Consumer advocates have warned that the telecommunications industry's "three strikes" scheme designed to catch illegal downloaders of movies, music and TV shows will pave the way for Australian internet users to be hit with "extortionate" fines.

The telco industry's lobby group, Communications Alliance, submitted the final version of its Copyright Notice Scheme Code 2015 to the Australian Communications and Media Authority for approval on Wednesday afternoon – less than 24 hours after iiNet and M2 Group were forced to hand over the personal details of 4736 customers to Voltage Pictures, which owns the copyright to Hollywood film Dallas Buyers Club.

Under the new system, copyright owners would create lists of Internet Protocol (IP) addresses that belong to alleged illicit downloaders. This will be cross-checked against the IP addresses of all Australian internet providers and warning letters will be sent to users by the relevant telco.

If a user gets three warning letters, or "strikes", in a 12-month period, telcos will help copyright owners identify them for potential legal action after a hearing in a prescribed court. Up to 200,000 notices can be processed and sent each year.