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Investigation into giffgaff about its compliance with metering and billing requirements


Closed

Investigation into giffgaff Limited (giffgaff)
Case opened 17 September 2018
Case closed 30 July 2019
Summary

This investigation examined whether giffgaff complied with its obligations under General Condition 11 requiring Communications Providers (“CPs”) to accurately bill consumers for their use of communication services. We found that giffgaff contravened GC 11.1 as a result of a billing error that meant customers received inaccurate bills and were overcharged.

Relevant legal provision(s)

GC11.1 of the General Conditions

Following our investigation, Ofcom has today issued a Confirmation Decision to giffgaff under s96C of the Communication Act 2003 (the “Act”) for contravening what was at the time GC 11.1 of the General Conditions. Ofcom and giffgaff entered into a settlement process in respect of this matter and giffgaff wrote to Ofcom on 22 July 2019, admitting its liability in relation to the nature, scope and duration of the contravention.

In light of the evidence and giffgaff’s admissions, Ofcom is satisfied that giffgaff contravened GC 11.1 as a result of a billing error that meant customers received inaccurate bills and were overcharged.

giffgaff offers pre-paid bundles of voice minutes, SMS (texts) and data known as “goodybags”. Customers can also purchase pre-paid top-up credit. Ofcom has found that giffgaff contravened GC 11.1 by overcharging customers who purchased a goodybag while using pre-paid credit to consume data or while on a voice call. The purchase of a goodybag should have made any data use or voice call free. However, giffgaff did not immediately apply the goodybag that the customer had purchased to their account. As a result, a customer’s pre-paid credit continued to be used to pay for data use or a voice call when it should have been free as a result of the purchase of the goodybag.

This billing error affected giffgaff’s data services between 26 May 2011 and 15 June 2018 and affected its voice services between 26 May 2011 and 14 February 2019. giffgaff has estimated that it overcharged around 2.6 million customers up to almost £2.9 million over a 7 - 8 year period as a result of its billing error.

In light of seriousness of this case, including the failings we have found, the Confirmation Decision imposes a financial penalty of £1.4 million on giffgaff in respect of its contravention of GC 11.1.

In setting the penalty, we have had regard to our penalty guidelines. The penalty reflects a number of factors including the objective of deterrence and the seriousness of the contravention, including our findings that giffgaff failed to take appropriate steps to prevent the billing error, its senior management should have been aware of the billing error much earlier and giffgaff missed opportunities to identify, escalate and remedy the billing error.

The penalty would have been significantly higher had giffgaff not self-reported the contravention, co-operated closely with our investigation and proactively taken steps to remedy the contravention following discovery of the issue, including implementing a comprehensive refund plan. It is important that communications providers (“CPs”) take compliance with their regulatory responsibilities seriously and that when things go wrong, they recognise this and act quickly and responsibly to remedy any harm that has been caused and allow Ofcom to investigate, as appropriate. Notwithstanding the failings we have found in this case, we strongly encourage CPs to take note of giffgaff’s conduct in this respect.

The penalty also includes a 30% discount from the penalty that Ofcom would otherwise have imposed, on account of giffgaff’s admissions of liability and its agreement to enter into a settlement.

During the course of this investigation, Ofcom also became aware that giffgaff had failed to provide accurate information in response to two statutory information requests issued by Ofcom under section 135 of the Act. We have today issued a separate Confirmation Decision under s139A of the Act to giffgaff for its contraventions of requirements to provide information. We have imposed a penalty of £50,000 on giffgaff for these contraventions.

This penalty would have been significantly higher if giffgaff had not identified and proactively made Ofcom aware of the inaccuracies in its responses. It is important that CPs inform Ofcom as soon as possible when they become aware that the information they have provided in response to a statutory information request was inaccurate or incomplete.

Non-confidential versions of these Confirmation Decisions are currently being prepared and will be published shortly.


Case leader

Maria Constantinou (email: maria.constantinou@ofcom.org.uk)

Case reference CW/01230/09/18