Regulator Ofcom has today November 16 fined EE and Virgin Media a combined total of £13.3m for overcharging phone and broadband customers who wanted to leave their contracts early.
Phone and broadband companies can charge customers who decide not to stay with them for the minimum term of their contracts. But under Ofcom rules, these charges must be made clear to customers, and must not make it too costly to switch to another provider.
The investigation by Ofcom found that both EE and Virgin Media failed to comply with these rules, because:
- 400,000 or so EE customers who ended their contracts early were over-billed, and customers ended up over-paying up to £4.3m;
- Almost 82,000 Virgin Media customers were overcharged a total of just under £2.8m
- Both companies failed to clearly set out the charges customers would have to pay if they ended their contract early.
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.”
HM Treasury will take the money Ofcom has received.
Both EE and Virgin set the early exit fee to high meaning thousands of customers were unlikely to switch to another provider something which is against Ofcom’s rules.
Virgin were charged £7m and a further £25,000 for failing to provide information when requested.
EE was fined £6,300,000 it includes a 30% reduction because it admitted the breaches and agreed to settle the case.
Not all of EE’s customers paid the huge charge as customer services waived the fee.