Cost of living: Ofcom asked to investigate Virgin Media price hikes
Company's terms and condition potential breach of law, says consumer group Which?
Which? has urged Ofcom to investigate concerns that Virgin Media is potentially breaking the law in hiking customer broadband bills whenever it chooses.
The consumer champion believes Virgin Media’s terms and conditions are an attempt for the firm to “have its cake and eat it”, which has seen the company applying aggressive inflation-linked annual mid-contract price increases.
Virgin Media’s terms and conditions state that the firm can “change our charges at any time”, whilst a new clause says that in future, customers will face annual price rises based on Retail Price Index (RPI) inflation plus an additional 3.9%.
This comes despite affected consumers being unable to cancel without paying substantial exit fees.
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Which? has now formally raised concerns with Ofcom, saying 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 terms and conditions to justify inflationary price hikes, the consumer champion said.
So far this year, several broadband customers across major providers have faced the choice between price hikes or paying fees to get out of their contract, as the cost of living crisis continues.
“Consumers are generally somewhat reluctant to cancel their broadband contracts, due to the complexity of the market, inconvenience of switching providers, and fear of losing their connection,” Which? said.
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Virgin Media has almost 6 million broadband customers in the UK, with existing customers facing 13.8% average increases to their bills. This is equivalent to more than £100 a year for some households paying for more expensive packages.
Which? believes that the contract clauses 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.
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.
The regulator 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.
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“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,” Rocio Concha, Which? director of policy and advocacy, said:
“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.”
Meanwhile, 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.”
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