The consumer association 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.
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.
Which?’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.
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.”
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.
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.
However, a Virgin Media spokesperson says the accusations are unfounded:
“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.”
Adds Alex Tofts, broadband expert at Broadband Genie:
“While it’s positive to hear that Virgin Media is being challenged on the clarity of its contracts, the uncertainty and confusion surrounding mid-contract price rises goes far wider than a single provider.
“Linking consumer bills to a yardstick as unpredictable as future levels of inflation was always a recipe for trouble, but when the rates were low it was easy to kick the can down the road.
“Over the last couple of years, the surge in the cost of living has brought the chickens home to roost, with broadband customers suddenly facing inescapable double-digit price rises that were written into their contracts.
“Ofcom is currently reviewing whether these inflation-linked increases are sufficiently clear and fair for consumers, but it’s obvious that they are not. Getting rid of mid-contract rises should be the regulator’s priority, and it is hoped that we will soon see the back of them.”