ASA rules against telecoms companies on mid-contract price rises

The question

What steps should be taken to ensure contractual mid-term price rises don’t fall foul of advertising regulations or Ofcom’s existing and incoming transparency rules?

The key takeaway

The Advertising Standards Agency (ASA) has ruled against six major telecommunications companies in relation to mid-contract price rises. The ASA took a firm stance on the companies’ failure to draw price rise information to the attention of consumers. Rules will be tightened further from January 2025 with Ofcom requiring communications companies to clearly set out any mid-term contract prices rises in pounds and pence before signing, with any inflation-linked rises being banned.

The background

Currently, many telecommunications companies often include mid-contract price rises in their agreements with consumers, with such price rises being linked to inflation. The concern from Ofcom has been that these price rises have left consumers with a lack of certainty about the contracts they are signing and the price rises that will take effect during the contract’s term. From 2022, Ofcom has required communications providers to “specify price rises in contracts from the start”, before consumers signed the contract. Failing to do so meant consumers would need to be given one month’s notice before any rises, and the right to exit the contract fee-free.

The development

The ASA reviewed ads from BT, EE, Plusnet, TalkTalk, Telefonica, and Virgin Media and ruled that each had failed to make clear to consumers that the contracts would be subject to mid-term price increases. The regulator upheld the complaints against all six companies’ ads for broadband or mobile data products for being insufficiently transparent over pricing, and updated guidance has since been published on the presentation of mid-contract price increases in ads.

Consumer protection measures will be strengthened further from 17 January 2025, when Ofcom will require that all new contracts that fall within its remit show, in pounds and pence, what price rises will be imposed mid-term. Inflation or percentage-linked mid-term price rises will be banned.

Why is this important?

With Ofcom’s strengthened consumer protection measures coming into effect imminently, telecoms companies must ensure that their mid-contract price increases comply with the strengthened protections and do not include any inflation or percentage-linked mid-term price rises. Beyond the telecommunications sector, the ASA’s rulings demonstrate that all organisations including mid-contract price rises in their agreements must ensure that their ads are transparent and comply with the new guidance.

Any practical tips?

Make sure that all mid-contract price rise information complies with the transparency rules. In particular:

• show clearly when prices will rise and by how much, in pounds and pence
• make sure that dates and increase amounts appear and remain on screen, even when scrolling
• avoid using colours and backgrounds that blend in with the background, and
• locate qualification information close to price claims and ensure that it is immediately distinguishable.

Winter 2024