The Commerce Commission is seeking more than $1 million in refunds for Orcon and Slingshot customers, after alleging the companies failed to disclose early termination fees.
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The commission has filed court proceedings against three local subsidiaries of Australian utilities company Vocus Group, which supplies power and broadband services under the Slingshot and Orcon brands.
It alleges the firms breached the Fair Trading Act by not telling customers between 2014 and 2020 that they might have to pay between $130 and $250 for terminating their contracts early.
The Commerce Commission is seeking more than $1 million in refunds on behalf of 5222 customers.
Vocus said it had been working with the commission and the court proceedings were "unwarranted".
It said it would fight the case.
The watchdog also warned Callplus Services, which trades as Slingshot and Orcon, for raising broadband prices when it did not have the right to do so in January 2019.
Callplus had already responded to the commission's concerns, by clarifying the terms and conditions of its contracts with customers to explain when it may increase prices.
It had also taken steps to refund customers who terminated their agreements and were charged early termination fees following the 2019 price increase.