giffgaff fined £1.4m by Ofcom over billing gaffe
giffgaff has been found to have overcharged millions of its customers for up to 8 years. Information provided to telecoms regulator Ofcom by the company estimated that it had overcharged by almost £2.9m over seven to eight years due to billing errors. Around 2.6 million customers were affected by giffgaff’s gaffe.
Ofcom fined the Telefónica-owned company £1.4m for the overcharging following an investigation.
The investigation was launched in 2018 after a customer complained that they had been billed incorrectly. Ofcom Director of Investigations and Enforcement Gaucho Rasmussen said giffgaff had made “unacceptable mistakes”.
"This fine should serve as a warning to all communications providers: if they get bills wrong, we’ll step in to protect customers,”
As giffgaff alerted Ofcom once it spotted the error, set up a customer refund process and later agreed to settle the case, the regulator decided to reduce the original £2m fine by 30% to £1.4m.
What happened to the money of customers who were overcharged?
The firm stated that 90% of customers affected were entitled to a refund of £5 or less.
Approximately £2.1m has already been returned to 1.2 million out-of-pocket customers, leaving about £8m yet to be refunded.
giffgaff Limited said it no longer held records on 1.4 million former customers who were with the operator from May 2011 to May 2016 and so it has donated £752,257 of this non-refundable money to charity.
In a message to giffgaff community members, Ash, a spokesperson for the company, said it had “taken major steps to refund the members affected”.
“However, for those whose records we were not able to hold on to, and who we haven’t been able to get in touch with, we’ve made the decision to do something different,” Ash said.
“We have estimated the potential impact this issue would have had. We did this by looking at our existing data, and used it to project the impact between the time when this issue began, arriving at a figure of £752,257.”
Clearly, this money doesn’t belong to us, so we will be donating this amount entirely to charity
giffgaff members nominate charities for giffgaff to donate to every six months and the company said it would split the £752,257 between good causes chosen over the past year.
Ofcom advises any customers who believe they are still entitled to a refund to contact giffgaff.
What went wrong?
The billing failure was discovered in the giffgaff prepay bundles it calls “goodybags”.
Goodybags allow customers to top up on UK minutes, texts and data all at once. They last for up to a month and, once purchased, the goodybag balance and the pre-paid top-up credit balance are supposed to be separate.
Ofcom stated that the purchase of a goodybag should have made any data use or voice call free from that point on.
However, giffgaff failed to apply the goodybag immediately on purchase.
The bundle was only activated on a customer’s account when they ended any call they were on, or when they started a new data session. For many people, this meant it was not applied until they rebooted their phone or put it into and out of flight mode.
So, if customers were making a call, or were using data at the time they topped up, the charge was deducted from their pre-paid credit balance instead of from the goodybag bundle.
Ofcom said this meant that customers were really being charged twice by giffgaff.
An additional fine of £50,000 was levied on the operator for giving inaccurate information to Ofcom on two occasions. The regulator stated that this penalty would also have been “significantly higher”, but took into consideration that giffgaff had informed Ofcom of the inaccuracies when it discovered them.
Both data and voice call billing errors appear to have begun in May 2011. Data services were wrongly billed until June 2018, while the voice calls error continued until February of this year.
What did Ofcom say?
Ofcom said the £1.4m fine was meant to reflect the seriousness of the mistake and act as a deterrence against such errors in the future.
"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, cooperated closely with our investigation and proactively taken steps to remedy the contravention following discovery of the issue, including implementing a comprehensive refund plan.”
If you believe you were affected by this billing error you can check by entering your giffgaff account details into the company’s web app.
Should I stick with giffgaff or switch?
Despite this issue, giffgaff has a 68% rating of great or excellent on Trustpilot, with 26% rating it poor or bad. A total of 3,744 reviews on the site gives it an average of four out of five stars and a rating of “great”.
The telecoms provider has a lot of loyal members in its community, and Selectra has recommended the operator for data heavy users in the past. That said, there are plenty of mobile operators out there to choose from and it's always worth taking a look around at other offers. We recommend checking our guide to find the best mobile network for you.