Vodafone hit with record £4.6m fine by Ofcom

James Pearce
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UK arm of the operator found to have breached consumer protection rules following two investigations

Vodafone UK has been slapped with a record £4.6 million fine for “serious” breaches of consumer protection rules following two investigations by regulator Ofcom.

Ofcom has issued its largest ever fine for a telecoms operator after finding Vodafone had misled pay-as-you-go customers by charging them for top-up credit, without providing any services.

The investigation into the operator’s pre-paid division found at least 10,452 had topped up their Vodafone SIM without receiving credit to their account. Affected customers collectively lost more than £150,000 over a 17-month period, the regulator found.

The regulator also carried out a second investigation into Vodafone UK’s handling of customer complaints, which has seen it named the worst performing UK mobile operator for seven consecutive quarters in Ofcom’s Telecoms and Pay TV Complaints report.

Ofcom found that customer service advisors working on behalf of Vodafone were not given sufficient training on what would count as a customer complaint. Poor processes meant some complaints were not handled “in a fair, timely manner”, and the operator failed to inform customers of alternative options for dispute resolution.

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."

Vodafone has faced numerous problems linked to its billing system over the last few years, according to industry sources, and it said the PAYG issues were linked to this, but all affected customers have now been refunded.

A Vodafone spokesperson added: “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.”

The fine is the biggest Ofcom has levied on a telecoms firm, and one of the largest in its history.  TV channel ITV was hit with a £5.7 million payout in 2008 over ‘abuse’ of premium-rate phone-in services. TalkTalk and Tiscali were fined £3 million in 2011 after they were fined to have incorrectly billed tens of thousands of customers for services they did not receive.

Experts and analysts say the Vodafone fine should serve as a stark warning to telcos over the need to handle customer complaints properly.

Matthieu Clauzure, brand and marketing manager at customer experience specialist CCA International, said: “Providing a poor, or non-existent, service is bad enough; to compound this by hampering customers’ ability to complain after the event is unforgiveable. Any organisation should be able to not only let customer know their rights, but also to provide a smooth, satisfactory experience when those rights are put to the test. This means ensuring agents are trained on how to recognise, deal with and escalate complaints when necessary.

“Organisations should now take this as a wake-up call; even if their own activities are whiter than white, they should still make sure that their complaints procedure is sufficient. After all, a near-million-pound fine is still no drop in the ocean.”