UK comms regulator Ofcom has fined telcos EE £6.3 million (€7.1m) and Virgin Media £7 million for overcharging phone and broadband customers who wished to leave their contracts early.
The penalties are the result of investigations into EE’s and Virgin Media’s early-exit charges.
Phone and broadband companies can charge customers who decide not to see out the minimum term of their contracts. But under Ofcom rules, those charges must be made clear to customers, and must not make switching to another provider too costly.
Ofcom’s investigation found that both EE and Virgin Media failed to comply with these rules, because:
“EE and Virgin Media broke our rules by overcharging people who ended their contracts early,” commented Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement. “Those people were left out of pocket, and the charges amounted to millions of pounds.”
“That is unacceptable. These fines send a clear message to all phone and broadband firms that they must play by the rules, in the interests of their customers.”
Virgin Media said it strongly disagreed with the decision, believing it to be both unjustified and disproportionate. The Company will now appeal Ofcom’s decision in the Competition Appeal Tribunal.
Between September 2016 and August 2017, Virgin Media said it mistakenly overcharged 1.5 per cent of its 5.5 million cable customers. “This clearly should not have happened and we have taken a number of steps to make sure that it does not happen again. We carried out a full review of our systems and processes, which included introducing a new automated ETC calculator for our Customer Care Agents as soon as we could. We have also improved customer communications, updated our website and made our policy easier to understand,” it advised.
“Virgin Media has always informed both existing and potential customers that our contracts apply over a specific period, that ending a contract early may result in a fee being charged and that they should consider the length of contracts before entering into them. Rolling 30 day contracts are also available for customers who want more flexibility and do not wish to sign up for a fixed period, such as 12 months,” it added.
Tom Mockridge, CEO of Virgin Media, said: “We profoundly disagree with Ofcom’s ruling. This decision and fine is not justified, proportionate or reasonable.
“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.
“We wholeheartedly reject the claim by Ofcom that our ETC levels dissuaded customers from switching.
“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.”