Ofcom fines O2 £10m for overcharging customers

Over 140,000 customers were overcharged when leaving O2 between 2011 and 2019

Telecoms regulator Ofcom has fined O2 £10.5m for overcharging its customers. Ofcom’s rules require telecoms companies to provide customers with accurate bills and charges. In 2019, Ofcom opened an investigation into potential issues with the way O2 was billing customers who were leaving the provider.

When a customer leaves a mobile provider, the company provides a final bill setting out any remaining fees and charges the customer has to pay before their account is closed. Between at least 2011 and 2019, an error in the way O2’s systems calculated the final bills for pay monthly mobile customers meant many people were billed for some charges twice.

Ofcom found that this billing error arose in four different scenarios and meant that amounts already scheduled to be taken by direct debit were not being taken into account by O2 in final termination bills. As a result, where those termination bills were paid, O2 took payment for that same charge twice.

In total, over 250,000 customers were billed for these incorrect charges, amounting to £40.7m. Around 140,000 customers actually paid the extra charges, paying a total of £2.4m.

The fine includes a 30% reduction from the £15m financial penalty Ofcom would have imposed, which reflects O2 has accepted the findings of the investigation and agreed to settle the case.

O2 had initially identified issues with its billing processes in 2011, but efforts to address these problems were not successful and customers continued to be overcharged. Ofcom found that O2 breached its rules and fined the company £10.5m. O2 has accepted the findings of the investigation.

Ofcom considered that several aggravating factors support their finding that this was a serious breach by O2 (and are reflected in the penalty amount):

  • the significant duration of O2’s contravention;
  • the significant degree of actual and potential harm caused by O2’s contravention;
  • the significant scale and scope of O2’s contravention;
  • the significant absence of effective governance processes in place to prevent the billing error from occurring in the first instance and to identify the billing error once it occurred; and
  • the 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 or, to the extent that it was followed, it failed in some key respects in both 2011 (when O2 first identified the billing error) and 2019 (when the error was re-identified).

O2 has refunded the customers affected in full for the extra charges they paid, plus an additional 4%. For those customers that O2 has not been able to reach, the company has committed to make a donation to charity for the equivalent amount of money those customers were overcharged.  It has also changed its billing processes to prevent this issue arising again.

Any customers with evidence they were affected by these billing errors but have not yet been refunded, are advised to contact O2 directly.

Gaucho Rasmussen, Ofcom’s Enforcement Director: 

“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 and this fine is a reminder that we will step in if we see companies failing to protect their customers.

“O2 has refunded the customers who were affected, and we are satisfied the company has taken action to prevent this happening again.”

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