Which? calls for Virgin Media to be investigated under regulator Ofcom over a clause in its broadband contract that says it can change its charges at any time.
The concerns come after the provider increased its bills for existing customers by an average of 13.8%, adding more than £100 annually for some households paying for more pricer packages.
With the cost of living crisis taking its toll on the price of food and energy, mid-contract rises have put extra strain on consumers. Millions of customers already faced a hike in their mobile and broadband bill mid-contract in April based on the Consumer Price Index (CPI) rate of inflation, which added around 15% on bills, according to Uswitch.
The watchdog claims Virgin Media is breaking the law and “giving itself sweeping powers to hike customer broadband bills by unlimited sums whenever it chooses”.
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Why is Which? Urging Ofcom to look into Virgin Media’s broadband contract? And what does this mean for the 6 million Virgin Media broadband customers? We take a closer look.
Which? calls for Ofcom to investigate Virgin Media
Which? has formally raised concerns to Ofcom, claiming Virgin Media is the “most egregious example of unacceptable price hiking practices across the broadband industry.”
The complaint to Ofcom is based on Virgin Media passing inflation-linked mid-contract hikes to its customers and not giving the right for affected customers to cancel without a hefty exit fee.
Back in April, Virgin Media broadband customers faced a 13.8% hike in their bills, based on the CPI rate of inflation. The good news was customers affected had an option to leave penalty-free.
But, from April 2024, the provider will introduce an annual inflation-linked price rise based on the higher measure of inflation, Retail Price Index (RPI), plus an additional 3.9% rise.
Both CPI and RPI are measured based on a basket of goods and services and how the cost has changed over time.
RPI takes into account housing costs, such as mortgage interest payments, whereas CPI doesn’t take any housing costs into consideration- which is why the CPI rate of inflation tends to be lower.
Most broadband providers use the rate of CPI for inflation-linked hikes. But Virgin Media believes the measure of the RPI is more recognised. Unfortunately, this means that, from April 2024, customers will have to pay an exit fee to switch broadband providers.
In Virgin Media’s terms and conditions, the small print also gives the provider the option to raise bills at any time, something Which? believes is in breach of the Consumer Rights Act. In other words, the watchdog said Virgin Media is trying to, “Have its cake and eat it.”
Which? raises the concern that, when customers sign a broadband contract with Virgin Media, it will be impossible to predict how much they will end up paying during the term of their contract.
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.”
Virgin Media has responded to these allegations. A 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.”
What does this mean for Virgin Media broadband customers?
If you’re a Virgin Media broadband customer, you should have already been notified about the changes in price rises due in April 2024.
Virgin Media said: “Customers were given the right to cancel their contract within 30 days of receiving this notification.”
If you didn’t cancel and you want to switch providers, Virgin Media will impose an Early Disconnection Fee, in other words, an exit fee.
There is no fixed fee to pay, as this will vary depending on the services you have, how much you already pay for the services and the minimum period left on your contract.
If your contract started before 4 April 2023, your exit fee will be capped at £288, including VAT. If you’re a new customer or renewed your contract after the said date, your exit fee is not capped.
In regards to next steps, an Ofcom spokesperson 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.”