Complaints Prompt Probe of Virgin Media’s Contract Cancellation Charges

A string of consumer complaints have today prompted Ofcom to launch a probe into Virgin Media’s contract cancellations policy, which will examine whether or not the cable broadband, phone and TV provider has been playing fair when applying Early Termination Charges.

Nearly all of the market’s largest broadband and phone providers will levy some form of Early Termination Charge (ETC), which applies to customers that choose to exit their contract before the current term has come to an end (Virgin calls these Early Disconnection Fees). For example, this is how much Virgin Media charges per month if you leave their broadband service before your contract is up (applies to the remaining months).

Virgin’s ETC for Broadband

However Ofcom has received complaints about Virgin Media’s handling of ETCs and thus the regulator has decided to probe whether or not the operator is compliant with their General Condition 9.3 rule. On top of that they will also check if the operator’s approach is “unfair” under Section 62(1) of the Consumer Rights Act 2015 (CRA).

The GC9.3 rule is designed to “ensure that the conditions which apply if you terminate your contract don’t disincentivise you from changing to a new provider, e.g. through excessive early termination charges.” Meanwhile Section 62(1) of the CRA states that an unfair term of a consumer contract is not binding on the consumer (this means provisions within the contract itself).

A Virgin Media Spokesperson told ISPreview.co.uk:

“We note Ofcom’s investigation into early termination charges and will work with them during the course of their inquiry.”

In addition, the regulator has also launched a new monitoring and enforcement programme that will look at whether other ISPs are making mistakes in the same area (here).

Ofcom’s Statement

Ofcom receives a large number of complaints about ETCs from consumers trying to exit their communications service contracts. Complaints indicate that some consumers are unclear about the circumstances in which an ETC can be charged and question whether such charges are fair.

Our objectives for this programme are:

* To ensure that CPs are taking appropriate steps to make consumers aware of any applicable ETCs when they are signing up to a minimum contract period; and
* To ensure that terms and conditions imposing ETCs on consumers comply with GC9.3 and are fair for the purposes of the CRA.

Under this programme, we will collect information from relevant sources, including CPs, and review relevant consumer complaints data, in order to assess compliance and take any action as appropriate.

Where we identify specific issues in relation to ETCs, we may initiate separate investigations of named providers. Where we do so, these will be announced via our Competition and Consumer Enforcement Bulletin.

At this stage there’s very little solid information to go off, although it’s worth pointing out that Virgin Media have recently introduced the option of monthly (30 day) contract terms for those who don’t like being tied down for longer (here). The disadvantage of a monthly contract is that you have to pay more to receive the same service, while longer contracts tend to be cheaper but can carry nasty caveats like ETCs.

However feedback from some of our readers suggests that Ofcom might possibly be taking issue with the fact that Virgin Media also charges ETCs when customers move house but are then unable to provide the service at the new property (e.g. because their network is not present).

In other cases customers claim to have cancelled after the operator broke their own contract through incorrect billing or other reasons, although despite this Virgin Media then continued to levy ETCs. We should learn more if the regulator decides to press ahead with a full investigation, although this process could take awhile.