EE and Virgin Media slapped with £13.3m fine

  • EE and Virgin Media slapped with £13.3m fine

EE and Virgin Media slapped with £13.3m fine

The communications regulator has fined EE and Virgin Media £13.3 million for overcharging phone and broadband customers who wanted to leave their contracts early.

EE, Britain's biggest mobile operator, was fined £6.3m and Liberty Global-owned Virgin Media was fined £7m.

Both companies failed to make sufficiently clear the charges customers would have to pay if they ended their contract early, concluded the regulator, which described the companies' actions as "unacceptable". "Those people were left out of pocket, and the charges amounted to millions of pounds", said Gaucho Rasmussen, Ofcom's Director of Investigations and Enforcement.

Almost 82,000 Virgin Media customers were overcharged a total of just under £2.8m.

Virgin's mistake was similar to EE's and it's noted that some 6,800 of those affected were overcharged by more than £100!

Virgin has also made changes to its procedures and contract terms for home movers. However, not all affected customers had paid these excessive charges as EE had subsequently waived some of them, leaving £4.3m in excessive charges.

Tom Mockridge, chief executive of Virgin Media, said: "We profoundly disagree with Ofcom's ruling".

Ofcom's investigation found EE did not clearly set out the exit fees that would be charged to customers on its discount contracts over a six-year period.

Virgin Media has refunded or made donations in relation to 99.8% of those affected and if after further efforts others can not be identified the overpayments will be made as donations to charity. It called the decision unreasonable and the fine excessive.

Virgin immediately said it would appeal against Ofcom's decision in the Competition Appeal Tribunal.

"We accept Ofcom's findings and recognise that we have made a mistake", a company spokesperson said in a emailed statement.

We wholeheartedly reject the claim by Ofcom that our ETC levels dissuaded customers from switching.

The company was fined an additional £25,000 for providing incomplete information to the regulator. "We will be appealing Ofcom's decision".

Some customers appear to have avoided the charge and the EE estimate of what was over charged is up to £4.3m.

Making sure that broadband consumers can easily switch between providers is one of the key aims for Ofcom and as various alternate broadband infrastructure appears making it cheaper and simply to switch between them is important, particularly as not all retailers sell the full fibre services and as firms like Vodafone roll-out further this will become more of a problem. Invariably the underlying VDSL2 and ADSL2+ part of the connection is on a simple 1 month term but the consumer is tied in for a long period, the benefit of the long contract is usually seen as subsidised broadband hardware and welcome offers.

"An example of where this works particularly well is in energy, where we as the single ombudsman for the sector work closely with Ofgem and Citizens Advice in a tripartite model based on collaboration and intelligence sharing".