Have you actually read your broadband contract?

IanMSpencer

In an idle moment I decided to read my Vodafone contract for my upcoming broadband installation (about half the price of Virgin without playing the Virgin Cancellation Games).

There are two real gems of unfair contracts:

Section 4.5 deals with pricing (which has broad exemptions from fairness as long as the offer is clear):

4.5. Changes to your terms, services or charges. Please note:

a) We may change your Agreement, our services or charges at any time in order to:

i             Change the way in which we provide services to you (for example by using a different technology to provide the service); 

ii      Change the structure of our services, charges or equipment (for example, by changing the component parts of a service); 

iii Change the amount payable for part of the services, including without limitation additional services (for example, we may increase the amount payable for certain international calls if our international partners increase their costs); 

iv Remove and/or replace some or all of the equipment; 

v Place limits on the way you use our services (for example, if we suspect that you have committed an illegal act while using our services); 

vi Stop providing all or part of the service to you (for example, if we're no longer able to provide a part of the service at your address); or vii We may increase the charges for an optional additional service that does not form part of the main home broadband and phone service. For example, we may increase the price of a calls bundle that lasts for one month and can be terminated at any time.

(b) We are also entitled to make the following changes to the Agreement, our services or charges (together, the "Permitted Changes"):

i) Each April, your monthly plan charge will increase by an amount equal to the Consumer Price Index rate published by the Office for National Statistics in January ("CPI rate l) plus an additional 3.9% on top of the CPI rate. We will apply that CPI rate plus 3.9% adjustment from your April bill. In the event that the CPI rate is negative, this will be ignored but the additional 3.9% will still apply; 

ii            We may remove any benefits, discounts or additional services that we told you would expire part way through you plan when you purchased, provided we remove them at or after the time we told you they would expire; 

iii          We may make administrative or technical changes; 

iv      We may make changes that have no negative effect on your use of the service; We may make changes that are to your benefit; 

vi            We may provide new features of the service to you; 

vii    We may maintain or improve the services we provide;

 viii We may clarify the Agreement so it is easier to understand; 

ix   We may make changes required by:

a.          applicable laws;

b.          regulations;

c.           codes of practice;

d.          a regulator; 

or e.              a court of competent jurisdiction; 

x          We may remove any benefits, discounts or additional services that we told you would expire part way through you plan when you purchased, provided we remove them at or after the time we told you they would expire; 

xi    We may replace some or all of the equipment with equipment of equivalent or better quality; 

xii    We may reflect a change in the way we organise and/or operate our business; or xiii We may reorganise where certain terms of the Agreement are set out.

(c) We don't know what will happen in the future, so we may need to change your Agreement, our services, or charges for a reason other than those specified in clause 4.5(a) and 4.5(b) above.

So, regardless of all the wise words, they reserve themselves the right to change prices for any reason they deem fit. They seek to offload all the risk of future supply costs onto the consumer, all while offering a fixed price contract.

Then we have another clause 7.4 b)

b) We may end the Agreement if we are permanently unable to provide our services to you or by giving you 30 days written notice (for any reason). You won't have to pay a termination fee in this case.

So, although the consumer is obliged to pay termination fees if they cancel the contract early for whatever reason (except poor performance as defined by Vodafone), Vodafone give themselves no obligation to provide a service for the length of the contract and kindly will not charge you for arbitrarily withdrawing their service, let alone compensate you.

This is a classic unbalanced contract.

I'd suggest their retention of the right to terminate at any time for any reason means that anyone cancelling a contract with Vodafone should be able to avoid paying termination fees due to this contract.  

QrizB

Yes I've read my broadband contract. I'm currently with Vodafone.

Vodafone is one of the UK's largest telcos. I would expect them to have had their legal team review their contact terms. The chance of it being unlawful is small.

Hopefully you are still within your cooling off period. If so, you are free to cancel Vodafone and choose a different provider.

IanMSpencer

QrizB said:

Yes I've read my broadband contract. I'm currently with Vodafone.

Vodafone is one of the UK's largest telcos. I would expect them to have had their legal team review their contact terms. The chance of it being unlawful is small.

Hopefully you are still within your cooling off period. If so, you are free to cancel Vodafone and choose a different provider.

I have literally quoted obviously unfair terms and you say that because they have lawyers it must be ok?

QrizB

IanMSpencer said:

I have literally quoted obviously unfair terms ...

You have literally quoted terms that you consider unfair. Whether they are unlawful would be for a court to decide.

IanMSpencer said:

... and you say that because they have lawyers it must be ok?

Have you taken legal advice and was the advice that those contract terms were unlawful?

If you have done so, you should have no qualms about agreeing to the contract since, should Vodafone try to invoke them, you can get them struck out.

If you haven't, then we're just two people disagreeing on the internet.

IanMSpencer

It is always the case that the court is final arbiter in a contract dispute, but would any reasonable person think that such a contract would meet the tests of a balanced contract, even when the price it the core item?

I don't need to spend time or money to take legal advice on a contract which is advertised as fixed price for 24 months yet has terms that allow them to change the price at any time for any reason. As you say, the only qualms I would have with this contract is the hassle as it is so obviously unenforceable.

On their web page there is a single asterisk highlighting the 3.9% escalation, but no mention of any other hidden terms.

So: ASA complaint submitted and OFCOM complaint submitted. Posted here so that anyone on a Vodafone contract who is unhappy about being charged cancellation fees (the most likely scenario) don't have an enforceable contract.

Neil_Jones

IanMSpencer said:

QrizB said:

Yes I've read my broadband contract. I'm currently with Vodafone.

Vodafone is one of the UK's largest telcos. I would expect them to have had their legal team review their contact terms. The chance of it being unlawful is small.

Hopefully you are still within your cooling off period. If so, you are free to cancel Vodafone and choose a different provider.

I have literally quoted obviously unfair terms and you say that because they have lawyers it must be ok?

An automatic price wise does not make it "unfair".

The "we may change these terms and conditions at any time" is pretty much standard fare in any contract.  Normally it happens at renewal but they feel an option is needed mid contract.

With regards to "although the consumer is obliged to pay termination fees if they cancel the contract early for whatever reason (except poor performance as defined by Vodafone), Vodafone give themselves no obligation to provide a service for the length of the contract and kindly will not charge you for arbitrarily withdrawing their service, let alone compensate you." - that is probably there because if the company was to go bankrupt/administration/liquidated there would be no money to pay out.

Anyway if you don't like Vodafone T&Cs, go and find another provider.  Plenty around that won't give you an automatic price rise, but you will pay more from the outset.

glennevis

Quote
"Plenty around that won't give you an automatic price rise, but you will pay more from the outset."

Not necessarily.

I was with Vodafone on VDSL until February this year when I was notified of the magnitude of the annual increase. That triggered a search for a better value service.

As a result I switched to a local FTTP provider who not only does not apply annual increases during the contract but was actually cheaper than Vodafone's slower VDSL service. I noted the local provider had knocked £5 a month off the price since the previous year, that was the game changer.

This year prices have fallen again, they are now offering 30x faster and are still cheaper than Voda.

By the way, yes I do read the T&Cs of all my contracts.

Report

On-the-coast

don’t think I’ve ever signed a contract without reading it…
Usually the flip side to the parts you’ve highlighted is that you’re allowed to exit the contract without penalty… which generally keeps things “fair” - but do read it all to confirm that sweeping statement on my part. 

IanMSpencer

Neil_Jones said:

IanMSpencer said:

QrizB said:

Yes I've read my broadband contract. I'm currently with Vodafone.

Vodafone is one of the UK's largest telcos. I would expect them to have had their legal team review their contact terms. The chance of it being unlawful is small.

Hopefully you are still within your cooling off period. If so, you are free to cancel Vodafone and choose a different provider.

I have literally quoted obviously unfair terms and you say that because they have lawyers it must be ok?

An automatic price wise does not make it "unfair".

The "we may change these terms and conditions at any time" is pretty much standard fare in any contract.  Normally it happens at renewal but they feel an option is needed mid contract.

With regards to "although the consumer is obliged to pay termination fees if they cancel the contract early for whatever reason (except poor performance as defined by Vodafone), Vodafone give themselves no obligation to provide a service for the length of the contract and kindly will not charge you for arbitrarily withdrawing their service, let alone compensate you." - that is probably there because if the company was to go bankrupt/administration/liquidated there would be no money to pay out.

Anyway if you don't like Vodafone T&Cs, go and find another provider.  Plenty around that won't give you an automatic price rise, but you will pay more from the outset.

Them giving themselves options to change everything about the contract for any reason is barely a contract let alone a fair one. Consumer contracts are expected to be balanced, so a company giving itself the right to cancel with 30 days notice while tying the customer to term with penalties is clearly not balanced.

With regards to the escalation clause, that is subject to investigation by the CMA, though whether they will act remains to be seen, but the arbitrary application of a rise when RPI can theoretically fall seems like a silly unbalanced idea that can cause the whole clause to fail. My complaint was based on that as the actual rate was unpredictable, removing the right to cancel was placing all the risk on the consumer without allowing them the option to downgrade to a service they could afford without penalty.

HaroldWhistler

IanMSpencer said:

Neil_Jones said:

IanMSpencer said:

QrizB said:

Yes I've read my broadband contract. I'm currently with Vodafone.

Vodafone is one of the UK's largest telcos. I would expect them to have had their legal team review their contact terms. The chance of it being unlawful is small.

Hopefully you are still within your cooling off period. If so, you are free to cancel Vodafone and choose a different provider.

I have literally quoted obviously unfair terms and you say that because they have lawyers it must be ok?

An automatic price wise does not make it "unfair".

The "we may change these terms and conditions at any time" is pretty much standard fare in any contract.  Normally it happens at renewal but they feel an option is needed mid contract.

With regards to "although the consumer is obliged to pay termination fees if they cancel the contract early for whatever reason (except poor performance as defined by Vodafone), Vodafone give themselves no obligation to provide a service for the length of the contract and kindly will not charge you for arbitrarily withdrawing their service, let alone compensate you." - that is probably there because if the company was to go bankrupt/administration/liquidated there would be no money to pay out.

Anyway if you don't like Vodafone T&Cs, go and find another provider.  Plenty around that won't give you an automatic price rise, but you will pay more from the outset.

Them giving themselves options to change everything about the contract for any reason is barely a contract let alone a fair one. Consumer contracts are expected to be balanced, so a company giving itself the right to cancel with 30 days notice while tying the customer to term with penalties is clearly not balanced.

With regards to the escalation clause, that is subject to investigation by the CMA, though whether they will act remains to be seen, but the arbitrary application of a rise when RPI can theoretically fall seems like a silly unbalanced idea that can cause the whole clause to fail. My complaint was based on that as the actual rate was unpredictable, removing the right to cancel was placing all the risk on the consumer without allowing them the option to downgrade to a service they could afford without penalty.

 @IanMSpencer
I agree with you. It is a totally unbalanced "contract" and something that has been done by so many of these companies with a very poor regulator all these years. It appears that it is more market competition (primarily because of the emergence of either 4G Mobile Broadband, or Full Fibre to the premises [FTTP] broadband that has allowed new players to enter the marketplace) that is undoing these types of contract versus the regulator or legislators (many of whom either seem to be in bed with these entities, and/or haven't got much of a clue about the underlying technology) doing anything about it. 

Generally speaking, one would have thought that for a contract between two parties (which could both be businesses or consumers) pertaining to the procurement of goods (in this case the goods being "broadband"), the entire point/advantage of a long term contract for both parties would be:

1. Certainty of price with Budgeting - The long term contract would allow for a firm price to be locked in, so the buyer has a certainty in knowing what they are going to have to pay for the term to get the service. For the buyer, this means the price wouldn't go up (on the flip side, the price would not go down even if the wholesale cost has gone down during the contract period). The seller equally guarantees a price that will be paid for services they provide, allowing them to budget/forecast their business model over time in order to invest and make money (for the seller the price stays the same even if wholesale costs go down in the contract period). 
2. Security - Both the buyer and the seller have peace of mind, knowing the agreement will last. The buyer is guaranteed a service and the seller is guaranteed a customer. 
   

When a contract allows one party (in this case the seller), to unilaterally raise a price for something and the buyer on the flip side is not allowed to reduce the amount they pay should their own costs go up, that is certainly a lopsided arrangement. If there is no competition and the whole market consisted of this type of seller, that would amount to a cartel, not free and competitive markets. When the sellers also get to mis-market "fibre to a cabinet and copper to a house" as "Superfast fibre" and get to charge the same price for a completely different speed (e.g. one customer on the same cabinet may get 20Mbps, another 50Mbps and others only 0.5Mbps with constant dropouts), that is false advertising/marketing and means the Regulator itself is effectively useless. 

One could understand inbuilt price increases if you were talking about long term leases of lines (e.g. 5, 10, 15, 20 years). In this market however, we are talking about a service provided typically over a 12, 18 or 24 month period (these days, there are 30 day rolling providers coming onto the scene thankfully) with wholesale costs in providing Full Fibre (the current future of broadband globally) going down over time. Many of these same companies do not also provide good customer service when there are major errors on their part when it comes to billing errors, failure to cancel contracts when requested by customers (during the 14 day window or at the end), refunding monies on time, responding to customers in a timely manner without wasting their time (and energy and money), preventing scammers from charging customer accounts (for text subscriptions, or activating new lines on their accounts etc). Nor are they fined adequately to deter such poor service. Many of these entities would be up in arms with a contract clause that let a customer pay less if inflation went up, or if inflation happened to be negative, to pay 3.9% less every year. Things like long waiting times for customer service, major errors that cause major mis-billing, nuisance calls etc would end virtually overnight if the Regulator announced that any company that had a certain verified number of such complaints over x months were fined £1,000,000 per aggrieved customer. 

IanMSpencer

In the recent consultation by OFCOM, there is this intriguing (to me!) section:

General consumer law

4.13 We have also considered whether relying on general consumer law could achieve our objectives. In particular, we have had regard to the unfair terms provisions in the Consumer Rights Act 2015 and the relevant guidance produced by the Competition and Markets Authority (CMA). Under this regime a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the consumer’s and trader’s rights and obligations under the contract to the detriment of the consumer. Inflation-linked price variation terms are not ‘blacklisted’ (i.e. automatically unfair) under this regime. Further, the Consumer Protection from Unfair Trading Regulations 2008 contain a general prohibition of unfair trading, prohibitions of misleading and aggressive trading practices and certain specific prohibitions on particular practices considered to be inherently unfair.

4.14 Ofcom is an enforcer of general consumer protection legislation in the sectors it regulates. However, we do not consider that enforcement under consumer law is likely to achieve our objectives. This is because:
 • First, it is likely to be complex. Under these regimes, the question of whether a particular inflation-linked price variation term is lawful depends upon the facts and circumstances in a particular case.  Furthermore, this question can only be decided by a court and only on an ex post basis (i.e. after contravening conduct has occurred). 
 • Second, it is unlikely to achieve our objectives in a timely manner. Bringing consumer enforcement proceedings in court is likely to take time. This is part of the reason that the Government has proposed legislation which, if passed, will establish a direct enforcement regime empowering the CMA to be able to find breaches of consumer law and impose penalties itself.
 • Third, even if Ofcom brought consumer law proceedings in respect of one or more inflation-linked price variation terms and was successful, this may clarify the types of terms that are not lawful but may nevertheless create uncertainty about what kinds of price increases are lawful.

4.15 We therefore consider that enforcement under consumer law is unlikely to achieve our objectives in a practical and timely manner.

Basically, they are saying that they are seeing that provider's contracts do appear to be unlawful, but the process to unravel these through the courts is too cumbersome.

OFCOM, surely having analysed potentially unlawful contracts, should highlight any areas and specific terms which you deem incompatible with consumer law and insist that the providers resolve those incompatibilities or provide a complete explanation of why they are both legal and compatible with OFCOM's desire to ensure that consumers are treated with complete fairness. It cannot be unreasonable that OFCOM require all telecoms providers to have contracts that are fully compliant with reasonable interpretations of consumer law?