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.
Ofcom says both companies were fined for breaking consumer protection rules by not clearly setting out early-exit fees for leaving and excessive charges to customers for ending their contracts early.
EE has been fined £6.3 million while Virgin Media has been fined £7 million. Virgin was also fined an additional £25,000 for failing to provide complete information to the watchdog.
The watchdog says that following an investigation around 400,000 EE customers who ended their contracts early were over-charged and paid up to £4.3 million too much.
Almost 82,000 Virgin Media customers were overcharged a total of just under £2.8 million.
Ofcom says these excessive charges disincentivised EE and Virgin Media customers from switching to another provider, which is against its rules.
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.
Gaucho Rasmussen, Ofcom’s director of investigations and enforcement, says: “EE and Virgin Media broke our rules by overcharging people who ended their contracts early. Those people were left out of pocket, and the charges amounted to millions of pounds.”
He adds: “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.”
What to do if you think you have been overcharged
EE’s overcharging was between at 1 January 2012 and 5 June 2018 for its mobile customers, and 1 January 2012 and 7 August 2018 for its landline and broadband customers.
Ofcom says EE has refunded just over £2.7 million to the affected customers it has been able to identify, which means up to £1.6 million has not yet been refunded.
Virgin Media’s overcharging was between 22 September 2016 and 22 August 2017.
Virgin Media has reimbursed 99.8% of affected customers and the company is continuing its efforts to trace remaining customers in order to refund them.
If you believe you have been overcharged you should contact your Virgin Media or EE customer care team who will be able to help you. Alternatively, you can also make a complaint, details of which are on the EE and Virgin Media websites.
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Ofcom’s investigation found that Virgin Media levied early-exit charges that were higher than customers had agreed to when signing up to their residential contracts for almost a year.
However, Virgin Media says it “strongly disagrees” with the decision taken by Ofcom and will appeal to the the Competition Appeal Tribunal.
Tom Mockridge, chief executive of Virgin Media, says: “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.”
He adds: “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.”
Virgin Media says it mistakenly overcharged 1.5% of its 5.5 million cable customers and it has taken a number of steps to make sure that it does not happen again.
An EE spokeperson says: “We accept Ofcom’s findings and recognise that 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.’’
Richard Neudegg, head of regulation at uSwitch.com, says the fines will send out a serious message to the telecoms industry.
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He says: “It is heartening to see the best interests of consumers being prioritised. In many cases, customers leaving their mobile or broadband contracts early are doing so due to circumstances out of their control, and there are already clear rules in place to prevent providers from overcharging when this happens.
Mr Neudegg adds: “That almost half a million consumers have been hit by unfair fees by EE and Virgin Media is very disappointing but the scale of the penalties is a real warning shot for the rest of the telecoms industry.”