Virgin Media is facing calls for the telecoms watchdog to urgently investigate the legality of its broadband contracts, under which it can increase bills at any time and by unlimited amounts.
The consumer champion Which? has concluded that Virgin Media’s terms and conditions may amount to unfair contract terms and could be in breach of the Consumer Rights Act. It has written to Ofcom calling on it to intervene.
Virgin Media, which has almost 6 million broadband customers in the UK, said it denied these “baseless allegations in the strongest possible terms”.
Which? claimed that buried in the company’s small print was the right to apply “aggressive inflation-linked annual mid-contract price increases, while removing the right for affected customers to cancel without paying substantial exit fees”.
It said this was creating a significant imbalance between the rights Virgin Media had granted itself and those of the customer.
In April, Virgin Media customers faced average increases to their bills of 13%, equivalent to more than £100 a year for households on expensive packages. It was by no means alone: almost all telecoms suppliers have responded to high inflation by pushing through similar increases, leading to accusations that they are fuelling “greedflation”.
In May, the company changed its terms and conditions, adding a clause stating that in future customers would face annual price rises based on the retail price index (RPI) measure of inflation. The move set Virgin apart from rivals, as most other telecoms operators use the consumer price index (CPI), which produces lower calculations of inflation and is regarded as more accurate than RPI.
It also became the latest operator to impose an additional 3.9% supplement on top of the annual inflation-linked increase, which campaigners say is hard to justify at a time when inflation is soaring.
Which?’s complaint to Ofcom centres on a longstanding clause in Virgin Media’s terms and conditions stating that the firm can “change our charges at any time”, meaning some customers could face more than one price increase during the lifetime of a contract. Given the current rate of inflation, those increases could be large. Virgin’s mobile phone customers this year faced 17.3% increases – RPI of 13.4% (January’s inflation number) plus the 3.9 percentage point supplement.
Rocio Concha, the director of policy and advocacy at Which?, 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.”
Concha said she believed the consumer group’s stance was 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”.
A Virgin Media spokesperson said: “We have always been open and transparent about any price increases. We have 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.
“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.”
This is the latest row to dog the broadband supplier. In recent weeks it has come under fire after its email systems collapsed, leaving customers without access to emails for days and in some cases months.
Ofcom said it was ready to consider and respond to the issues 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,” it said. “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.”
