Giffgaff fined £1.4m for overcharging customers

Ofcom has today fined the mobile company Giffgaff £1.4m, for overcharging millions of customers.

The fine follows an Ofcom investigation. Ofcom 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.”

The money raised from this fine will be passed on to HM Treasury.

Fine and customer refunds

Giffgaff has already refunded around £2.1m to affected customers. In cases where it hasn’t been able to trace and refund customers, it has donated the money to charity. If you’re a Giffgaff customer and think you are still owed a refund, you might wish to contact Giffgaff.

The fine includes a 30% reduction because Giffgaff agreed to settle the case and admitted the breach.

It also recognises that, in line with good industry practice, Giffgaff reported the matter to us promptly when it realised its mistakes and took 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.

Under Ofcom rules telecoms providers must bill customers accurately for the services they use. 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 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.

During the course of the investigation, Giffgaff failed to provide accurate information in response to two of the information requests. So, Ofcom have also today imposed an additional penalty of £50,000 on Giffgaff for this.