Which? has asked Ofcom to urgently investigate Virgin Media after claiming the firm is potentially breaking the law by “giving itself sweeping powers to hike customer broadband bills by unlimited sums whenever it chooses”.
The watchdog said it believed Virgin Media was attempting to “have its cake and eat it” by applying inflation-linked annual mid-contract price increases in its terms and conditions 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 its concerns with the regulator, claiming they are the “most egregious example of unacceptable price hiking practices across the broadband industry”.
Virgin Media said it rejected the “baseless” allegations in the “strongest possible terms”, claiming that Which? had “wilfully misrepresented” a separate clause in its terms and conditions, which were written “almost identically” to those of other providers.
Which? said its action was a “shot across the bows” of all UK telecoms providers and suggested it could have far-reaching implications for firms preparing to potentially inflict inflation-busting mid-contract price increases on millions of customers again in April next year.
This year, many broadband customers across major providers faced the choice of hefty increases to their monthly bills or paying significant fees to get out of their contract.
Virgin Media, which has almost six million broadband customers in the UK, increased its bills for existing customers by an average of 13.8% – equivalent to more than £100 a year for some households paying for more expensive packages.
Which?’s complaint to Ofcom highlights a clause in Virgin Media’s terms and conditions, which states the firm can “change our charges at any time”.
It has also added 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% – the same rate imposed on Virgin Mobile and O2 Mobile customers, who this year faced 17.3% hikes.
Which? said it believed both clauses amounted 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.
Guidance on unfair contract terms from the Competition and Markets Authority (CMA) states that “any purely discretionary right to set or vary a price after the consumer has become bound to pay is obviously objectionable”.
Which? said the terms also made 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 it believed potentially amounted to a breach of the Consumer Protection from Unfair Trading Regulations, which prohibit unfair commercial practices, including misleading actions and misleading omissions.
The watchdog said Virgin Media’s pricing practices were compounded by “woeful” customer service, with Ofcom already investigating claims the company has made it difficult for customers to cancel their services.
Which? has also urged the regulator to assess all relevant telecoms providers for compliance with consumer protection legislation.
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.
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.”
A Virgin Media spokesman 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.”
An Ofcom spokesman said: “We will consider – and respond to – the issues that Which? has raised.
“We already have an enforcement programme open into whether telecoms firms have previously been complying with our rules, which state that mid-contract price rises must be set out clearly before customers sign up.
“We are also reviewing whether inflation-linked, mid-contract price rises give customers sufficient certainty and clarity about what they can expect to pay. We will report on both of these later this year.”