EE and Virgin are fined £13m for overcharging
EE and Virgin Media were fined £13.3million between them yesterday for overcharging customers who ended their phone and broadband contracts early.
Nearly half a million were “out of pocket” after being overbilled or charged fees they did not agree to, watchdog Ofcom said.
About 82,000 Virgin Media users overpaid nearly £2.8million and 400,000 EE customers were overcharged a total of £13.5million but ended up paying £4.3million after some bills were waived.
Shocking
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.” Phone and broadband companies can charge people who leave contracts early but under Ofcom rules the charges must be made clear and firms must not make switching too costly.
BT-owned EE apologised for its “mistake” after it was fined £6.3million for not setting out its charges to end contracts over six years.
A spokesman said: “We have refunded customers and changed the way we calculate early termination charges.”
Virgin Media, owned by Liberty Global, was fined £7million, plus £25,000 for providing Ofcom with incomplete information.
The regulator said it levied early exit charges that were higher than that agreed by customers for almost a year.
But Virgin Media chief executive Tom Mockridge said Ofcom’s decision was unjustified and disproportionate and vowed to appeal. He said: “A small percentage of customers were charged an incorrect amount and for that we are very sorry.
“This unreasonable decision and excessive fine does not reflect the swift actions we took, the strong evidence we have presented, nor our consistent, open and transparent co-operation with the regulator.”
Alex Neill of consumer magazine Which? said: “We would always advise unhappy customers to switch to a different provider, so it’s shocking that they have been penalised with unclear and excessive exit charges.”
Mark Pocock of broadbandchoices.co.uk said the “lack of transparency by providers” meant people did not feel confident switching and “end up stuck in old contracts and overpaying”.
Virgin Media has reportedly reimbursed or made charity donations covering 99.8 per cent of its overcharging, but Ofcom said £1.6million of EE’s overpaid fees were yet to be repaid.
IT CAN be tempting to think that some companies see their customers as cash cows and nothing else. Take the case of Virgin Media and EE, which have been fined a huge amount for overcharging those who wanted to end their contracts early. Where is the customer care in that?
Ofcom was right to go after them; these companies were so driven by the profit motive that hitting them in the wallet was the only way to make them see sense. Firms like these two need to understand that while they provide a much needed service, that does not give them carte blanche to charge what they like. It is about time they were brought to book.