Vodafone fined £4.6 million for failing customers

26 October 2016

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.

Financial penalties

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.”

  1. 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.
  2. Between December 2013 and April 2015.
  3. 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.