Vodafone hit with record fine for 'serious and sustained' breaches of consumer protection rules

The world's second-largest mobile operator, Vodafone, has been handed a £4.76 million ($5.60 million) fine by industry regulator Ofcom. The fine -- the largest ever for a telecoms company -- was a result of Vodafone's "serious and sustained" failings.

The company failed to top-up customers' accounts when they bought credit, and failed to act quickly enough to rectify the problem. The failings cost customers £150,000, and it is now going to cost Vodafone £3.7 million; the remaining £925,000 of the fine is for failures with complaint handling.

In all, 10,452 of Vodafone's pay-as-you-go customers were affected by problems, and the company says that all but 30 of them have now been refunded. Ofcom points out that the size of the fine reflects the "serious and unacceptable" nature of the failings and should act as a warning to other telecoms companies. Lindsay Fussell from Ofcom said: "Phone services are a vital part of people's lives, and we expect all customers to be treated fairly and in good faith".

Vodafone described the debacle as an "unhappy episode", which it blames on moving to a new billing system. The company points out that it has donated £100,000 to charity to make up for the 30 customers it had been unable to track down, to make sure it did not profit from the mistakes.

In response to the fine, Dan Howdle from Cable.co.uk said:

This is the biggest telecoms fine Ofcom has ever levied, and rightly so. It’s still the Wild West out there: Virtual network operators migrating across networks, leaving a trail of disgruntled customers in their wake; Post Office Mobile, Sainsbury's Mobile and others shutting down altogether; falling customer service levels, and in the case of Vodafone -- the UK’s most complained about mobile provider according to Ofcom's most recent report -- failure even to provide services customers have already paid for.

While the investigation shines light on inadequate remedial systems within Vodafone, it would be foolish to assume it is alone in its inadequacies. The message is clear to all: Fines of this size are the shape of things to come, and preventative measures should be taken, or suffer the consequences.

Vodafone now has 20 days to pay the fine, which will then be passed to the Treasury.

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