Telecoms industry watchdog Ofcom levied a total of £13.3m ($17.03m) in penalties on the two British firms after an investigation revealed the companies' misdeeds over early exit charges affecting roughly 500,000 broadband and phone users over a six-year period.
Virgin Media was hit with £7m ($8.9m) in fines and EE with £6.3m ($8.07) for violating consumer protection laws, according to an Ofcom press statement.
Ofcom's investigation revealed that nearly 400,000 EE customers terminating their contracts early overpaid a total of £4.3m ($5.5). 82,000 Virgin Media customers paid hefty fines totalling almost £2.8m ($3.6m).
Whilst most telecom providers can charge customers terminating their contracts before the minimum term, Ofcom mandates that all charges must be communicated clearly to customers and prohibits companies from charging excessive costs related to switching telecom companies.
Both companies did not sufficiently communicate charges to customers for ending their contracts early, Ofcom stated, adding that both companies have agreed to reduce exit fees and change their terms and conditions.
"EE and Virgin Media broke our rules by overcharging people who ended their contracts early. Those people were left out of pocket, and the charges amounted to millions of pounds," said Gaucho Rasmussen, Ofcom's director of investigations and enforcement.
That is unacceptable. These fines send a clear message to all phone and broadband firms that they must play by the rules, in the interests of their customers."
While EE has agreed to settle out of court, Virgin Media plans to challenge Ofcom's decision.
"We profoundly disagree with Ofcom's ruling," Tom Mockridge, CEO of Virgin Media said in a press release. "This decision and fine is not justified, proportionate or reasonable."
"A small percentage of customers were charged an incorrect amount when they ended one or more of their services early and for that we are very sorry," Mr. Mockridge stated. "As soon as we became aware of the mistake, we apologised and took swift action to put it right by paying refunds, with interest, to everyone affected."