A couple of years ago Ofcom received a large amount of complaints from Vodafone customers. Today, after a full investigation, Ofcom have announced the results and a rather large fine. The regulator found that Vodafone had failed to process top-up credit for pay-as-you-go customers and they’d handled complaints badly. Nearly ten and a half thousand pay-as-you-go customers didn’t get their accounts credited, despite customers purchasing the phone credit. Collectively, the customers lost £150,000 over a 17-month period.
The result is a huge £4.6m fine by Ofcom for “serious and sustained breaches of consumer protection rules”. The report also highlighted how Vodafone had broken rules on handling customer complaints and had mis-sold products.
Vodafone, who currently have 20 million customer, have offered “profound apologies” and they tell us…
Everyone who works for us is expected to do their utmost to meet our customers’ needs.
It is clear from Ofcom’s findings that we did not do that often enough or well enough on a number of occasions.
The network has blamed a “complex IT migration” for the top-up failures, but the second strand of the investigation – relating to customer service failings – showed that customer service agents didn’t have proper guidance on what was and what wasn’t a customer complaint. Some customer feedback wasn’t handled in a timely fashion either.
Further details of the Ofcom judgement can be found on their website and below. The fine is broken down as follows…
£3,700,000 for taking pay-as-you-go customers’ money without providing a service in return
£925,000 for the flaws in its complaints handling processes.
Richard Neudegg, regulation expert at uSwitch.com states..
A fine of this size shows just how seriously Ofcom is taking failure to deliver correct service and follow the rules on complaints. In the case of Vodafone more than 10,000 customers failed to have their PAYG accounts credited despite having ‘topped up’ – and Ofcom clearly feels their subsequent handling of complaints was sub-standard.
Vodafone fined £4.6 million for failing customers
Ofcom investigation uncovered mis-selling, inaccurate billing and poor complaints handling procedures
Vodafone will be fined £4,625,000 by Ofcom for serious and sustained breaches of consumer protection rules.
The penalty is the result of two investigations into Vodafone completed by Ofcom today.
One investigation found that 10,452 pay-as-you-go customers lost out when Vodafone failed to credit their accounts after they paid to ‘top-up’ their mobile phone credit.1 The affected customers collectively lost £150,000 over a 17-month period.2
Vodafone also failed to act quickly enough to identify or address these problems, which stemmed from the company transferring to a new billing system.3 Only after Ofcom intervened did the company take effective steps to stop pay-as-you-go customers from paying money for nothing, and to reimburse those affected.
Vodafone also breached Ofcom’s billing rules, because the top-ups that consumers had bought in good faith were not reflected in their credit balances.
In a second investigation, we found that Vodafone failed to comply with our rules on handling customer complaints.
Vodafone’s customer service agents were not given sufficiently clear guidance on what constituted a complaint, while its processes were insufficient to ensure that all complaints were appropriately escalated or dealt with in a fair, timely manner.
Vodafone’s procedures also failed to ensure that customers were told, in writing, of their right to take an unresolved complaint to a third-party resolution scheme after eight weeks.
As a result of these failings, two penalties have today been imposed against Vodafone: £3,700,000 for taking pay-as-you-go customers’ money without providing a service in return; and £925,000 for the flaws in its complaints handling processes.
The money, which must be paid to Ofcom within 20 working days, will be passed on to HM Treasury.
The penalties incorporate a 7.5% reduction to reflect Vodafone’s agreement to enter into a formal settlement, which will save public money and resources. As part of this agreement, Vodafone admits the breaches. It has also reimbursed all customers who faced financial loss, but for 30 it could not identify, and made a donation of £100,000 to charity.
Lindsey Fussell, Ofcom Consumer Group Director, said: “Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies.
“Phone services are a vital part of people’s lives, and we expect all customers to be treated fairly and in good faith. We will not hesitate to investigate and fine those who break the rules.”
Affected customers were those who paid to top up their mobile phone credit by Vodafone’s E Top-Up” methods – i.e. at ATMs, by direct debit, E-pack purchase, E-top up (Swipe cards) and Mobile ATM top-ups.
Between December 2013 and April 2015.
In 2010, Vodafone began a project which included the transfer of its pay-as-you-go billing processes from one system to another as part of an IT upgrade.