Optus could face a $10 million penalty after the consumer watchdog commenced court proceedings against the mobile firm for misleading customers over subscriptions to expensive and unwanted content.
The Australian Competition and Consumer Commission says Optus has admitted to making false or misleading representations and already refunded about $12 million to about 240,000 customers.
Another $19 million has been refunded by third-party providers after Optus failed to adequately tell customers they were subscribed to content such as games and ringtones that, even if accessed unintentionally, would result in a bill.
"A substantial number of Optus customers were signed up to subscriptions for expensive, often unwanted content without being required to enter payment details or verify their identity, as occurs with many other online purchases," ACCC chair Rod Sims said in a statement.
"Many customers didn't realise they were signing up to anything at all, and in some cases family members such as children incurred these charges without the account holder's knowledge."
The ACCC alleges Optus knew about the issue and did nothing.
"Despite over 600,000 direct enquiries Optus received over a number of years about this DCB service, Optus chose to continue to generate major profits at the expense of basic consumer protections," Mr Sims said.
"There was compelling need for safeguards to be put in place to stop customers paying for content like ringtones and games that they did not want, did not use, and had difficulty unsubscribing from, and Optus just ignored this."
Singapore Telecom-owned Optus has agreed to apply jointly for orders from the Federal Court including declarations that it breached the ASIC Act and will pay $10 million in penalties.
Rival Telstra this year paid a $10 million penalty following a similar action by the ACCC.
The Federal Court will rule on whether the orders and penalties are appropriate.