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Which? Accuse ISP Virgin Media UK of Unlawful Customer Contracts

Thursday, Aug 24th, 2023 (8:43 am) - Score 4,144
Contract under magnifying glass

A team of legal experts at Which? have today accused broadband ISP Virgin Media (VMO2) of potentially breaching consumer contract law by “effectively [maintaining] a licence to impose unlimited [price] increases” through their Terms & Conditions (T&Cs) for existing customers. The consumer magazine wants Ofcom to investigate.

The issue appears to centre around a long-standing clause in Virgin Media’s T&Cs, which states the ISP can “change our charges at any time“. The clause was maintained earlier this year after the provider updated their terms to “introduce an annual inflation linked price rise based on the Retail Price Index + 3.9%” (here), which mirrors the approach that was already being taken by all the other major broadband providers (O2 and Virgin Mobile already adopt this approach).

NOTE: Virgin’s monthly prices will increase each year from April 2024 by the RPI rate of inflation announced in February each year plus 3.9%.

The policy change is due to come into effect from April 2024 and is then effective from April each year. But it will also make it harder for customers to exit their contract penalty free when the new hikes hit in the future, which is because customers gain more forward transparency over the forthcoming price rises (even though many consumers still find ‘inflation’ linked hikes confusing).

Which? believes both clauses amount to “unfair contract terms” and could be in breach of the Consumer Rights Act 2015 by creating “a significant imbalance” between the rights Virgin Media has granted itself and those of the customer. The view seems to be 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“.

The organisation claims these terms also make it impossible for consumers to predict how much they will end up paying for broadband services when they sign a contract with Virgin Media (we assume because the RPI rate can’t be 100% known until February each year). Which?’s legal experts believe this also potentially amounts to a breach of the Consumer Protection from Unfair Trading Regulations, which prohibit unfair commercial practices, including misleading actions and misleading omissions.

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.”

Which? has called on Ofcom to proceed with an urgent investigation of Virgin Media, which they hope could be concluded before next year’s RPI linked round of price hikes hit in April 2024. The consumer magazine also warns that some of the other major broadband ISPs should be probed over similar terms, but it remains to be seen whether the regulator will take any action.

However, Virgin Media has strongly rejected “many” of the claims, describing some as a “deliberate misrepresentation of the facts“, and others as being just “simply incorrect“. The provider states that Which? is misrepresenting a separate clause in their T&Cs, which does not specifically relate to customers’ monthly subscription charges, but instead to other out-of-bundle charges (e.g. out-of-allowance and admin charges).

Virgin notes that their T&Cs are also written almost identically to those of other broadband ISPs and has thus questioned why Which? decided to single them out (the consumer magazine said they did this because Virgin allegedly represents “the most egregious example of unacceptable price hiking practices,” which Virgin deny). Finally, Virgin said there is categorically no plan to increase customers’ bills multiple times within the same year.

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.

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.”

Just to be clear about one thing. Virgin mentions above that “customers were given the right to cancel their contract within 30 days of receiving this notification“, although this refers to the price notification they issued earlier this year (this allowed existing customers to cancel without penalty), rather than any future price hike notifications. The existing terms do have a standard 30-day cancellation clause too, but crucially that is NOT a penalty free cancellation for those still within their minimum term.

At this stage it remains unclear whether Ofcom will find enough cause to investigate Virgin Media, but they’re already investigating the ISP after customers complained that the “company is making it difficult for them to cancel their services” (here). The regulator is currently also in the process of reviewing whether inflation-linked mid-contract hikes give customers “sufficient certainty and clarity about what they can expect to pay” (here) and a verdict is expected later this year.

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.”

We suspect Ofcom would be more likely to force a general industry change, via new guidelines, than to target Virgin Media specifically over Which?’s accusation.

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Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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Comments
19 Responses
  1. Avatar photo CG says:

    I’m not a lawyer so can’t comment on the legality. However I think some operators have done themselves no favours. I am more critical of the mbile prioce hikes with bundled airtime and handsets. I think for those it is very difficult to justify the high mid-term price hikes for the handset portion. Of course people should read contracts and know what they are signing up to.

    As my employer reimburses me up to a price cap for my mobile, I just factor in worst case price hikes and choose appropriately. If I was having to fund my own phone I would buy the handset separately from the airtime.

    Overall, I do think there needs to be more transparency in the advertising.

    1. Avatar photo Raj says:

      Agreed. If anything, CPI/RPI increases should apply to airtime and not device cost.

  2. Avatar photo anonymous says:

    They saw BT doing inflation + 3.9% and held off for a few years then thought “hey we want some of the pie” – so you can only conclude it’s to try and legally drain money from customers, particularly in areas where no ALTNETS service a road/property and the only alternative is ADSL or slow FTTC lines or wait for FTTC availability due to full cabinets.

    I think Ofcom need to stamp on contract terms full stop. If you sign up to a price, it’s that agreed price for duration of contract else what’s the point of a contract that is all in the operator’s favour.

  3. Avatar photo Anthony says:

    Not one person in England outside of the ISPs likes these annual CPI price increases in April. They are seen as a means to cheat and con customers. They are confusing, complicated, distressing and just outright annoying. Which! should be lobbying for these to be removed from the whole industry

    1. Avatar photo anonymous says:

      Virgin was RPI + 3.9% not CPI + 3.9%

  4. Avatar photo No Name says:

    All mid contract price rises should be banned.

    If ISP’s can’t offer a 2 year contract at a price without factoring in the increase in costs to them over that short period then they probably shouldn’t be running a company. Inflation doesn’t matter because your whole customer base doesn’t renew their contracts at the same time so it always balances out.

    1. Avatar photo Simon Farnsworth says:

      I wouldn’t go quite as far as banning mid-contract price rises completely; however, I would require them to be included in all up-front material, including advertising, such that people know up-front exactly what they will pay during the lock-in period.

      Yes, this means you need to estimate inflation adequately; but the public policy justification for contractual lock-in is that the cost basis of telecoms is capital-intensive, operationally cheap. Getting people to pay £2,000 as a connection fee, then £1/month ongoing fees doesn’t work as a business model, because relatively few people will be willing to pay the high up-front costs, but getting people to fund that as £25/month does work. The up-front cost has already been paid, so inflation-linking your price rise isn’t relevant to this justification.

  5. Avatar photo S S says:

    Virgin Media are such a scummy company. Tried to cancel my services with them the other day but the phone line got “cut off” twice. So went through their WhatsApp messaging service. Started at 4pm and didn’t get through to someone until 10am the next morning. Now every day since I have had numerous calls every day from them trying to get me back. So glad to see the end of them, just got a couple of weeks to get through the relentless calls… I’m sure this would be classed as harassment….

  6. Avatar photo NE555 says:

    I think there are two completely separate issues here.

    1. Virgin has always maintained the right to change prices whenever they like. However, this was balanced by consumers having the the right to leave penalty-free when they did – meaning there was no unfairness.

    2. Virgin is now introducing RPI-plus increases within the contract term, and without the right to leave (as most large ISPs are doing these days)

    I think the only point Which? can make is that if Virgin are introducing (2), they ought to drop (1), or at least clarify that any *other* price rises within contract still allow the user to leave.

    Virgin are saying that (2) is no worse than what almost everyone else is doing – which is sadly true.

    Market forces don’t seem to be able to fix this one. If one large ISP were to say “look! we don’t have mid-contract price rises!”, it would mean that their starting price is higher – and unfortunately that’s the main thing that people look at when comparing ISPs.

    Equally, market forces don’t seem to be able to fix the severe post-contract price hikes that most providers apply (when really the price should be going *down*, as all the costs of the initial setup have been paid off)

    1. Avatar photo anonymous says:

      BT and others are CPI +3.9%
      Virgin is RPI + 3.9%

      RPI is more than CPI. There is a difference. Therefore VM are more expensive than the others using CPI.

    2. Avatar photo Iain says:

      Which? are absolutely right. Consumers had the right to leave whenever a mid contract price rise was announced. It’s clear as day unfair to take that a way.

      This is on top of mid contract price rises being scummy.

  7. Avatar photo Chris says:

    Vm keep charging me more than my contract states, every month they say they will correct it and every month it’s not.

    They claim I can’t leave penalty free as they will correct the bill but currently it’s been wrong the last 8 months.

  8. Avatar photo Philip says:

    Since winter 2017, VM’s RFoG has been a life saver for us. The VM Customer Services and Operating Procedures leave everyone wishing Openreach would get moving and deliver a few more KM of FTTP covering all of our village.

    Sadly we have been waiting for Openreach since 2010 and still no FTTx offerings only 4G GSM.

  9. Avatar photo ACdeag says:

    It would be better if the networks weren’t allowed to use CPI/RPI but had to give a fixed amount they would increase each year. As it was publicised then there would be competition on it. If O2 said 5% and EE said 4% then people can compare and decide to go to EE if they wanted a lower increase.

  10. Avatar photo Roger_Gooner says:

    I received an email from VM on 24 February 2023 informing me of three things.

    1. There would be an increase from 1 May 2023 of £21.50 a month, but it wouldn’t start until “your current price offer ends”.

    2. From 24 April 2024 the monthly subscription price for my services will increase every April and it’ll be linked to the Retail Price Index (RPI) rate of inflation plus an additional 3.9% (“so the amount of any increase will be clearer, sooner”).

    3. If I was unhappy with any changes then I could change or cancel my package, including my Volt O₂ sim, any time before 4th April 2023, without paying any cancellation fees.

    That all seemed clear enough to me.

    1. Avatar photo Iain says:

      The problem is your contract originally allowed you to cancel penalty free, whenever a price rise was instituted. It’s legally flawed for them to give you notice in past for next year’s price rise.

    2. Avatar photo Andrew G says:

      @Roger_Gooner: Both here and in VM’s customer forums you’ve been remarkably uncritical of Virgin Media’s more despicable behaviours and poor performance, so I’m unsurprised that VM’s open ended “as much as we like as often as we want” are all clear to you. Funnily enough, the thing here isn’t whether it is clear, but that it is unfair. See the comments about CMA rules. Then see VM’s response, which is not about the unfairness, but that the terms are clear. You see the difference? Clear versus fair? Yet here you are, again jumping in to defend the indefensible. Last time we crossed swords in the VM forum you resolutely ignored my requests to explain why you were so keen to take the company’s side, but here’s your chance again.

    3. Avatar photo Roger_Gooner says:

      @Andrew G: It’s a competitive market as VM has about 54% of UK properties covered whilst Openreach has 80% (with a third of all UK properties covered by fibre, much more than VM) and altnets have made major inroads too, and as for Pay TV Sky covers 97% of the country. VM customers often have alternative providers, so they can switch if unhappy. A case in point: I got a deal recently at a much reduced price from VM but if I hadn’t I was prepared to move to Sky’s TV, broadband and landline.

    4. Avatar photo XGS says:

      According to NE555 above customers now have to pay cancellation fees if they cancel due to the price increase.

      Alongside this VMO2 make it a difficult and time consuming task trying to leave time service.

      One Touch Switch will put an end to that but in the meantime that needs sorting.

      If customers can’t leave penalty free RPI + 3.9% is, for me, unacceptable. A customer signing up the wrong time could have been facing a 15% increase.

      The customer needs to be given at least an estimate of this rise.

      I trust all VMO2 employees will be receiving an RPI + 3.9% pay rise.

Comments are closed

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