EE and Virgin Media have today been fined a combined total of £13.3 million for overcharging customers who wanted to leave their contracts early.
Ofcom said phone and broadband companies are allowed to have early-exit charges but they must be made clear to customers, and “must not make switching to another provider too costly”.
The regulator’s investigation found that EE and Virgin Media overcharged 500,000 customers and 82,000 customers respectively.
“Those people were left out of pocket, and the charges amounted to millions of pounds,” said Gaucho Rasmusse, Ofcom’s director of investigations and enforcement.
“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.”
The Ofcom investigation found that 400,000 EE customers paid up to £4.3 million too much and 82,000 Virgin customers were overcharged by just under £2.8 million.
Virgin admitted that it had accidentally overcharged a small percentage of customers but said it planned to appeal the “unjustified and disproportionate” decision.
“We profoundly disagree with Ofcom’s ruling,” said CEO Tom Mockridge. “This 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.
“As 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.
“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.”
Ofcom said EE’s £6.3 million fine incorporates a 30 per cent reduction to reflect that the company admitted the breaches and agreed to settle the case.