Ofcom has issued huge fines against broadband and mobile phone businesses that overcharged customers for early termination fees. But what are these fees – and should you be concerned? Here’s a quick guide by Martyn James of complaints website Resolver.
What are ‘early termination fees?’
When you enter in to a contract with a broadband or mobile phone provider but you want to leave the contract early, you’ll have to pay a fee for doing so. These ‘early termination’ or ‘exit’ fees are standard across all contracts – sometimes even pay as you go.
Resolver has received thousands of complaints about fees and charges over the last few years. Often, it’s because people didn’t understand how high the fees could be when they signed up. But on other occasions, people have argued that the fees are unfair, because they’re moving somewhere where there’s no broadband or mobile coverage, or the service or internet speeds weren’t up to scratch.
How do the fees work?
Early termination fees are calculated by working out how long you have left on your contact then billing you for the remaining months.
With broadband, you are generally liable for the full monthly payments to the end of the contract, less things like VAT and discounts. Needless to say, this can result in huge charges if you’re leaving the contract shortly after it’s begun. You’ll usually have to give 30 days’ notice too.
Mobile phone contracts operate on the same principle. With most providers, you’ll need to pay a monthly charge too, though this will depend on the tariff you’re on and will vary quite a bit.
How do I know if I’ve been overcharged?
While Ofcom has fined two firms, many people may be concerned by the exit fees they’ve already paid to any broadband or mobile phone company.
The firms in question – EE and Virgin – have said they are refunding people who have been affected. But if you’re concerned that you have been overcharged by any provider, contact them in the first instance and ask them to check the fee that you paid. You can do this through Resolver.
Your mobile or broadband provider should be able to provide you with the details of the fee you were charged along with their charging structure at the time you left. If you still feel you’ve been overcharged there are free ombudsman services you can take your complaint to.
What if my exit fee was unfair?
Though not covered by the Ofcom fine, many people have told Resolver they are unhappy about being charged an exit fee. If you want to make a complaint about this, then you can do so through Resolver. Make sure you explain what it is you are unhappy with, for example:
- The way the deal was sold to you and the terms and conditions
- If the service wasn’t available after a house move
- If the service was not as advertised (system problems, download speeds).
If you are making a claim about service issues, you’ll need to have given the business chance to sort things out first. So make sure you’ve reported the matter to the firm. It makes sense to take screenshots of broadband speeds, which you can get through downloading a range of free apps.
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