EE and Virgin Media Face £13m Fines

Telecoms regulator Ofcom has fined Virgin Media and EE a total of £13.3m after both companies were found to be charging customers excessive early-exit fees.

Companies are permitted to charge customers who decide to leave before the minimum term of their contract has passed, but Ofcom rules stipulate that these charges must not make it too costly for customers to switch, and should be clearly stated when the contract is signed.

Ofcom’s investigation found that both EE and Virgin Media had violated these rules. Around 400,000 EE customers were overcharged and collectively paid up to £4.3m more than they should have, whilst 82,000 Virgin Media customers were overcharged around £2.8m. Neither company clearly set out their early-exit charges to customers.

Ofcom’s Gaucho Rasmussen, 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.”

Over a period of 6 years, EE had been selling its mobile customers “discount contracts”, which did not clearly state the charges they would face if they terminated the plans early. In addition, up to 15 million EE discount contracts for mobile, landline, and broadband packages required customers to pay exit charges that were far too high.

EE miscalculated their charges for early exit by using the regular monthly price of their contracts, and not the discounted one they were actually receiving. Consequently, the 400,000 EE customers who broke off their contracts before the minimum term was up were over-billed a total of £13.5m in early exit fees. Some charges were waived by EE, so they estimate that customers overpaid by £4.3m overall.

Virgin Media had been charging customers higher early-exit fees than they had agreed to pay when signing up. 82,000 customers left their contracts early and were collectively overcharged just under £2.8m. This averaged out to about £34 per person, but an overcharging in excess of £100 was experienced by almost 7,000 customers. Ofcom deemed these early exit fees to be far too high as it deterred customers from switching to another provider, as well as finding that the information on their website regarding early-exit fees were not clear enough.

EE was fined £6.3m overall, including a 30% reduction for admitting wrongdoing. EE agreed to significantly reduce its fees and to change its terms. Refunds of over £2.7m have already been issued, although a further £1.6m cannot be refunded as they cannot identify who the money should be refunded to.

Virgin media was fined £7m in total, with a further £25,000 fine for failing to provide the full information requested by Ofcom. Refunds or donations to charity have been made in the cases of 99.8% of customers. Virgin Media has changed their procedures, reducing early exit charges by an average of 30%.

All money raised from the fines will be passed on to HM Treasury.

Danny Lord

Danny is our Editor-in-Chief, and has been writing news and guides for comparison sites for the last five years.

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