Ofcom fines O2 £10.5m for overcharging customers

• O2 broke Ofcom’s rules by failing to provide customers with accurate bills
• Over 140,000 customers were overcharged when leaving O2 between 2011 and 2019

Ofcom has fined O2 £10.5m, after customers leaving the mobile provider were overcharged, due to billing errors by the company.

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.

What Ofcom’s investigation found

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.

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.

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.

Refunds for the customers

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.”

Ofcom will publish the full findings from its investigation, shortly.

Notes to editors

1. Ofcom’s consumer protection rules are set out in the General Conditions (GCs). GC C3 (formerly GC 11) places obligations on communications providers in relation to providing accurate bills and charges, retention of records, and approval of metering and billing systems.
2. Our investigation found that O2’s affected customers were not provided with an accurate final termination bill detailing that their accounts were in credit (or would be in credit) taking into account further scheduled direct debit payments for amounts already billed.”
3. Around 85,000 of the affected customers, who were billed a total of £36m in extra charges, were leaving O2 as their contracts were being cancelled for being in arrears.
4. The fine includes a 30% reduction from the £15m financial penalty we would have imposed, which reflects O2 has accepted the findings of our investigation and agreed to settle the case.
5. Ofcom’s investigation into this issue followed notification from BABT, the approval body for O2’s metering and billing system.