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EE and Virgin Media fined for breaking consumer protection rules

Source: Vsoft, 19/11/2018

Ofcom has imposed fines totalling Â£13.3m on EE and Virgin Media,
saying both providers levied excessive charges on customers who
ended their contracts early
regulator Ofcom has imposed fines of Â£6.3m on EE and Â£7m on Virgin
Media for overcharging phone and broadband customers who were
trying to leave their contracts early.
While communications services providers (CSPs) are entitled to
charge customers who decide not to ride out their minimum contract
periods, these charges must be made clear to customers and must
not make switching providers too costly.
An Ofcom investigation found that 400,000 EE customers ending
their contracts early were over-billed to the tune of Â£4.3m, and
82,000 Virgin Media customers were over-billed to the tune of
Â£2.8m. In addition, said the regulator, both providers failed to
make these charges clear.
â€œEE 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,â€ said Gaucho
Rasmussen, Ofcomâ€™s director of investigations and enforcement.
â€œThat 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.â€
In EEâ€™s case, the code breaches took place over a six-year period,
affecting 15 million customers on discount contracts. The
investigation found that these contract terms and conditions were
unclear and would have been required to pay excessive charges to
exit early.
Out of those 15 million contracts, 400,000 did leave their
contract early, and were collectively billed up to Â£13.5m, because
EE miscalculated exit charges based on the non-discount contract
price. In many cases, the charges were waived, resulting in the
lower Â£4.3m figure.
EE pointed out that it had accepted it broke the rules and co-
operated fully with the investigation, and its fine has
accordingly been reduced by 30%. The operator has now refunded
just over Â£2.7m to customers, while Â£1.6m remains unreturnable
because the affected customers canâ€™t be identified. It has also
undertaken to change its terms and reduce its exit fees.
â€œWe accept Ofcomâ€™s findings and recognise that we have made a
mistake. We apologise to customers with discounted tariffs who
paid more than they should have when cancelling their contracts
early,â€ said an EE spokesperson.
â€œWeâ€™ve already refunded customers and changed the way we calculate
early termination charges, and we will continue to focus on
ensuring our policies are clear and fair for all customers.â€™â€™
In Virgin Mediaâ€™s case, 82,000 customers were overcharged by an
average of Â£34 per person under an early-exit charging regime that
was higher than what they had initially agreed to in their
contracts.
Ofcom found that this meant Virgin customers were disincentivised
to switch suppliers, and that the provider failed to publish clear
and current information to help customers understand the charges.
In addition to the Â£7m fine, the provider has been hit with an
additional Â£25,000 charge for providing incomplete information in
response to a legal request.
The supplier has now either reimbursed, or donated to charity in
lieu, in respect of virtually all the affected customers, and is
still trying to trace the minority that remain. It has now
committed to reduce the level of its charges, and make its terms
and conditions much clearer â€` including publishing reminders that
its broadband network is not nationwide by any means, and that
customers moving to a home outside its coverage area may be liable
for early-exit charges.
It will also be updating its training and customer service
procedures, and doing more to promote 30-day rolling broadband
contracts.
Virgin fights on
While EE has accepted its fine, Virgin Mediaâ€™s CEO Tom Mockridge
vowed to fight the ruling in court, saying that the fine failed to
take into account the remedies it had put in place.
Mockridge also pointed out that none of the 82,000 affected
customers had actually changed their decision to leave as a result
of being overcharged.
â€œThis decision and fine is not justified, proportionate or
reasonable. A small percentage of customers were charged an
incorrect amount when they ended one or more of their services
early and for that we are very sorry,â€ he said.
â€œAs soon as we became aware of the mistake, we apologised and took
swift action to put it right by paying refunds, with interest, to
everyone affected. For those few people we could not locate, we
have made an equivalent donation to charity. We also reviewed our
internal processes and systems, and improved our customer
communications to make sure that this does not happen again.
â€œWe wholeheartedly reject the claim by Ofcom that our ETC [early
termination charge] levels dissuaded customers from switching,â€
said Mockridge.

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