The telecoms regulator has fined Three Ireland €575,000 for breaching contract change and switching rules.
The fine follows an investigation by ComReg into changes by Three in March and April of this year.
ComReg found that the conditions and procedures put in place by the telecoms company in respect of the proposed contract changes had the effect of "disincentivising customers from changing service provider."
The issue began on March 3 when Three told its prepay and bill pay customers that it was planning to change its terms and conditions from April 3.
The move prompted a sharp reaction from the customers, many of whom contacted ComReg's Consumer Care section.
Most of the complaints focused on customers inability to access a 1800 number provided by Three to enable customers to seek more information or cancel their service.
Following an investigation of the proposed changes, ComReg also issued a Non-Compliance notice to Three Ireland around its obligations to customers.
While Three subsequently committed to implementing a series of measures aimed at resolving the issues that led to the non-compliance, the regulator decided to fine it €575,000.
This was because it believed Three had failed to properly advise its customers of the nature of the contract changes proposed.
It had also failed to adequately enable them to exit their contracts without penalty, after being notified of the proposed contractual changes, ComReg said.
Three also did not ensure that its conditions and procedures for contract termination did not act as a disincentive to consumers changing service provider, ComReg found.
Since the findings, the regulator says Three has given back money to any customer who was charged an early termination fee or other penalty as a result of the contract changes.
The mobile operator also re-notifed certain customers of their contract changes, while also giving them the option to withdraw from the contract without penalty if they wanted to.
The company has also committed to abide by a range of procedures if, in the future, it implements more contract changes.
These include not applying an early termination fee or other penalty if a customer decides to exercise their right to cancel within the allowed window.
Three will also accept notifications of contract cancellation from customers by phone, post, online chat, or by visiting a retail store and Three will promptly confirm such cancellation requests using the same channel of communication.
The issues in this case involved 1.3 million Three customers.
The proposed contract changes related to a price increase of up to €5 a month per customer and changes to terms and conditions ahead of the abolition of EU roaming charges.
The fine is the largest retail penalty ever issued by ComReg.
In a statement, Three said it had been in discussions with ComReg over the past number of months about how it communicated and implemented the changes to some customers' contracts earlier this year.
It added that steps have now been put in place to avoid similar issues in the future.