Ofcom, the U.K. telecom regulator, has fined EE and Virgin Media a combined total of £13.3 million for overcharging customers with phone and broadband products that wished to leave their contract early. Ofcom said that while firms can include early-exit charges in their contract, these two firms didn’t make it clear that the charges existed. It said around 400,000 EE customers overpaid up to a total of £4.3 million, while almost 82,000 Virgin Media customers were overcharged by up to £2.8 million.
Discussing the development, 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.”
In EE’s case, it miscalculated exit fees because it used non-discounted monthly retail prices to work out the charge, therefore, customers who would have paid a discounted price if they’d remained with EE were instead charged a cumulative price based on non-discounted figures. As a result, EE was fined £6.3 million after 30% was reduced due to it admitting its faults and settling the case.
As for Virgin Media, it was found to have overcharged 6,800 of the almost 82,000 affected customers by more than £100. As a whole, Ofcom said Virgin Media, in general, charged too high an exit fee which dissuaded customers from leaving the service, the regulator confirmed this is against its rules. It also found Virgin Media hadn’t published up-to-date information about exit fees; as a result, it was fined £7 million plus an addition £25,000 for failing to provide full information when asked. Virgin Media stated that it was going to appeal the regulator's decision.
Both of the firms, as a result of these findings, have tried to refund affected customers and have reduced their exit fee charges. They’ve also taken measures to make it clearer to customers what fees are involved when leaving the service early.