Wed, 26 Oct 2016
NEWBURY-based telecom's giant Vodafone has been fined £4.6m for inaccurate billing and poor handling of complaints.
Two investigations into the company by industry watchdog Ofcom found "serious and sustained breaches of consumer protection rules".
The company, which has its UK headquarters in Shaw-cum-Donnington, was fined £3.7m for failing to credit the accounts of 10,452 customers' pay-as-you-go accounts after they paid to top up their phones.
The affected customers collectively lost £150,000 over a 17-month period, Ofcom said.
Ofcom’s 18-month investigation also found that Vodafone failed to comply with rules on handling customer complaints, which resulted in a fine of £925,000.
The fines must be paid to Ofcom within 20 working days and will be passed on to HM Treasury. The penalties incorporate a 7.5 per cent reduction owing to Vodafone entering a formal settlement, which Ofcom said would save public money and resources.
Ofcom consumer group director, Lindsey Fussell, said: “Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecom's 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.”
Ofcom found that Vodafone failed to quickly identify or address the problems, which the company said resulted from a complex IT migration at the end of 2013.
This resulted in some people being incorrectly migrated and showing as disconnected on Vodafone systems. The error lead to a sharp increase in the volume of customer complaints, which triggered the Ofcom investigations.
But it was only after Ofcom intervened in June 2015 that Vodafone started dealing with the issues effectively and reimbursing customers.
In a second investigation, Vodafone failed to comply with our rules on handling customer complaints.
Staff were not given clear guidance on what constituted a complaint, and processes were insufficient to ensure that they were dealt with in a fair and timely manner.
Customers were also not informed in writing about their right to take unresolved complaints to a third-party.
Vodafone said that it had refunded 10,422 customers out of the 10,452 affected. The average refund per customer was £14.35.
The company said that it was unable to track down the remaining 30 customers affected.
“As we cannot refund those customers and have no intention of profiting from this issue in any way, we have instead made a donation of £100,000 to a number of UK charities.
Vodafone said it had conducted a full internal review of the failure and overhauled its procedures as a result.
The company said in a statement: “This has been an unhappy episode for all of us at Vodafone: we know we let our customers down.
“We deeply regret these system and process failures. We are completely focused on serving our customers: everyone who works for us is expected to do their utmost to meet our customers’ needs, day after day, and act quickly and efficiently if something goes wrong.
“It is clear from Ofcom’s findings that we did not do that often enough or well enough on a number of occasions. We offer our profound apologies to anyone affected by these errors.”