Ofcom has today fined the mobile company Giffgaff £1.4m, for overcharging millions of customers.
The fine follows an Ofcom investigation. We found that an error in Giffgaff’s billing system led to around 2.6 million customers being overcharged up to a total of almost £2.9m.
Giffgaff is owned by Telefónica UK, which trades as mobile network O2. Giffgaff uses O2’s network to provide mobile services to its customers.
Gaucho Rasmussen, Ofcom’s Director of Investigations and Enforcement, said: “Getting bills right is a basic duty for every phone company. But Giffgaff made unacceptable mistakes, leaving millions of customers out of pocket.
“This fine should serve as a warning to all communications providers: if they get bills wrong, we’ll step in to protect customers.”
Fine and customer refunds
Giffgaff has already refunded around £2.1m to affected customers. In lieu of those customers it has not been able to trace and refund, it has donated the money to charity. Customers who consider they are still due a refund may wish to contact the company.
Ofcom’s fine incorporates a 30% reduction as Giffgaff agreed to settle the case and admitted the breach identified.
The reduced penalty also recognises that, in line with good industry practice, Giffgaff reported the matter to Ofcom promptly when it realised its mistakes, and took active steps to fix the problem and refund customers.
What went wrong
Giffgaff customers can pre-pay for bundles of voice minutes, text messages and data – known as ‘goodybags’. They can also purchase pre-paid top-up credit.
Ofcom rules require telecoms providers to bill customers accurately for the services they use.[1] But in this case, customers who bought a ‘goodybag’ bundle, while using their pre-paid credit, were overcharged.
This was because there was a delay in Giffgaff applying the bundle purchase to their accounts. It meant that any voice calls customers were making, or the data they were using at the time, came out of their pre-paid credit. These services should have been free immediately from the point the bundle was purchased – so the customers were effectively charged twice.
Giffgaff applied the ‘goodybag’ bundle to a customer’s account only once they ended the voice call they were on, or when they started a new data session – for example, by turning their phone off and back on again.
Next steps
The fine, which must be paid to Ofcom within 20 working days, will be passed on to HM Treasury.
During the course of our investigation, Giffgaff failed to provide accurate information in response to two statutory information requests issued by Ofcom. So we have also today imposed an additional penalty of £50,000 on Giffgaff for these contraventions.
