Investigation into Virgin Media’s early termination charges

27 June 2017

Open

Investigation into Virgin Media Limited (‘Virgin’)
Case opened 28 June 2017
Summary

This investigation found that Virgin contravened General Conditions (‘GCs’) 9.2 and 9.3 by:

  • failing to publish up-to-date and clear information about the charges customers would have to pay if they ended their contract early (early termination charges or ‘ETCs’); and
  • by incorrectly setting its ETCs so they were too high and overcharging thousands of customers as a result.

We imposed a penalty of £7m on Virgin for these contraventions.

Virgin also agreed to make a number of improvements to the information it provides to its customers about its ETC policy when they move home.

During the course of the investigation, Virgin contravened information requirements imposed under s135 of the Communications Act 2003 (the ‘Act’). We imposed a penalty of £25,000 on Virgin for this contravention.

Relevant legal provision(s)

GC 9.2 and GC 9.3 (now contained in GCs C1.2 and C1.3), and s135 of the Act

Ofcom has today issued a Confirmation Decision to Virgin under s96C of the Communication Act 2003 for contraventions of GCs 9.2(j) and 9.3 of the General Conditions between at least 1 September 2016 and 22 August 2017. Specifically, Ofcom has found that Virgin:

(i) contravened GC 9.2(j) during the period 1 September 2016 to 20 March 2017 by not publishing clear and up-to-date information on its website to allow customers to easily identify the ETC which applied to their Virgin package; and

(ii) contravened GC 9.3 during the period 22 September 2016 to 22 August 2017 by setting and charging ETCs that were higher than the amounts that its customers on fixed term contracts had agreed to pay so that it failed to ensure that its conditions and procedures for contract termination did not act as disincentives for its customers against changing provider. Virgin overcharged almost 82,000 customers a total of just under £2.8m.

In light of these findings, Ofcom has imposed a penalty of £7m on Virgin. The penalty has been set at a level sufficient to reflect the seriousness of the contravention and to act as a deterrent to Virgin and other providers from contravening the rules.  It also takes account of the actions Virgin has taken since we opened the investigation, including refunding affected customers and reducing the level of the ETCs it charges to customers.

A non-confidential version of the Confirmation Decision is currently being prepared and will be published shortly.

Ofcom has also been investigating under the Consumer Rights Act 2015 the fairness and transparency of Virgin’s procedures and contract terms that apply to customers moving home. Virgin has made a number of changes to its procedures, including:

  • making clearer to consumers that Virgin’s network does not cover the whole of the UK and that if a customer moves to a home outside of Virgin’s network they may be liable to pay an ETC. In particular Virgin will make this clear in:
    • its customer contracts and terms and conditions;
    • the material on its website; and
    • in the scripts used by its customer service agents.
  • pointing customers towards its postcode coverage checker and to the availability of its 30 day rolling contracts as an alternative option for customers who are aware they may need to move house in the near future; and
  • updating its agent training materials and process to ensure that agents provide correct information to customers that indicate they may need to move home.

In addition, Virgin has amended its terms and conditions so that customers moving home within Virgin’s network who continue to take Virgin’s services no longer have to sign up to a new fixed term contract in order to avoid paying ETCs (they can instead continue with their existing contract at their new address).

As a result of these changes Ofcom is now closing its investigation. We will be continuing to monitor complaints against Virgin about these issues closely, to ensure that customers are made aware of their potential ETC liability under Virgin’s terms and conditions when moving home.

We are also continuing to monitor complaints about these issues across CPs, and compliance with the rules about ETCs, as part of our ongoing enforcement programme.

During the course of this investigation, Ofcom became aware that Virgin had failed to provide complete information in response to a statutory information request issued by Ofcom under section 135 of the Act. We have therefore today issued a Confirmation Decision under s139A of the Act to Virgin for its contravention of requirements to provide information. We have imposed a penalty of £25,000 on Virgin for this contravention.


Case leader

Geoff Brown (email: geoff.brown@ofcom.org.uk)

Case reference CW/01198/06/17