The UK’s major broadband providers, including BT, EE, Plusnet, Talktalk, O2, and Virgin Media, have been found to have misled consumers by failing to clearly disclose mid-contract price increases, according to a ruling by the Advertising Standards Authority (ASA). The ASA determined that the companies had not prominently displayed important information about price rises, instead separating it from headline prices and placing it in less noticeable areas of their websites.
As a result, the ASA has ordered the companies to cease running the ads and to ensure that they clearly communicate that their broadband contracts are subject to mid-contract price increases, with this information presented prominently. This ruling is part of the ASA’s broader efforts to address mid-contract price rises, following the introduction of new guidance that sets stricter standards for advertisers to disclose important information about future price increases, as reported by City AM.
The guidance, which took effect in December after a six-month transition period, advises that information about price increases should be “up front and prominent” and that the full future price should be stated in pounds and pence. Many of the UK’s major broadband providers adjust their monthly charges each April, based on either the Consumer Price Index (CPI) or the Retail Price Index (RPI), with an extra increase of around three percent to offset rising operational expenses.
BT, EE, Plusnet, Talktalk, O2 and Virgin Media raise prices
Ordinarily, this leads to an uptick in costs by about four percent to five percent annually, irrespective of the initial contract price. Yet, due to high inflation rates seen in 2023 the peak in 30 years recent rises have been steeper than usual.
Consequently, several providers implemented hikes up to 7.9 percent this April, with Virgin Media introducing a significant 8.8 percent raise.
Customers who wish to escape these escalating costs often face hefty exit fees if they choose to terminate their contracts prematurely.
Nevertheless, regulatory changes are on the horizon; Ofcom has decreed that from next year, broadband companies can no longer link annual price adjustments to inflation rates. This suggests that new customers may encounter a consistent yearly increase when entering contracts.
Reacting to a ruling on the clarity of price hike information, a spokesperson for Virgin Media O2 stated: “After working closely with the ASA to update our website and provide prominent advice about any price changes, we are surprised and disappointed by their ruling.”
The representative elaborated: “Consumers visiting our website are greeted with a prominent message at the top of the page explaining in large bold font how and when price rises take effect, and this explanation is also always visible when consumers scroll, ensuring they are not misled.”
“While we’re confident in the steps we’ve taken to repeatedly provide consumers with clear and easy-to-understand information about any price rises, we’ll carefully review their judgment and implement any necessary changes.”
The ruling follows a report by City AM on how Plusnet has seen an increase in profit despite a drop in customer numbers after shutting down its mobile division and the discontinuation of John Lewis’s broadband service.
The Sheffield-based broadband provider, part of the BT Group, experienced a 29% decrease in its customer base due to these closures.
Nevertheless, annual contractual price increases have helped mitigate the impact on its revenue, resulting in only a 5% decline.
In August, TalkTalk finalised the principal terms of a refinancing agreement, securing a £400 million financial boost for the telecoms heavyweight.
The Salford-based firm had been negotiating with one of its major shareholders following alerts that it was nearing financial collapse.
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Original artice – https://business-live.co.uk/all-about/yorkshire-humber
