TalkTalk and Tiscali have been fined £3 million for billing tens of thousands of customers for services they had not received.
Ofcom began an investigation into the two telecoms companies in July 2010 after receiving complaints from over 1000 customers.
It was found that both companies wrongly billed customers and in particular, continued to bill consumers who had closed their accounts. Over 62,000 cases were found that had occurred between January and November of last year.
The rules state that “communications providers must not send bills to customers unless every amount in those bills represents the true extent of any such service actually provided.”
Following the findings, Ofcom issued both with a legally binding notification and set a deadline of December 2nd 2010 to begin to sort out the billing issues. However, despite taking steps to comply, both TalkTalk and Tiscali UK continued to incorrectly bill a further 3000 customers in the period up to March 2011.
As a result, Ofcom decided to impose the financial penalty to reflect the seriousness of the breach and act as a warning to other telecoms companies.
The companies were also required to refund affected customers and “take steps to remedy the harm they caused to consumers”. They have so far paid over £2.5 million in refunds and good will payments to more than 65,000 customers.
Ofcom has the power to fine companies who break the rules up to 10% of their turnover.
The watchdog said: “Ofcom considers this to be a serious breach of the rules. However, Ofcom is issuing TalkTalk and Tiscali UK with a lower penalty than they might otherwise have been given, had they not taken steps towards complying with the rules, and taken action to remedy the harm they caused to consumers.”
TalkTalk and Tiscali UK have 30 days from the date of notification to pay the fine.