7 million could be refunded and customers are urged to contact the telco if they find unauthorised charges on their mobile phone bill.

Telstra's penalties must be paid to the Commonwealth of Australia within a fortnight.

The orders came down on the same day another major Australian company was fined the same amount for breaching consumer laws.

Ford Australia must pay $10 million after it mishandled customer complaints over cars that shuddered, jerked or lost power because of faulty transmissions.