Virgin Media has stated it “strongly disagrees” with the conclusion reached by Ofcom
Virgin Media has been fined £7million while EE has been hit with a staggering £6.3million charge.
Ofcom explained such a conclusion was reached after it carried out an investigation into early exit charges from both providers.
The regulator said: “Phone and broadband companies can charge customers who decide not to see out the minimum term of their contracts.
“But under Ofcom rules, those charges must be made clear to customers, and must not make switching to another provider too costly.”
Ofcom explained it found “around” 400,00 EE customers that has terminated their contracts early were “over-billed”.
Moreover, it added Virgin Media was responsible for overcharging over 82,000 customers.
The regular went on: “Our investigation found that both EE and Virgin Media failed to comply with these rules, because around 400,000 EE customers who ended their contracts early were over-billed, and customers ended up over-paying up to £4.3m.
“And almost 82,000 Virgin Media customers were overcharged a total of just under £2.8m; and both companies failed to make sufficiently clear the charges customers would have to pay if they ended their contract early.”
Ofcom explained one of the biggest problems surrounding EE was its failure to “clearly set out the charges its mobile customers would have to pay if they ended their contracts early” on certain “discount contracts”.
It declared: “Ofcom’s investigation found that, over a six-year period, terms applying to EE’s ‘discount contracts’ did not clearly set out the charges its mobile customers would have to pay if they ended their contracts early.
“We also found that up to 15 million discount contracts for EE’s mobile, landline and broadband customers required them to pay excessive early exit charges.
“Of those customers, 400,000 decided to leave their contracts early during the relevant period. They were collectively over-billed by up to £13.5m in early exit charges.”
However, Ofcom did explain that not all customers affected ended up paying the charges set by EE.
And the regulator insisted the bills “disincentivised” customers from switching to another provider.
It went on: “Not all affected customers paid the excessive charges, as some were subsequently waived by EE. Taking this into account, EE estimates that its discount customers overpaid by up to £4.3m.
“These excessive charges disincentivised EE customers from switching to another provider, which is against Ofcom rules.”
With regard to Virgin Media, the UK regulator said the provider was responsible for charging customers higher early-exit fees than had been agreed.
Ofcom explained: “Our investigation found that, for almost a year, Virgin Media levied early-exit charges that were higher than customers had agreed to when signing up to their residential contracts.
“Our investigation also discovered that Virgin Media failed to publish clear and up-to-date information on its website to help customers understand its early-exit charges.”
In response to Ofcom’s decision, Virgin Media has stated it “strongly disagrees” with the conclusion that was reached.
Furthermore, the firm will appeal the regulator’s move in the Competition Appeal Tribunal.
Virgin Media said: “Virgin Media strongly disagrees with the decision taken by Ofcom today. We believe it to be both unjustified and disproportionate. The Company will now appeal Ofcom’s decision in the Competition Appeal Tribunal.
EE said it recognised it had “made a mistake” and apologised to the affected customers
“Early Termination Charges (ETCs) are widely used by businesses across a number of sectors to calculate the payment due should a customer decide to leave before the end of their agreed contractual term.
“Between September 2016 and August 2017, Virgin Media mistakenly overcharged 1.5% of its 5.5 million cable customers. This clearly should not have happened and we have taken a number of steps to make sure that it does not happen again.
“We carried out a full review of our systems and processes, which included introducing a new automated ETC calculator for our Customer Care Agents as soon as we could. We have also improved customer communications, updated our website and made our policy easier to understand.
“Virgin Media has always informed both existing and potential customers that our contracts apply over a specific period, that ending a contract early may result in a fee being charged and that they should consider the length of contracts before entering into them.
“Rolling 30 day contracts are also available for customers who want more flexibility and do not wish to sign up for a fixed period, such as 12 months.”
Express.co.uk also reached out to EE and received an statement from the UK network.
Virgin Media has been fined £7million while EE has been hit with a staggering £6.3million charge
EE said it recognised it had “made a mistake” and apologised to the affected customers.
An EE spokesperson said: ‘’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.’”