Virgin Media and EE have been fined a combined £13.3 million for overcharging nearly 500,000 phone and broadband customers in a landmark action by Ofcom.
The watchdog said both companies failed to make clear the charges customers would have to pay if they ended their contract ahead of schedule.
Ofcom’s investigation found about 400,000 EE customers with recurring monthly discounts were over-billed, which saw them overpaying up to £4.3 million.
Virgin Media and EE have been fined a total of £13.3million by Ofcom for overcharging nearly 500,000 broadband customers. Pictured is a Virgin Media advert featuring billionaire founder Sir Richard Branson and Olympic sprinter Usain Bolt
It added that almost 82,000 Virgin Media customers were overcharged a total of just under £2.8 million.
Ofcom confirmed any customers who think they were overcharged by either firm but have not received a refund can still get in touch with them or their provider to resolve the matter.
A £240 penalty for moving
Martin Eldridge, Virgin Media customer
Martin Eldridge, a loyal Virgin Media customer for 13 years, was hit with an early exit fee of £240 when he moved house.
He had to cancel his internet and pay TV service because he was moving from Oxfordshire to a new area in Dorset not covered by the Virgin network.
While it is common practice for broadband providers to charge early exit fees, Virgin was the only major firm to make customers pay to cancel if they move to an area it does not supply.
Mr Eldridge, 52, whose monthly bill was £71, made an unsuccessful complaint to the independent ombudsman and Virgin Media passed the case to a debt collection agency and put a black mark on his credit record.
He described the firm’s actions as ‘disgusting’, adding: ‘It is an unjust fee. Virgin ruined my credit rating for six years.’
Virgin Media said the early exit fee had been correctly applied in this case.
Ofcom fined EE £6.3million and Virgin Media £7million for breaking consumer protection rules.
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.’
Meanwhile Virgin Media has vowed to appeal against Ofcom’s decision.
Tom Mockridge, chief executive of Virgin Media, said: ‘We profoundly disagree with Ofcom’s ruling. 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.’
A spokesman for EE added: ‘We accept Ofcom’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.
‘We’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.’
Ofcom said it launched the investigations are running a monitoring and enforcement programme after noticing a number of complaints about overcharging.
Although both probes have concluded, the monitoring programme remains in place and further investigations could be opened should the watchdog receive complaints with sufficient evidence.
Around 400,000 customers were affected at EE, while another 82,000 were overcharged by Virgin Media
Ofcom confirmed it is not currently investigating any other firms for overcharging customers ending their contracts.
A spokeswoman said: ‘We have no investigations into any other provider currently but the programme is ongoing so we are still monitoring compliance with the rules.
‘If we gather evidence that raised concerns about another provider it is within our right to open another investigation.
What to do if you think you have been overcharged for ending a contract early
Customers of any broadband provider who think they have been overcharged for ending their contract early can get in touch with Ofcom via www.ofcom.org.uk/complain-to-ofcom.
The watchdog encouraged EE customers in a similar situation to go to the firm directly after confirming the company had co-operated with its investigation and refunded customers.
EE customers can call 0800 079 0125 or visit ee.co.uk/help/help-new/make-a-complaint.
‘Our door is always open should any customers think they have been overcharged.’
The watchdog said any EE customers who think they were overcharged should get in touch with the firm directly to discuss a refund.
Ofcom’s investigation found EE did not clearly set out the exit fees that would be charged to customers on its discount contracts over a six-year period.
It discovered that up to 15million discount contracts for EE’s mobile, landline and broadband customers required them to pay excessive early exit charges, of which 400,000 decided to leave and were over-billed.
Virgin Media overcharged customers leaving contracts early for almost a year, according to Ofcom.
Gillian Guy, of Citizens Advice, said: ‘Yet again mobile and broadband companies have been caught overcharging their customers. This is another in a long line of failings in the mobile and broadband industry.’
Alex Neill, of the consumer group Which?, said: ‘We would always advise customers who are unhappy with their deal to switch to a different provider, so it’s shocking that these customers have been penalised with unclear and excessive exit charges.’