Ofcom has fined Virgin Media £28 million for putting customers through what it called unreasonable effort, hassle and difficulty when trying to switch to another provider. Ofcom’s General Conditions make clear that the conditions or procedures telecoms providers have in place must not act as a disincentive for customers who wish to cancel their contract. Ofcom received 1,881 complaints from customers who reported difficulties cancelling. Following unsuccessful engagement with the company to address the issue, Ofcom launched an investigation into whether the company had complied with its duties.
Ofcom’s investigation
The investigation uncovered systemic and repeated failings in Virgin Media’s contract termination procedures. Its call agents mishandled calls in ways that delayed or prevented customers from cancelling and switching to a competitor.
Virgin Media split its retention team into two “tiers” of agents. Only agents in the second tier were able to process cancellations. This meant callers had to repeat their cancellation request to at least one further agent to stand any chance of having it processed.
Customers reported making multiple attempts to cancel through repeated calls to the retention team and through other contact channels, and in some cases resorted to cancelling their direct debits, which led to further difficulties such as missed payments affecting their credit score.
Call handlers mishandled calls. Behaviours and tactics included repeated attempts to pressure customers to stay, even when they had made it clear they wanted to cancel; unnecessary or excessive call transfers to other departments; keeping customers on hold excessively, unnecessarily and repeatedly; deliberately dropping calls; and failing to process cancellations on the system.
Virgin Media effectively encouraged the use of these behaviours to deter customers from cancelling by financially rewarding agents through its commission scheme. Its training and guidance for agents also failed to prevent these behaviours, while inadequate quality assurance and monitoring meant they were often overlooked. In addition, it did not have proper oversight of its third-party call centres or quality monitoring.
As a result, Ofcom concluded that Virgin Media’s two-tier cancellation process and agent behaviours caused customers on millions of calls unreasonable effort, hassle or undue difficulty when trying to cancel. These failings were likely to have acted as a disincentive to switch for customers across millions of calls, delaying or preventing them from taking advantage of a competitor’s offer, contrary to Ofcom’s consumer protection rules.
Financial penalty
Following the investigation, Ofcom has fined the Virgin Media £28 million. In setting the penalty amount, Ofcom took into consideration, among other things:
- the significant harm experienced by those customers affected;
- Virgin Media’s repeated failures to act to identify and prevent the harm;
- the financial gain the company is likely to have made;
- Virgin Media’s repeated failure to comply with Ofcom’s information gathering process during its investigation; and
- the fact the company has been fined previously for a breach of the same rule in 2018.
The penalty includes a 30% reduction because Virgin Media ultimately admitted its failings and agreed to settle the case.
Ofcom says that Virgin Media has made several changes, including improvements to its commission scheme, training, quality assurance and monitoring. Ofcom is requiring Virgin Media to check that every affected customer who complained has received the compensation or other remedies to which they were entitled. The company must complete this within six months.
Broadband and mobile companies are not covered by the forthcoming subscription rules in the Digital Markets, Competition and Consumers Act 2024, so this is a useful illustration of Ofcom’s powers in these sectors. It may also provide an indication of how the CMA might approach similar problems within its remit.
