Today, the Office of Communications (Ofcom) issued its largest ever fine under its consumer protection rules, ordering Virgin Media to pay £28 million for systematically preventing customers from cancelling their contracts.
The offence? A nearly three-year campaign of deliberate call-dropping, excessive transfers, and pressuring customers to stay, all financially incentivised through a commission scheme that rewarded agents for keeping potential leavers signed up.
This is not the first time Virgin Media has fallen foul of this rule — it was fined for a breach of the same provision in 2018. The relevant period under investigation is also important, It ran from January 2022 right up to 11 September 2024, one day before Ofcom’s new One Touch Switch process launched, removing the need for customers to contact their existing provider before switching.
The scale of the conduct uncovered, and the size of the penalty, send an unmistakable signal as the UK prepares for a new statutory regime governing subscription cancellations.
What happened?
Ofcom’s investigation, launched after nearly 1,900 complaints, uncovered systemic and deliberate failings across millions of calls during the relevant period.
It found that Virgin Media operated a two-tier retention system in which only second-tier agents could process cancellations, forcing over a million callers to repeat their request to at least one additional agent. Beyond this structural barrier, agents repeatedly pressured customers to stay, transferred callers excessively between departments, placed them on hold without reason, and deliberately dropped calls. Some customers resorted to cancelling their direct debits, damaging their credit scores.
Critically, Virgin Media’s commission scheme encouraged these behaviours. Training and quality assurance processes failed to prevent the misconduct, and oversight of third-party call centres was inadequate.
The legal basis
Ofcom issued its decision under section 96C of the Communications Act 2003. The underlying rule, General Condition C1.8, provides that the conditions or procedures telecoms providers put in place must not act as a disincentive for customers who wish to cancel. Ofcom concluded that Virgin Media’s conduct caused customers “unreasonable effort, hassle or undue difficulty,” amounting to a disincentive to switch in breach of the rule.
Aggravating factors included the significant consumer harm, the financial gain Virgin Media likely made, its repeated failure to comply with Ofcom’s information-gathering requests, and the fact that this was a second offence. The penalty includes a 30% reduction for Virgin Media’s admission and agreement to settle and without it, the fine would have exceeded £40 million.
A preview of the DMCCA regime
The UK’s new subscription contracts regime under the Digital Markets, Competition and Consumers Act 2024 (“DMCCA”) is expected to come into force in spring 2027, specifically targeting “subscription traps” — business models that make it unreasonably difficult for consumers to cancel.
Under the DMCCA, traders must ensure consumers can end their contracts in a way that is “straightforward” and “without having to take any steps which are not reasonably necessary.” Where the contract was entered into online, an online cancellation route must be provided.
Telecoms contracts regulated by Ofcom are excluded from the DMCCA regime, as are utilities, financial services, insurance, healthcare, and childcare contracts. As such, Virgin Media will continue to be regulated by Ofcom via the General Conditions, rather than under the DMCCA. But its conduct is a textbook illustration of the mischief the DMCCA targets, and many businesses, including those in streaming, software, retail, gyms and beyond, will fall within its scope.
When the DMCCA comes into force, enforcement will sit with the CMA, armed with the power to impose penalties of up to 10% of global turnover and to compensate consumers directly. Ofcom’s £28 million fine is substantial, but under the DMCCA the consequences could be significantly greater.
What should your business do now?
If your business operates a subscription model, or any service with a cancellation process, you should be taking the following steps now.
- Audit your cancellation journey and map every step a customer must take to leave. If the process involves unnecessary transfers, repeated identity checks, or retention offers that cannot easily be declined, it is likely to fall foul of both existing sector-specific rules and the incoming DMCCA requirements.
- Scrutinise your incentive structures. If staff are rewarded for retaining customers regardless of how they achieve it, you are potentially building non-compliance into your operations.
- Cooperate early. Virgin Media’s failure to comply with Ofcom’s information requests was treated as an aggravating factor. The AA, by contrast, received a 40% discount for early cooperation (see our earlier post on that here).
Don’t wait for the regulator to call
The DMCCA subscription regime is expected in spring 2027, but the lead time required for technical changes means businesses should be acting now. As the AA’s £5 million bill for a £3 booking fee recently demonstrated, regulators are not waiting for businesses to catch up.
Virgin Media’s £28 million fine started with a phone call that went unanswered. Businesses would do well to pick up.