Giffgaff Fined £1.4m for Overcharging 2.6 Million UK Customers

Ofcom has concluded their investigation into “inaccurate” billing at 4G mobile operator giffgaff – owned by O2 (Telefonica UK) – and has fined the company £1.4 million after it found that an error in their billing system led to around 2.6 million customers’ being overcharged up to almost £2.9m in total over a period of nearly 8 years.

The investigation began in September 2018 (here) after information provided by the network operator suggested that it had been in breach of the regulator’s General Condition 11.1 rule for several years. GC11 requires, amongst other things, that broadband ISPs and mobile operators accurately bill consumers for their use of communication services.

Initially it was thought this billing problem began in June 2016 but the final ruling covers the much wider period between 26th May 2011 and 14th February 2019. Giffgaff’s customers typically pre-pay for bundles of voice minutes, text messages and data (aka – goodybags) and they can also purchase pre-paid top-up credit. In this case customers’ who bought such a goodybag bundle, while using their pre-paid credit, were overcharged.

Ofcom found that there was a delay in giffgaff applying the bundle purchase to their accounts, which 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.”

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.”

The operator is already said to have refunded around £2.1m to affected customers and it has made a proportional donation to charity in order to cover the refunds that would have been due to those customers it has not been able to trace. All those who have not been refunded but believe they were affected by this are encouraged to contact giffgaff.

The £1.4m fine, while significant in scale, also includes a 30% reduction after giffgaff agreed to settle the case, admitted the breach identified and ultimately reported the matter to Ofcom promptly when it realised its mistakes. On top of that Ofcom also recognised that they had taken active steps to fix the problem and refund customers.

During the course of Ofcom’s investigation it was recently found that the operator had also “failed to provide accurate information in response to two statutory information requests” (here). As a result an additional penalty of £50,000 has been imposed upon them for these contraventions.