UK regulator Ofcom fined EE £6.3 million and Virgin Media £7 million for overcharging phone and broadband customers who wished to leave their contracts early, with the latter stating it will appeal the decision in court.
“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 said in a statement.
Around 400,000 EE customers who ended their contracts early were over-billed, and ended up over-paying up to £4.3 million, while 82,000 Virgin Media customers were overcharged £2.8 million, it added.
Gaucho Rasmussen, Ofcom’s director of investigations and enforcement, said: “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.”
As part of EE’s co-operation with the investigation, the operator has agreed to change its terms and significantly reduce its charges, and volunteered to conduct an in-depth review of its processes and systems to help secure its future compliance with Ofcom rules, the regulator stated.
An Ofcom representative told Mobile World Live “the incorrect charging only affected customers with recurring monthly discounts. This is in the interest of customers”, adding that ‘’We accept Ofcom’s findings and recognise that we have made a mistake.”
As for Virgin, Ofcom said it had reimbursed or made donations to charity in respect of most affected customers and will update its procedures and contract terms.
However, Virgin said in a statement it “strongly disagrees with the decisiom”, deeming it “unjustified and disproportionate” and plans to take the matter to the Competition Appeal Tribunal.
In a statement, the company defended early termination charges, stating they are widely used by businesses to calculate the payment due should a customer decide to leave before the end of their agreed contractual term.
Last year EE was fined £2.7 million by Ofcom for billing issues which led to customers being overcharged by a total of £250,000.
Ofcom also hit EE parent BT in 2017 with a record £42 million fine for breaching contracts with telecoms providers and failing to pay the required level of compensation for delays in Ethernet installations.Subscribe to our daily newsletter Back