Giffgaff fined £1.4m for 'goodybag' failings

The errors took place between May 2011 and June 2018, costing customers up to £2.9 million in extra charges.

Giffgaff have accepted the findings and the case has been settled with a 30% discount due to their rapid acknowledgement of Ofcom's findings.

However, they were also fined an additional £50,000 for failing to prove accurate information to two statutory information requests during the investigation.

Credit: olesea vetrila/Shutterstock.com

What did giffgaff do?

Over a period of seven to eight years, giffgaff incorrectly applied bundles to customers' accounts following the purchase of a 'goodybag' bundle.

Customers purchasing these bundles of voice, text and data expected to have the bundle applied immediately so the allowances in the bundle was used ahead of any pre-paid credit on the account.

However, giffgaff only applied the bundle to a customer's account when they ended the call they were on or when they ended a data session by turning their phones off and back on.

This led to customers effectively being charged twice for using the same minutes or data.

Up to 2.6 million customers were affected by the error between 2011 and 2018, and it was brought to light voluntarily by giffgaff themselves when they realised the seriousness of the failings.

Affected customers have already been refunded by giffgaff, with £2.1 million passed on from the operator. If giffgaff haven't been able to trace a previous customer, they have donated the equivalent amount to charity.

That said, if customers do believe they're still due a refund can still contact giffgaff directly.

Compliance with Ofcom

Ofcom sanction operators based on how severe their breach is and, in this case, they ruled the failings were severe.

They pointed out that giffgaff senior management should have been aware of the overcharging error much earlier, and that the company missed opportunities to identify it, escalate it appropriately and to remedy it.

However, Ofcom recognised that giffgaff's self-reporting of the issue was in line with their expectations of operators and this lowered the fine significantly.

Giffgaff also cooperated closely with the investigation, notwithstanding the inaccuracy in responding to the information requests.

It seems that Ofcom are keen to highlight giffgaff's billing failings as a deterrent to other operators, but they are also keen to stress the importance of self-reporting problems to those same operators.

Latest hefty fine from Ofcom

The ruling against giffgaff is the latest in a series against operators for customer service failings relating to overcharging.

For instance, EE were fined £2.7m in 2017 for overcharging 40,000 customers in EU roaming charges.

EE were again fined £6.3m in 2018 for over-billing when customers wanted to leave contracts early. At the same time, Virgin Media were fined £7m for similar failings related to their broadband customers.

Ofcom are emphasising customer service and fairness in their latest batch of reforms, and giffgaff were one of the signatories to the Fairness for Customers commitments launched in June.

Key to these commitments is the responsibility to ensure a 'clear and fair approach to pricing', something giffgaff evidently contravened in the past.

However, as a mobile provider, giffgaff are ranked as one of the best in terms of their customer service.

In our guide to the operators with the best customer service updated earlier this year, giffgaff scored high in several metrics based on information from various Ofcom reports.

Read our review of giffgaff here.