EE Fined $3.3mn for Overcharging

UK comms regulator Ofcom has imposed a fine of GBP2.7mn (USD3.3mn) upon mobile provider EE for overcharging around 40,000 customers. Most of those customers were wrongly charged for calls to EE’s customer service line whilst roaming in the EU. The 150 number they dialled should have been charged at 19 pence per minute, but was actually charged at £1.20 per minute because the leading ‘1’ was wrongly interpreted as the international dialling code for the USA. This error resulted from flawed configuration of the processing of short code data via a clearing house. The error ran from 1st July 2014 to 20th July 2015, but EE’s sin was apparently compounded by their failure to take prompt action to identify the victims and to reimburse them.

This is the second big fine from Ofcom for billing screw-ups. In October the regulator imposed a GBP4.6mn (USD5.6mn) penalty on Vodafone as a result of their long-running billing fiasco. The compliance failures of the two businesses can be contrasted in various ways. Vodafone’s billing errors led to a record-breaking deluge of complaints, whilst EE’s complaints figures remained in line with industry averages. However, Ofcom focused on Vodafone lacking the capacity to cope with the complaints generated by a botched billing migration, rather than the billing errors themselves. This clearly begs some questions about whether Ofcom adopted a consistent approach to each case.

Ofcom’s announcement is clearly designed to give cover to EE’s regulatory auditor, Tüv Süv BABT, which also audits Vodafone and the billing accuracy of most UK telcos. An impartial observer would note that fines like these indicate the audits did not actually identify errors, and so failed to protect consumers. Though customers were mischarged from 1st July 2014, Tüv Süv BABT only notified Ofcom of a problem on 16th September 2015, suggesting the auditor only learned of it after the configuration error had been identified and fixed by EE. Furthermore, Ofcom then instigated their own investigation, which took a year to reach this conclusion. As the auditors are supposed to sign-off on accuracy compliance, and the regulations demand continuous compliance, it is hard to understand why no fines resulted from the auditors simply refusing to approve the telcos they were paid to audit on behalf of customers.

Probably Ofcom defends the flawed audit regime it imposes on telcos because it wishes to avoid embarrassment. Put simply, consumers are nowhere near as well protected from billing errors as either Ofcom or the auditors would like to pretend. But this repeated failure to close the gap between public promises and audit realities means Ofcom is now arguing for the very same auditors to earn increased fees by also ‘protecting’ customers from being overcharged for data services, despite the obvious inadequacy of the existing audits for voice services.

Eric Priezkalns
Eric Priezkalns

Eric is a recognized expert on communications risk and assurance. He was Director of Risk Management for Qatar Telecom and has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and others.

 

Eric was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He was a founding member of Qatar’s National Committee for Internet Safety and the first leader of the TM Forum’s Enterprise Risk Management team. Eric currently sits on the committee of the Risk & Assurance Group, and is an editorial advisor to Black Swan. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.

 

Commsrisk is edited by Eric. Look here for more about Eric’s history as editor.