Plusnet fined £880,000 for overcharging customers

Plusnet has been handed a £880,000 fine by the regulator Ofcom. The telecoms firm continued to bill over 1,000 customers after they had cancelled their contracts.

The BT-owned telecoms firm brought the overcharging issue to Ofcom itself, after realising a computer glitch meant former customers had been overcharged by more than £500,000.

When a customer cancels their home phone or broadband service, their ex-provider’s billing systems should recognise the line as "ceased". But, Plusnet’s billing system experienced an error that meant lines that should have been cancelled were still recognised as "live".

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This meant that customers who thought they had left Plusnet continued to be billed for a service they were not using. As a result 1,025 customers were wrongly charged more than £500,000.

The glitch meant that Plusnet broke Ofcom’s fundamental billing rule – no customer should continue to be charged after they have left a company. Hence, the £880,000 fine.

“There can be no margin for error, and no excuses, when it comes to billing customers correctly,” says Lindsey Fussell, Ofcoms’s consumer group director.

“This fine should serve as a reminder to telecoms companies that they must adhere to Ofcom’s billing rules at all times, or face the consequences.”

Have you missed out on a refund?

To add to Plusnet’s problems it has also been revealed that it has failed to refund more than half the customers it overcharged.

The company has repeatedly tried to contact all the former customers affected by the billing error, but only managed to get in touch with 356 people. They have refunded £212,140 to those customers, an average of £600 each including four per cent interest.

But, the other 669 customers never came forward and so have each missed out on a £600 refund. As a result, Plusnet has donated the £400,000 leftover refund money to several local charities.

“We are very sorry and would like to apologise to the customers affected,” Plusnet said in a statement. “We reported this ourselves to Ofcom, and have made every effort to contact these customers to arrange a full refund before the investigation started.

As well, as reporting the problem to Ofcom, Plusnet is keen to make it clear to its customers that the error has now been corrected and no more customers will continue to be billed if they choose to leave the company.

“We would also like to reassure all customers this was an isolated historic issue and we have implemented a number of new robust measures to make sure this doesn’t happen again.”

The firm must pay the £880,000 fine to HM Treasury within 20 days. The firm received a 20 per cent reduction on the fine to reflect the fact the company co-operated fully with the investigation and was happy to opt for a formal settlement in order to save public money and resources.