Vodafone Charging Mess Leads to Huge Fine

Today’s breaking news is that Vodafone UK has received multi-million pound fines from Ofcom, the UK comms regulator, due to several failures that all seem connected to the loss of control and integrity of customer charging. This post will be updated through the day, as more information is received and the media responds.

The total of the regulatory fines is GBP 4,625,000 (USD 5.6mn). Ofcom said the unprecedent penalty was justified because of “serious and sustained breaches of consumer protection rules.”

Ofcom said the fines followed the completion of two ‘investigations’ into Vodafone UK. Astute readers should take note that two seemingly separate investigations have closed on the same day, leading to a single press announcement of the conclusions and punishment. They will also remember that previous but relevant investigations into Vodafone were closed after reaching the conclusion that there was no need for enforcement action. Reading between the lines, we can infer that Ofcom has had to find ways to address a range of problems, some of which they have failed to address before. This is linked to the ongoing barrage of negative media as Vodafone customers complain in record numbers about inaccurate bills and charging, and the failure to address the tsuanmi of complaints in a timely and satisfactory manner.

All of Vodafone’s problems, though investigated separately, ultimately stem from the chaotic breakdown of integrity following the transition to a new billing and charging system. Though Vodafone UK has previously escaped punishment for the postpaid billing errors that resulted, they have now been penalized for levying prepaid charges for services not delivered, and the inadequacy of the procedures to handle complaints. On the latter point, this is a bit like blaming the Customer Services division for the screw-ups that started with technology they do not control, and the failure of internal control and assurance over customer and usage data integrity. Put simply, Vodafone’s customer-facing teams would not have been overwhelmed with complaints if the billing migration had not been a mess that led to many customers being incorrectly charged.

Update 08:50 UTC Ofcom’s arse-covering press release focuses on Vodafone’s failure to credit prepaid accounts although customers had paid for top-ups. Deserved criticism of Ofcom is sidestepped by not mentioning why the regulator chose not to take similar action to protect postpaid customers from overbilling, even though record complaints numbers over the last 18 months confirm the much wider-ranging impact of Vodafone’s botched billing migration.

Update 10.00 UTC The scale of the fine has attracted the attention of the UK press, though they are mostly copying the words of the Ofcom press release with no analysis, even though they previously reported about the failures of Vodafone’s billing migration. The punishment is the top story on Reuters UK and near the top of the BBC News website.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.