EE and Virgin Media fined £13m for overcharging customers
Around 400,000 EE customers who ended their contracts early were overcharged to the tune of £4.3m over a six-year period, an investigation revealed.
And an estimated 82,000 Virgin Media customers overpaid by £2.8m in the year to August 2017. However, Virgin Media is to appeal the “unjustified and disproportionate” fine and ruling.
Current rules allow phone and broadband companies to charge customers who decide to leave before the minimum contract term is up. But these charges must be clear and providers mustn’t make switching to another provider too costly.
But the communications regulator Ofcom found the media giants failed to make clear the charges customers would have to pay if they ended their mobile, landline or broadband contracts early.
The investigation revealed that 15 million customers on EE’s ‘discount contracts’ weren’t given clear information about early exit fees and were required to pay excessive charges of up to £13.5m to leave between January 2012 and August 2018. This was due to an EE miscalculation.
Not all affected customers paid the excessive charges, as some were subsequently waived by EE. In total, 400,000 decided to leave early and they overpaid by up to £4.3m. It has refunded just over £2.7m to affected customers but £1.6m is outstanding. In light of this, Ofcom levied a fine of £6.3m for the breaches.
Virgin Media overcharging
For nearly a year (22 September 2016 and 22 August 2017), Virgin Media was found to levy early exit charges which were higher than customers had agreed to.
As such, almost 82,000 customers who broke the contract term were charged just under £2.8m, an average of £34 per person, though Ofcom found nearly 7,000 were charged more than £100.
These high charges meant customers were disincentivised from switching away – against Ofcom rules – and the investigation also found it failed to publish clear and up-to-date information on its website to help customers understand early exit charges.
But Virgin Media has refunded or made donations to charity in respect of more than 99.8% of affected customers and Ofcom said it’s continuing its efforts to trace remaining customers in order to refund them. It has also made a number of changes to its procedures and contract terms.
As such, Ofcom fined the provider £7m and an additional £25,000 as it failed to provide complete information as part of the investigation.
What do the media giants say?
An EE spokesperson, said: “We accept Ofcom’s findings and recognise we have made a mistake. We apologise to customers with discounted tariffs who paid more than they should have when cancelling their contracts early. We’ve already refunded customers and changed the way we calculate early termination charges, and we will continue to focus on ensuring our policies are clear and fair for all customers.”
Tom Mockridge, CEO of Virgin Media, said: “A small percentage of customers were charged an incorrect amount when they ended one or more of their services early and for that we are very sorry.
“As soon as we became aware of the mistake we apologised and took swift action to put it right by paying refunds, with interest, to everyone affected. For those few people we could not locate, we have made an equivalent donation to charity. We also reviewed our internal processes and systems, and improved our customer communications to make sure that this does not happen again.
“This unreasonable decision and excessive fine does not reflect the swift actions we took, the strong evidence we have presented, or our consistent, open and transparent cooperation with the regulator. We will be appealing Ofcom’s decision.”