Telecom has refunded more than $2.7 million to customers after it admitted breaching the Fair Trading Act by misleading them about how much broadband data they used.
A software fault meant users were reaching their data cap ahead of their actual usage.
Telecom said faulty broadband data usage meters caused inaccurate readings for 97,000 customer accounts between November 2010 and June 2011.
It found 47,000 customers were affected by the fault.
In a public statement in June, Telecom outlined the fault and its intention to refund customers who had been affected.
It has written to affected customers and refunded more than $2.7 million so far.
Telecom brought the issue to the Commerce Commission's attention after customers' complaints and have been fully co-operative, the commission's competition manager Stuart Wallace says.
"We're pleased to have reached a settlement with Telecom and that they have made prompt refunds directly back to the customers who have lost out.
"The settlement is the best possible outcome for those customers and avoids potentially lengthy and costly court hearings paid for by taxpayers," Mr Wallace said.
NZN