Ofcom has fined EE and Virgin Media a combined total of £13.3 million following both operators overcharging customers looking to leave their contracts early.
EE has been fined £6.3 million with Virgin fined a further £7 million, although Virgin plan to challenge Ofcom’s ruling.
Both have been fined due to not making clear the charges that customers face if they decide to terminate their contracts early.
The fines follow an investigation that found over 400,000 EE customers who terminated their contracts early were over-billed, with customers over-paying up to £4.3m.
Around a further 82,000 Virgin Media customers were overcharged totalling £2.8m in overpaid customer charges.
Investigation
The fine comes as part of a six-year investigation by Ofcom that found terms applying to EE’s ‘discounted contracts’ weren’t clear to customers in setting out additional charges they could face if they left their contract early.
Up to 15 million discount contracts for EE’s mobile, landline and broadband customers required them to pay more expensive early-exit costs.
During this period the 400,000 who decided to leave their contracts early were collectively over-billed by up to £13.5m in charges as a result of EE miss-calculating prices early-exit charges for its customers based on the non-discounted monthly retail price.
Following the investigation EE has agreed to change its terms and reduce charges and has refunded £2.7m to the affected customers it could identify, although £1.6m cannot be refunded.
Ofcom has welcomed EE in-depth review of its processes and systems as it seeks to comply with regulations.
Meanwhile Virgin Media overcharged its customers that left their contracts early an average of £34, totalling £2.8m. Around 6,800 customers were over-billed by more than £100.
In total Virgin Media has refunded 99.8 per cent of its customers and the investigation has prompted Virgin to reduce the level of costs it charges those that leave early by an average of 30 per cent, with some reduced by 50 per cent.
Ofcom director of investigations and enforcement Gaucho Rasmussen said: “EE and Virgin Media broke our rules by overcharging people who ended their contracts early.
“This is unacceptable and 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.”
Appeal
However Virgin Media has said it will challenge the ruling as it claims it to be “unjustified” and “disproportionate” after saying it has refunded all those customers affected.
Virgin Media CEO Tom Mockridge said: “We profoundly disagree with Ofcom’s ruling. This decision and fine is not justified, proportionate or reasonable.
“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.”