Ofcom has handed down fines totalling £13.3m to Virgin Media and EE after concluding that they've been fleecing people who tried to leave their contracts early.
Virgin Media's portion of the fine is £7m, plus another £25k for leaving out important information in their submission to the regulator. The company overcharged 1.5% of their customers, which amounts to about 82,500 people, but says it's either refunded or donated to charity almost the entire lot.
Virgin is pretty grumpy about the fine – Chief Exec Tom Mockridge says through bites of humble pie:
"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."
EE, meanwhile, got a £6.3m fine, after it emerged that their "miscalculation" of charges for leaving a contract early netted them £4.3m they weren't entitled to, of which £1.6m is still owed to customers. The overcharges were applied to people who had recurring monthly discounts, and EE tells us they've already contacted customers who are due a refund.
The EE statement is considerably more humble than Virgin's:
"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."
The fines are serious business because in addition to being unfair, they discourage people from switching providers, which is both detrimental to competition and against Ofcom's rules.
Richard Neudegg, head of regulation at switching site uSwitch.com, says the fine should act as a warning to other companies:
"Ofcom is sending a serious message to all telecoms providers with these fines and it is heartening to see the best interests of consumers being prioritised.
In many cases, customers leaving their mobile or broadband contracts early are doing so due to circumstances out of their control, and there are already clear rules in place to prevent providers from overcharging when this happens.
That almost half a million consumers have been hit by unfair fees by EE and Virgin Media is very disappointing but the scale of the penalties is a real warning shot for the rest of the telecoms industry."