Free ISP RedHotAnt has started returning money to its customers after closing its unmetered access service in January.
Kent Trading Standards has been investigating the company over whether it cashed cheques for the internet service after it knew it would be closed down.
RHA decided "voluntarily" to return those cheques after Trading Standards went over the business's books and computers, according to PC Advisor sources.
This gets RHA off the hook with regards to a civil law suit, but if Trading Standards finds it cashed cheques after it knew it was pulling the service, the
company could still end up in the criminal courts.
RHA staff are dealing with customers on a case-by-case basis, beginning with the last customers to sign up to the unmetered service and working their way back.
Customers won't get all their money back – the amount will depend on how much they used the service.
Trading Standards officers have also managed to contact RedHotAnt’s managing director Kevin Wall after he dropped off their radar in February.
Officers involved in the investigation are now questioning Wall, who is believed to have approached Trading Standards of his own volition.
Richard Pilborough, operational support manager for Kent Trading Standards, would only say that officers were "in dialogue with a director of RHA".
“We are in contact with a director of the company over the investigation… and they are answering our questions,” said Pilborough.
But a PC Advisor source confirmed that the director is Wall.
Wall is understood to spend a significant amount of his time abroad, though Trading Standards would not say where.