Mobile phone company GiffGaff has been fined £1.4m by the telecoms watchdog for overcharging millions of customers over an eight-year period.
Ofcom said on Tuesday that GiffGaff, which is owned by O2’s parent company Telefonica, had made “unacceptable” billing mistakes that led to it overcharging 2.6 million customers.
GiffGaff charged customers too much when they bought pre-paid bundles of voice minutes, text messages and data – called “goodybags” – between May 2011 and February this year.
These services should have been free to use immediately from the point at which the bundle was purchased. But delays in applying goodybag bundles to accounts meant that voice calls and data were initially taken from pre-paid credit, meaning customers were charged twice.
The £1.4m fine includes a 30 per cent discount because GiffGaff reported its billing mistakes to the regulator and agreed to the settlement.
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Giffgaff has already refunded around £2.1m to affected customers. Where the company has not been able to trace customers and issue a refund, the relevant amounts have been donated to charity, Ofcom said.
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.”
During the course of Ofcom’s investigation, Giffgaff failed to provide accurate information in response to two statutory information requests. As a result, Ofcom also imposed an additional penalty of £50,000.
