UK telecoms regulator Ofcom has fined quad-play providers EE and Virgin Media for leaving customers "out of pocket" and overcharging those who wanted to leave broadband and phone contracts early. Following its investigation, Ofcom has fined EE £6.3m and Virgin Media £7m.
According to the regulator, around 400,000 EE customers who ended their contracts early were over-billed, paying a total of around £4.3m as a result. Almost 82,000 Virgin customers were also overcharged, for an amount totalling just under £2.8m, although Virgin has already announced plans to appeal this finding.
Phone and broadband companies can charge customers who decide not to see out the minimum term of their contracts, but such charged 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, with both firms failing to make sufficiently clear the charges that customers would have to pay, in addition to over-billing leavers.
"EE and Virgin Media broke our rules by overcharging people who ended their contracts early," said Gaucho Rasmussen, director of investigations and enforcement at Ofcom. "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."
Ofcom's investigation of EE looked at a six-year period and found that the firm had miscalculated early-exit charges when it came to customers with 'discount contracts' leaving early. EE cooperated fully with Ofcom during the investigation, has volunteered to conduct an in-depth review of its processes and systems, and has already refunded over £2.7m to affected customers. In light of these actions, Ofcom elected to reduce the company's fine by 30 per cent.
In contrast, following Ofcom's investigation of Virgin Media charging higher-than-contracted early-exit fees, the mobile provider was fined an additional £25,000 for providing incomplete information to Ofcom's statutory information request. Virgin Media has since reminbursed or made donations to charity in respect of 99.8 per cent of affected customers, and has reduced the level of its early-exit charges by an average of 30 per cent.