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Six of the UK’s biggest broadband providers, BT, EE, Plusnet, Talktalk, O2 and Virgin Media, failed to make mid-contract price increases clear to consumers, the advertising watchdog has ruled.
The Advertising Standards Authority (ASA) said the companies misled consumers by placing important information about price rises separately to headline prices and in areas of less prominence on their websites.
The ASA ruled the ads must not appear again and told all six providers to ensure they make sufficiently clear that their broadband contracts would be subject to mid-contract price increases, and that information about the nature of such rises is presented prominently.
The rulings are part of wider work by the regulator on mid-contract price rises and follows guidance for firms that sets stricter standards on the prominence advertisers must give to important information about future increases.
The new advertising guidance, which came into force in December after a six-month grace period, advises that information about any price increase should be “up front and prominent”, and that the full future price the consumer will pay should be included in pounds and pence.
Many of the biggest broadband firms raise monthly bills every April during the term of contracts in line with the Consumer Price Index (CPI) or the Retail Price Index (RPI) plus an additional set amount of around three per cent to combat rising business costs.
This usually means a price increase of about four per cent to five per cent each year, regardless of the original cost of the deal. However, since the inflation rate is still stabilising after a 30-year high in 2023, price hikes remain higher than normal.
As a result, many providers raised prices by up to 7.9 per cent in April. Virgin Media increased its prices by 8.8 per cent.
Customers wanting to avoid these hikes can be charged punitive exit fees to leave their contract early.
However, this is set to change from next year after Ofcom banned broadband providers from linking their annual price hikes to inflation, meaning new customers may start to see a fixed yearly increase when they are signing up instead.
A Virgin Media O2 spokesman said: “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.
“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 comes after City AM recently reported how profit had risen at Plusnet despite a slump in customer numbers following the closure of its mobile division and John Lewis axing its broadband platform.
The Sheffield-headquartered broadband provider, which is owned by BT, suffered a 29 per cent reduction in its customer base following the closures.
However, annual contractual price rises partially offset the fall in its turnover to just five per cent.
In August, Talktalk agreed the key terms of a refinancing deal which will hand the telecommunications giant a £400m lifeline.
The Salford-headquartered company had been in talks with one of its largest shareholders amid warnings it was on the brink of collapse.