Ofcom explained that Giffgaff - which is owned by O2 parent Telefonica - overcharged around 2.6 million customers up to a total of almost £2.9 million.
Ofcom said that Giffgaff customers who bought one of their ‘goodybag’ bundles while using their pre-paid credit were overcharged.
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The reason behind this overpayment was due to a delay in Giffgaff applying the bundle purchase to customers accounts. This meant that any calls and data that customers were using at the time came out of their pre-paid credit.
Giffgaff only applied the ‘goodybag’ bundle to a customer’s account once they ended the voice call they were on, or when they started a new data session.
Ofcom explained that the services should have been free from the point the bundle was purchased – so the customers were charged twice.
Giffgaff said that it has already refunded around £2.1million to some of the affected customers.
In cases where it they mobile phone company hasn’t yet been able to find the customers to refund, it has donated the money to charity.
If you’re a Giffgaff customer and think that you are still owed a refund, you can contact Giffgaff to find out.
Giffgaff admitted wrongdoing
Ofcom also said the fine Giffgaff received was lower because the mobile phone company agreed to settle the case and admitted the breach.
Gaucho Rasmussen, director of investigations and enforcement at Ofcom, said, "Getting bills right is a basic duty for every phone company. But Giffgaff made unacceptable mistakes, leaving millions of customers out of pocket.
"This fine should serve as a warning to all communications providers: if they get bills wrong, we'll step in to protect customers."