When we sign on the dotted line for a new mobile network contract we are putting our full trust in a provider’s capacity and desire to afford us the best service throughout the term of that contract. Essentially, we expect to receive precisely what has been displayed in the array of marketing and information packs the company has put out there to attract us into signing on the dotted line in the first place. However, that’s not always what we end up getting.
Through a sophisticated web of confident customer service representatives, polished advertisements, high-end websites and high street stores up and down the country, our confidence in the company has been built. But what happens when we find that this trust may have been misplaced?
At the end of 2018, Ofcom, the UK’s communications regulator, reported that two of the most popular and trusted mobile providers had been overcharging a combined total of up to 480,000 customers. After a thorough investigation into EE and Virgin Media’s early exit charges, it was found that the companies failed to comply with regulations set out by Ofcom. These regulations state that network companies must keep their exit charges to a fair amount and they should be clearly expressed to customers. The idea is that these early exit costs should not be too high so they allow customers the freedom to move networks if they desire.
It was reported that EE calculated the early exit charges of ‘discounted contract’ customers at the full non-discounted monthly price, enticing customers to join on a “cheaper” contract; however; if they were unhappy and wished to change providers their mobility was hindered by the fact that EE was reported to have doubled their exit fees. The investigations also uncovered that these charges were also never made clear to clients when they first signed up.
Hundreds of thousands of customers who opted to leave their contracts early paid around £13.5 million in ‘unfair’ charges. A direct breach of Ofcom rules.
The investigation also uncovered that Virgin Media charged higher exit fees to customers than what was originally agreed during the set-up of their contracts. Following in EE’s footsteps, Virgin Media’s high exit charges also made it difficult for signed up customers to change providers. In addition to this, reports revealed that the company failed to present appropriate information online to educate customers or prepare them for those exit fees. It was reported that Virgin Media overcharged early exit fees to tens of thousands of clients by a total figure that was up to £2.8 million.
Fines and customer refunds
When running a business, having a reliable communications network is crucial as you have employees (and customers) relying on the connection so they can communicate with one another, for sales and customer care, all of which will no doubt be of vital importance to any company.
Because of EE’s and Virgin Media’s unclear information and inflated exit rates, both companies were fined and required to refund affected customers. EE was fined £6.3 million and had to refund £2.7 million to the customers they could trace, meaning some customers have not been refunded which was taken into consideration when Ofcom calculated their fine. They have now made adjustments to the terms in their contracts and reduced exit charges.
Virgin Media were fined £7 million and a further £25,000 because they did not provide full information during the Ofcom investigation. Refunds are being distributed to customers who can be traced, with the remaining refunds given to charities in the cases of customers who cannot be traced. Virgin have also reduced their early exit rates by 30–50%, as well as a further reduction for customers who are moving out of their service range.
Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement, said: “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.”