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Ofcom comes to the rescue: EE and Virgin Media fined for overcharging customers

Written by Fatima Amedu on 21 November 2018

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Ofcom comes to the rescue: EE and Virgin Media fined for overcharging customers

Date reported: 16 November 2018

It seems that it is not only customers that get annoyed when they receive unexpected charges when leaving their phone and broadband providers. Ofcom (the UK regulator and competition authority for the UK communications industry) has fined both EE and Virgin Media a combined total of £13.3 million for overcharging phone and broadband customers who wanted to leave their contracts early. Ofcom found that both companies had failed to clearly set out their Early Termination Charges (“ETC”) for their customers.

Say it isn’t so: How EE contravened the rules

It is well known that phone and broadband companies can charge customers who decide to end their contract earlier than the stipulated minimum term stated in their contract. However, an investigation revealed that EE had contravened the following General Conditions (“GC”):

1)      GC 9.2- EE failed to be specific with the terms of the ETCs and in the conditions of its mobile phone contracts. It failed to specify the amounts that made up its ETCs for its mobile consumers, which meant that the consumer could not know the cost of these charges if they wanted to terminate their contract; and

 

2)      GC 9.3 – EE failed to take into account any discounts that its mobile and home services consumers received on the monthly subscription price when calculating their ETCs. Instead the charges were based on a higher retail price that was excessive.

The above findings meant that around 400,000 EE customers who ended their contracts were overcharged by approximately £4.3 million.

Last but not least: Ofcom’s findings for Virgin Media

Ofcom made the same findings with Virgin Media and found that around 82,000 customers were overcharged an amount just under £2.8 million. 

Both EE and Virgin Media were fined £6.3 million and £7 million respectively.

Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement, said “[t]hat [this] 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.”[i]

EE are in the process of reviewing their procedures and Virgin Media has started to make changes to its procedures.

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