The Australian Communications and Media Authority has formally warned iTalkBB Australia that it is in breach of the Telecommunications Consumer Protection (TCP) code.
ACMA found the China-headquartered internet and telecommunications provider had breached direct debit conduct on 43 separate occasions.
The TCP requires telcos that offer direct debit payment options to obtain customer authorisation. Telcos are also required to give customers at least 10 working days to check their bill before a direct debit transaction.
ACMA also found that iTalkBB failed to correctly document and make available its complaints handling process, and did not keep records for three separate complaints.
This is the second time in under three years that ACMA has taken action against iTalkBB for breaching the TCP.
"Customers should have confidence that their telco will abide by rules designed to protect consumers," said ACMA chair Nerida O'Loughlin.
"This direction sends a strong message to iTalkBB Australia that it is time it took code compliance far more seriously to deliver better outcomes for its customers."
ACMA said it can commence federal court proceedings if the telco breaches its formal direction.
Last week, Australia's fourth largest telco, TPG, was hit with a $360,000 fine by ACMA for not prorperly unsubscribing customers that opted out of marketing materials, settling the matter out of the court.