O2 UK overcharged exiting customers by £40.7m over 7+ years: Ofcom slams senior managers, fines it £10.5m
- Reference: 1613130244
- News link: https://www.theregister.co.uk/2021/02/12/o2_uk_overcharged_exiting_customers/
- Source link:
The company didn't pot all of the £40.7m, as some of the customers it charged were already in arrears, and others simply looked at the overcharges on the bill and said “nope” as they left the firm’s loving embrace. Nevertheless, O2 gained a significant sum - £2.4m - from those who did pay up the amount they were overcharged.
[1]
O2 had initially identified issues with its billing processes in 2011 but, according to regulator Ofcom, "efforts to address these problems were not successful and customers continued to be overcharged."
The billing error came about in "four different scenarios", said Ofcom, and O2 had issued final termination bills without taking into account the money already scheduled to be taken from the customers by direct debit.
[2]
Ofcom fingered a "significant failure by O2's senior management to adequately ensure that the governance process it had put in place for fixing and remedying billing errors was followed," adding that not only had O2 failed in "some key respects in both 2011 (when O2 first identified the billing error) and 2019 (when the error was re-identified)", it had also failed to self-report.
[3]Ofcom said that between:
At least 26 May 2011 and 15 March 2019, O2 contravened [General Condition] C3.2 and former rule
General Condition
11.1s96C of the Communication Act 2003
by failing to render or make available accurate final bills to customers after their cancellation of services (i.e. termination bills) and by overcharging a significant number of customers terminating their "Pay Monthly" services with O2.The fine imposed by Ofcom includes a 30 per cent discount from the penalty the watchdog would have otherwise have imposed because of the firm's "admissions of liability and its agreement to enter into a settlement". The money handed over by the mobile firm gets dropped into a much-depleted HM Treasury.
EE, Virgin Media hit with £13.3m fine: Squeezing users for fees for early contract termination not OK [4]READ MORE
O2 is not the only UK telco that has been caught up in the overcharging-people-as-they-walk-out-the-door game. Just over two years ago, the regulator hit BT mobile offshoot EE and Virgin Media with a [5]£13.3m penalty for taking too much dough from customers who wanted to exit their broadband or mobile phone contracts before they were due to expire.
Back in November 2019, an investigation found over a six-year period some 400,000 EE customers who prematurely called time on their contracts were billed up to £13.5m in "early-exit fees" and that, for almost a year, Virgin Media imposed early-exit charges that were higher than those on the contract.
EE and Virgin were given fines of £7m and £6.6m repsectively.
The O2 UK fine is significantly higher, with Ofcom saying its magnitude reflected the seriousness, "significant duration", "significant degree of actual and potential harm caused"; its scale and scope; and the significant absence of effective governance processes.
Of the £40.7m charged incorrectly:
about 85,200 customers were overcharged c.£35,930,000 but had been disconnected by O2 for non-payment of bills (and didn't pay)
c.26,500 customers were overcharged c.£2,320,000 but did not pay those charges;
140,000 customers paid c.£2,410,000 in overcharges.
The mobile firm is the UK offshoot of megabucks multinational Telefónica Group, which netted €48.4bn in revenues for its last [6]reported financials , for fy2019 – €7.1bn of which came from its UK arm.
Ofcom said O2 UK has refunded the customers affected for the extra charges they paid, plus an additional 4 per cent and has also changed its billing processes to prevent this issue from happening again.
It also noted that the firm had committed to make a donation to charity for the equivalent amount of cash it overcharged customers that O2 "has not been able to reach". It's not known how many of the customers this is, or whether they simply decided never to open the envelope marked "O2".
For the 2019 overbilling by EE, the BT offshoot only managed to refund £2.7m of the £4.3m it estimated it overcharged its discount clients, which means £1.6m could not be returned. That went in the charity box, which is no bad thing, but presumably users of the discount option could have used the readies.
Gaucho Rasmussen, Ofcom’s enforcement director, said of today's fine: "Mobile customers trust their provider to bill them correctly and fix any errors as quickly as possible. But these billing issues continued for a number of years without sufficient action from O2, and thousands of customers were overcharged as a result. This a serious breach of our rules."
A separate probe into O2’s compliance with the regulator's section 135 [7]statutory information requests remains ongoing.
O2 UK spokesperson told The Reg it had remedied its billing processes, adding: "As the operator proactively driving over £168m value back to our customers in the last year alone, we are disappointed by this technical error and sincerely apologise to customers impacted.
"As Ofcom have stated today, the vast majority of funds reported were not overpaid. Only 6 per cent - £2.4m - relates to money that was overpaid by customers.
[8]
"We identified the issue ourselves and notified our industry billing auditor. We have also taken proactive steps to refund all impacted customers for the extra charges they paid, plus an additional 4 per cent." ®
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_datacentre/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YCa0KgeHQnmFgcsoIwfFFAAAAMQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_datacentre/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YCa0KgeHQnmFgcsoIwfFFAAAAMQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[3] https://www.ofcom.org.uk/about-ofcom/latest/bulletins/competition-bulletins/all-closed-cases/cw_01248
[4] https://www.theregister.com/2018/11/16/ofcom_were_fining_ee_and_vrgin_media_133m_for_early_contract_temrination_fees/
[5] https://www.theregister.com/2018/11/16/ofcom_were_fining_ee_and_vrgin_media_133m_for_early_contract_temrination_fees/
[6] https://www.telefonica.com/en/web/shareholders-investors/financial_reports
[7] https://www.ofcom.org.uk/about-ofcom/latest/bulletins/competition-bulletins/open-cases/cw_1252
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_datacentre/networks&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YCa0KgeHQnmFgcsoIwfFFAAAAMQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://whitepapers.theregister.com/
Re: What about credit records?
It's crazy how few customers actually get reimbursed.
Re: What about credit records?
With the push to do everything paperless there's less incentive - and quite possibly no mechanism - for customers to notify changes of address to suppliers. If the only contact detail for a customer is the mobile number then unless that's ported over to the new network the old supplier has no way to reach them. And that's apart from any impacts of successive DPAs on retaining records or, as the article mentions, the likelihood of any attempt at communication being ignored as spam.
In fact, it's surprising how many do get reimbursed.
Re: What about credit records?
Not really. The whole problem here was overcharging people who were no longer actually customers, and who they're now trying to contact as much as 10 years after they left. Anyone who has moved house in that time is likely to be impossible to find, at least without some seriously questionable digging through personal information. If anything, I'd say the exact opposite is true - it's crazy how many customers actually did get reminbursed. The EE case apparently managed 63%, and while that only went back 6 years, I'm still amazed it was anywhere near that much.
Re: What about credit records?
The have bank account details. You don't need an address to pay money into a bank account. That presumably is how they managed to refund that number of people.
They are all as bad as each other
They are all as bad as each other.
I've ported out (and back into) Three a couple of times, as they try to fuck over existing customers after the minimum contract term ends and unjustifiably push them onto much more expensive tariffs, with no way to switch to the normal tariffs on sale to new customers (which are comparable with, or often cheaper than, the existing contract). It's much easier to port out to a 30-day SIM-only account with a different network, and then later port back in as a new customer than have to waste time fighting with the call centre over this ("Never send a human to do a machine's job."). It's highly frustrating, because if Three didn't dick around with existing customers, I'd generally be perfectly happy to stay with them. The usual big company problem of completely failing to recognise loyalty.
This results in them having to refund some of the last month's payment after the port-out date, but rather than just refund it automatically via the direct debit mechanism, they send a paper letter asking the (ex-)customer to call them to arrange the refund (with no option to do it online via their absymal webshite customer account management area).
I'm sure this is deliberate, as not only is there a risk that someone might have moved (often a reason for porting, if the network is not available at the new address), but the hassle of trying to call the call centre and wait in an interminable queue means that I'm sure that few people deem it worthwhile for a couple of quid. If they really can't refund via the direct debit mechanism (which I very much doubt), they should at least notify customers via the mobile number and/or email address that they have for them, as well as a letter, and allow the refund request to be processed via the website.
Re: They are all as bad as each other
I gave up on their call centre long ago, but I've never had any problem moving between tariffs using the three website.
O2 Engineers
Since early January I've had b*gger all phone signal at home and all I see from O2 is a "Looks like a nearby phone mast isn’t working as it should, sorry. Our engineers are likely to be on the case already, and your service might come and go until we fix it." message.
I assume that O2 engineers wear a tutu, have little wings and a twinkly wand - or is that the fairies at the bottom of my garden?
Astonishingly OFCOM is still a government regulator
Great job. Finger really on the pulse. /S
And now they're making O2's current customers pay the penalty for being overcharged. You couldn't make it up.
:(
What about credit records?
It should be made to correct the credit records of all the customers who didn't pay and were disconnected, too.
Try getting it done yourself - it's pretty much impossible.