Which? has asked Ofcom to urgently investigate concerns that Virgin Media is potentially breaking the law by giving itself sweeping powers to hike customer broadband bills by unlimited sums whenever it chooses.
The consumer champion believes Virgin Media’s terms for customers are an attempt by the firm to “have its cake and eat it” by applying aggressive inflation-linked annual mid-contract price increases in its Ts & Cs while removing the right for affected customers to cancel without paying substantial exit fees and also maintaining the right to hike bills further at any time.
Which? has formally raised Virgin Media’s behaviour with Ofcom as it believes it is the most egregious example of unacceptable price hiking practices across the broadband industry. However, it is not the only provider that may be relying on questionable terms and conditions to justify inflationary price hikes.
The consumer champion’s action is a shot across the bows of all UK telecoms providers and could have far-reaching implications for firms preparing to potentially inflict inflation-busting mid-contract price increases on millions of customers again in April 2024. This year, many broadband customers across major providers faced an impossible choice between hefty increases to their monthly bills or paying extortionate fees to get out of their contract.
Virgin Media has almost six million broadband customers in the UK. This year its existing customers faced eye-watering 13.8 per cent average increases to their bills, equivalent to more than £100 a year for some households paying for more expensive packages.
Which?’s complaints to Ofcom highlight a long-standing clause in Virgin Media’s terms and conditions, which states the firm can “change our charges at any time” – effectively a licence to impose unlimited increases.
The firm has maintained this line in its Ts & Cs, while also adding a new clause stating that, in future, customers will face annual price rises based on Retail Price Index (RPI) inflation plus an additional 3.9 per cent. This is the same rate imposed on Virgin Mobile and O2 Mobile customers, who this year faced 17.3 per cent hikes.
Which? believes both clauses amount to unfair contract terms and could be in breach of the Consumer Rights Act by creating “a significant imbalance” between the rights Virgin Media has granted itself and those of the customer.
The consumer champion’s view is supported by guidance on unfair contract terms from the Competition and Markets Authority (CMA), which states that “any purely discretionary right to set or vary a price after the consumer has become bound to pay is obviously objectionable”.
This is particularly because these terms also make it impossible for consumers to predict how much they will end up paying for broadband services when they sign a contract with Virgin Media. Which?’s legal experts believe this also potentially amounts to a breach of the Consumer Protection from Unfair Trading Regulations, which prohibit unfair commercial practices, including misleading actions and misleading omissions.
The problems with Virgin Media’s pricing practices are compounded by woeful customer service, with Ofcom already investigating claims the company has made it difficult for customers to cancel their services. Virgin Media has also consistently underperformed in Which?’s annual broadband provider rankings – receiving just one star for customer service in this year’s survey.
Consumers are generally somewhat reluctant to cancel their broadband contracts, due to the complexity of the market, inconvenience of switching provider and fear of losing their connection.
Which? has asked Ofcom to proceed urgently with an investigation of Virgin Media, so that action can be taken to prevent millions of customers from facing unfair inflation-linked mid-contract price increases in April 2024. It has also urged the regulator to assess all relevant telecoms providers for compliance with consumer protection legislation.
Ofcom could demand that Virgin Media drops its unfair terms and ultimately ask a court to declare them unlawful and unenforceable, and to prohibit further unfair pricing practices. A court could order Virgin Media to refund money to consumers who signed up to unfair contracts.
Ofcom is already reviewing inflation-linked, mid-contract price rises amid concerns that they do not give consumers sufficient certainty and clarity about what they can expect to pay. However, Which? is concerned that the review is not expected to conclude in time to affect increases next April and is calling on all providers to stop the practice, irrespective of the outcome of the review.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Virgin Media is trying to have its cake and eat it by imposing eye-watering inflationary price increases while also giving itself the power to hike customers’ bills whenever it chooses. Which? believes this is not only unacceptable but potentially unlawful and Ofcom must investigate urgently.
“This should send a clear message to all telecoms firms that time is up for these unjustifiable inflation-linked, mid-contract price hikes. Providers should make a commitment now that they will not try to impose these increases next year, to reassure customers already struggling in a cost of living crisis that they will not face yet another unpredictable hit to their finances.”
Notes to editors
Which? guide to unfair contract terms and the Consumer Rights Act 2015: https://www.which.co.uk/
consumer-rights/advice/there- s-an-unfair-term-in-my- contract-how-can-i-complain- and-get-my-money-back- aeHsV7t85zl5
Which? guide to the Consumer Protection from Unfair Trading Regulations 2008: https://www.which.co.uk/
consumer-rights/regulation/ consumer-protection-from- unfair-trading-regulations- 2008-asO0C3p6VZQR
Virgin Media is the only broadband provider to use RPI – which is typically higher than CPI – as the basis for annual price increases. The Office for National Statistics dropped RPI as a national statistic in 2013, stating “we do not think it is a good measure of inflation and discourage its use. There are other, better measures available and any use of RPI over these far superior alternatives should be closely scrutinised.”
Recent Which? research found only one in 20 consumers (5.2%) were capable of estimating what impact an inflation-linked mid-contract price rise would have on their monthly telecoms bill: https://www.which.co.uk/
policy-and-insight/article/ customer-knowledge-and- understanding-of-mid-contract- price-rises-aH6Rj2y6KKP8
Ofcom investigates Virgin Media over customer difficulties cancelling contracts: https://www.ofcom.
org.uk/news-centre/2023/ virgin-media-investigated- over-difficulties-cancelling- contracts
Ofcom to review inflation-linked telecoms price rises: https://www.ofcom.org.
uk/news-centre/2023/review-of- inflation-linked-telecoms- price-rises
Right of reply
A Virgin Media spokesperson said: “We refute these baseless allegations in the strongest possible terms, which amount to a one-sided, selective and misinformed reading of widely used contractual terms.
“We have always been open and transparent about any price increases. While we know that price changes are never welcome, against a backdrop of rising costs, increased usage and continued investment, we have already openly set out to customers that we are introducing inflation-linked price changes from April next year, which are widely used and give customers greater certainty about what to expect from their bills. Customers were given the right to cancel their contract within 30 days of receiving this notification.
“It’s very worrying that Which? is choosing to wilfully misrepresent our pricing practices. Our terms and conditions are very clear that inflation-linked price rises only apply to a customer’s monthly subscription charges and we have no plans to increase monthly bills multiple times within the same year. If separate out-of-bundle charges are increased at any point, then this would be clearly outlined and customers would receive a right to cancel.
“Our terms and conditions have been drafted in line with standard industry practice, consumer law and Ofcom guidelines, and we are extremely disappointed that Which? has decided to make misrepresented claims relating to a single provider, especially one that has made more effort than many to be transparent with its customers.”
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.
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