Virgin Media has been overcharging customers early termination fees on contracts for its broadband, phone and telephone services, Ofcom has provisionally concluded.
The watchdog launched a formal investigation into the telecoms giant last summer into the fairness of its terms and conditions – specifically its charges for ending a contract early – after receiving scores of complaints from customers.
The probe included circumstances when customers had to end a contract because they were moving home into an area Virgin Media doesn’t supply.
Overcharging: Ofcom has provisionally concluded that Virgin Media has been unfairly charging customers a termination fee. Pictured, a Virgin ad with Usain Bolt and David Tennant
Ofcom said it had ‘reasonable grounds to believe’ that Virgin contravened rules by setting and charging customers early termination fees which were too high – they are often set at £240.
It also added that Virgin required customers moving house to an area within its network to sign up to a new fixed term contract or pay the fees and failed to take action to ensure that its conditions and procedures for contract termination did not act as disincentives to its customers against changing provider.
It also believed Virgin failed to publish clear and up-to-date information about the early termination fees on its website.
The investigation looked at the charges over the period between September 1 2016 and September 11 last year.
Ofcom said it aimed to reach its final decision by the end of summer.
All providers must ensure that their conditions or procedures for customers wanting to terminate a contract do not act as a disincentive for switching provider.
Complaints surfaced on various forums from Virgin Media customers who had been charged into the hundreds of pounds in early disconnection fees after signing up to set term contracts, but later finding they needed to move house part way through the agreement.
This is Money has also received dozens of complaints in recent years about unfair termination fees.
Josh Green was moving home when Virgin told him because it didn’t serve his new area, he would be required to pay a termination fee.
Furthermore, this week, we have been contacted by a reader who has been hit with a £240 termination fee because Virgin doesn’t serve the area he is moving to.
He says he has been happy with the service and would have continued with Virgin.
He says he signed a new 12 month contract with Virgin Media a month ago but told staff on the telephone he was moving house.
He claims they never asked where he was moving to check whether they supplied that area – and as a solution, have offered a £40 discount, still meaning a fee of £200.
HIT BY A TERMINATION FEE?
Have you been hit by an unfair termination fee by Virgin Media, or another telecoms firm?
Get in touch: firstname.lastname@example.org
Virgin runs its own cable network, which means that customers can only take their contracted service with them if their new house is also connected.
An Ofcom spokeswoman said: ‘Having assessed all available evidence, we have reasonable grounds to believe that Virgin Media has broken our rules by overcharging people wishing to leave their contracts early.
‘Virgin Media now has an opportunity to formally respond to our provisional decision. We will take any further representations the company makes into account, before making our final ruling.’
A Virgin Media spokesman said: ‘We have received Ofcom’s provisional findings and we will now review them thoroughly.
‘We make it clear to customers that early disconnection fees can apply and we also offer 30-day rolling contracts for those that do not want to sign up for a minimum period, such as 12 months, and need more flexibility.’