Internet provider BVivid has admitted to cold-calling customers and falsely suggesting they'd be disconnected or lose their number if they didn't immediately sign up to the NBN.
The consumer watchdog on Tuesday accepted a court-enforceable undertaking from BVivid that it likely breached consumer law, with the telco supplier now forced to offer refunds or fee-free contract exits.
Consumers generally have 18 months to switch to the NBN once available in their area before potentially facing disconnection, the Australian Competition and Consumer Commission says.
But that wasn't the message relayed to some prospective clients when they were contacted out of the blue by staff from BVivid's wholly owned subsidiary in India between October 2017 to May 2018.
"BVivid's calls likely misled consumers and gave them a false sense of urgency and need," ACCC commissioner Sarah Court said on Tuesday.
The change of service was then provided within the 10-day cooling-off period, with the company admitting that was likely in breach of unsolicited consumer agreement protections.
BVivid's other likely violations included not giving customers a contract termination form or noting its business address within agreements.
Commissioner Court said the system was set up to protect customers from cold-calling telemarketers but BVivid did "not meet all their obligations".
A recent report revealed the Telecommunications Ombudsman received 1,729 complaints last year over misleading conduct relating to NBN services delivery.
Ombudsman Judi Jones welcomed the ACCC taking action against BVivid, saying some telco providers were using misinformation and threats to the detriment of customers.
"Consumers are being told information about moving to the NBN that is simply not true and puts them at a disadvantage," she said.
"This is concerning behaviour from a small group of phone and internet providers and should stop."
BVivid will now have until October 10 to notify affected customers with refund or contract termination offers.
It has also paid $25,200 in penalties while promising to review all sales policies and introduce annual staff training.