Virgin Media has the right to raise bills at any time without any limits or restrictions.
Consumer Rights Act Allegations and Unfairness
Which? Virgin Media’s contract terms could be unfair and violate the Consumer Rights Act, according to Which? Virgin Media responded to these accusations by vehemently denying the allegations as unfounded.
Lauren Davies, CEO of VoIP provider bOnline, comments: “Companies from all walks of life need to be very careful about misleading their customers or committing them to fixed-term contracts. Consumer affairs are more important than ever. It’s a positive thing, as consumers will get the best deal and companies need to be more competitive to stay in business.
Hidden Clause Sparks Imbalance in Consumer Rights
Which? highlights a central issue. Virgin Media’s complex terms and conditions contain a clause that is less prominent. This clause allows the company to increase prices in line with inflation during a contracted period. This change also denies customers who are affected the right to cancel their contracts without having to pay substantial exit fees.
Price increases that are widespread trigger concerns
Virgin Media’s customers were faced with a 13% increase in average in April. This translates to an annual cost of over PS100 for households that subscribe to premium packages. This trend is not exclusive to Virgin Media. The majority of telecom companies have raised their prices to counter the rising inflation.
Changes in terms and conditions: Inflation-Linked Hikes
Virgin Media’s terms and conditions were revised in May to try to remedy the situation. Virgin Media introduced a clause that stipulated customers would be subject to yearly price increases linked to the Retail Price Index (RPI) measure of inflation. This is a departure from industry norms, as most operators use the consumer price index (CPI), which is a conservative inflation measure.
Controversial Surcharge Amid High Inflation
Virgin Media added to the problem by adding a 3.9% surcharge on top of the inflation-linked annual increase. Critics say that it is difficult to justify this surcharge in a time of high inflation.
Which? Ofcom Urgent Action Appeal
Which? Virgin Media’s long-standing terms and conditions, which grant the company the right to change charges at their discretion, are the source of Which? Customers could face several price increases throughout their contract, which could be significant given the current inflation rate.
Call for Investigation of Potential Unlawfulness
Rocio concha, director of policy and advocacy at Which?, says Virgin Media’s strategy of implementing inflation-driven high price increases while retaining the right to increase bills arbitrarily, is not only inacceptable but may be illegal. Concha urges Ofcom to launch an investigation immediately, highlighting the need to curb unjustifiable price increases in mid-contract linked to inflation.
Guidelines from the Competition and Markets Authority
Concha’s position is supported by the Competition and Markets Authority’s (CMA) guidance, which states that “any discretionary right of the company to change a price once the consumer is bound to pay it” is unacceptable.
Virgin Media Response to Ongoing Issues
Virgin Media responds to the allegations, stating that it has always communicated transparently about price increases. The company clarifies it notified its customers in advance of the inflation-linked price changes. Customers were given a 30 day window to cancel their contracts.
Virgin Media has had a number of recent problems, including an outage that affected its email system for a considerable period. This left many customers without access to email.
Ofcom Commitment to Addressing concerns
Ofcom expresses its readiness to address the concerns raised. The regulator confirms that it has an ongoing enforcement program to assess whether telecom companies are complying with the rules mandating transparency in communication of price increases mid-contract with customers. Ofcom will also examine whether the inflation-linked price increases give customers enough certainty and clarity about their future payments. It has promised to release a report on this matter later in the year.