A phone and internet provider has been fined $225,000 after using telemarketers posing as Telstra staff to trick customers into switching plans.

The Australian Competition and Consumer Commission launched proceedings against Zen Telecom in February, alleging it breached consumer laws by misleading customers about its relationship with the telco between September 2012 and August 2013.

In cold calls promoting the sale of fixed-line phone services, Zen Telecom telemarketers told consumers the company was associated with or acting on behalf of Telstra, when this was not the case.

It was Zen Telecom's practice not to audio record the sales part of the phone calls, when most of the false and misleading representations were made.

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On one occasion a Zen Telecom telemarketer told a Victorian customer they were entitled to a discount, which would apply to "a different bill coming in from our authorised wholesale department". When the customer asked whether the telemarketer worked for Telstra, she said: "We're the Australian authorised wholesale department on the Telstra network."

In a separate incident, a Victorian customer was not told during the marketing stage of the call which company he worked for, but said "this is a service call to inform you that as a Telstra customer, you are eligible for a discount on your telephone service of $20 to $25 a month".

The Federal Court fined Zen Telecom $225,000 for the consumer law breaches, which also included failing to provide dozens of customers with a copy of their contract within five business days, or informing them of their cooling off rights.

It was submitted to the court that Sanjay Bhayani, the sole director, secretary and shareholder of Zen Telecom, was aware of a "substantial degree of risk" that salespeople would make false representations about its association with Telstra.

"Zen Telecom breached laws that are specifically designed to protect consumers from unscrupulous sales tactics in unsolicited marketing," ACCC commissioner Sarah Court said in a statement.

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Zen Telecom fined $225,000 over Telstra ruse