By Lauren Howells.
Communication giants EE and Virgin Media have been fined a combined total of £13.3 million by Ofcom, for overcharging phone and broadband customers who wanted to leave their contracts early.
Ofcom said that the fines were the result of investigations into EE’s and Virgin Media’s early-exit charges.
Of the nearly 500,000 customers affected, around 400,000 were EE customers and almost 82,000 were with Virgin Media.
Ofcom fined EE £6.3 million and Virgin Media £7 million
Ofcom fined EE £6.3 million and Virgin Media £7 million for breaking consumer protection rules after both levied “excessive charges” to those customers who wanted to end their contracts early.
The law currently allows phone and broadband companies to charge customers who decide to leave their contracts early, but under Ofcom’s rules, those charges must be made clear to customers and must not result in switching to another provider becoming too costly.
“failed to make sufficiently clear” what customers had to pay
The regulator discovered that around 400,000 EE customers who ended their contracts early were over-billed and ended up overpaying by up to £4.3 million and nearly 82,000 Virgin Media customers were overcharged by a total of just under £2.8 million. Ofcom said that both companies had “failed to make sufficiently clear” what customers would have to pay if they ended their contract early. It also said that both EE’s and Virgin Media’s charges had disincentivised customers from switching to another provider, which is against Ofcom rules.
Ofcom said that EE has now refunded just over £2.7 million to those customers affected who it has been able to identify and has agreed to change its terms and significantly reduce its charges.
Virgin Media has now refunded or made donations to charity in respect of 99.8% of affected customers. It has also significantly reduced its early-exit charges by an average of 30%. In addition to this, those customers who move house within the Virgin Media network can now continue their existing contract at their new address.
Fines send a clear message
Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement, said:
“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.
“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 has said that it “strongly disagrees” with Ofcom’s decision and believes it to be “both unjustified and disproportionate”. It intends to appeal Ofcom’s decision in the Competition Appeal Tribunal.
EE recognise it had “made a mistake”
An EE spokesperson said that they accepted Ofcom’s findings and recognised that they had made a mistake.
“We apologise to customers with discounted tariffs who paid more than they should have when cancelling their contracts early”.