An Auckland court has fined Vodafone $402,375 for misleading customers with one of its internet deals.
The telecommunications company earlier this year pleaded guilty to five charges of breaching the Fair Trading Act over 14 months between 2007 and 2008 in a prosecution brought by the Commerce Commission.
The commission said Vodafone's advertising had misled customers about the cost of using its Vodafone Live mobile internet service, leading people to believe it was free.
Vodafone then billed them for using the service.
Commerce Commission competition manager Stuart Wallace said customers were shocked when they received bills of up to $1300 and Vodafone then made things worse by being uncooperative.
He says Vodafone gave some customers "the brush-off" and initially turned down requests for refunds.
Mr Wallace says telecommunications companies must be very clear about the cost of new products they launch.
As well as fining the telecommunications giant, the judge at the Auckland District Court on Friday ordered the company to pay court costs.
Vodafone blames technical glitch
Vodafone released a statement on Friday, saying technical problems led to incorrect charging and it would never deliberately mislead customers.
The company said it had refunded all those affected and has since put measures in place to make sure customers are not confused by its charges.
Vodafone still faces a series of other charges relating to other allegations that it breached the Fair Trading Act by misleading customers in other promotions.
The Telecommunications Users Association says the industry is still prone to misleading customers about how much things cost.
Chief executive Paul Brislen says he hopes the fine will send a strong message that companies need to make billing systems easy to understand.
"All the telcos have to be very careful about how they frame what they're offering to customers. It's very easy to build quite convoluted and awkward packages."