Virgin Media and EE have been fined a combined £13.3m for overcharging nearly half a million customers who wanted to leave their phone and broadband contracts early.
Regulator Ofcom hit Virgin Media with a £7m fine, while EE must pay £6.3m after both companies charged “excessive” amounts when customers left and for failing to make clear at the outset how much exit fees would be.
Virgin Media is appealing what it claimed was a “disproportionate” penalty, while EE’s fine was reduced by 30 per cent because the company admitted the breaches and agreed to settle.
Both companies have reduced their exit charges and made changes to their terms and conditions.
For almost a year, Virgin Media charged early-exit fees that were higher than customers had agreed to, the regulator said.
The company overcharged almost 82,000 customers by an average of £34 – a total of £2.8m. Ofcom found that 6,800 customers were overcharged by more than £100.
Virgin Media also failed to publish clear and up-to-date information on its website to help customers understand the fees.
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Both companies’ excessive early-exit charges made customers less likely to switch to another provider, Ofcom said.
EE did not clearly set out the exit charges its mobile customers would have to pay and over a six-year period 400,000 customers were overbilled by a total of up to £13.5m.
Not all affected customers paid the excessive charges, as some were waived by the company.
Gillian Guy, chief executive of Citizens Advice said everyone affected should receive a refund.
She added: “Yet again mobile and broadband companies have been caught overcharging their customers.
“Our own research exposed mobile providers for knowingly overcharging customers for phones they already own by £500m.”
“This is another in a long line of failings in the mobile and broadband industry – we need an independent consumer champion to stick up for customers and stop this from happening.”
Virgin Media customers who move house to an area not covered by the company’s network have to pay an early-exit fee.
The company will now make that fact clearer in its contract terms, on its website and in conversations with customers.
Those who move to an area within the company’s network will no longer have to choose between signing up to a new minimum-term contract or paying early-exit charges. Instead, they can continue their existing contract at their new address.
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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.”
Tom Mockridge, chief executive of Virgin Media, said: “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.”