The telephone ombudsman has given major phone companies until Christmas to stop harassing customers for phone bill debts or face tougher rules governing their pursuit of payments.
Mr Pinnock said debt collectors acting for phone companies were "routinely failing" to comply with industry guidelines.
His office had found consumers were being incorrectly listed as defaulters, previously waived debts were being sold and pursued, and agencies were not producing evidence that three-year-old debts were actually owed.
Mr Pinnock said: "Service providers have an obligation to consumers to ensure that debts referred or sold to specialist debt recovery companies are valid."
Consumer legal centres said they had been flooded with complaints after Telstra sold more than 800,000 debts to a Baycorp subsidiary, Alliance Factoring, in December. "Most of the problems still tend to be with Alliance Factoring," Mr Pinnock said.
