Justin Kerfoot from Cardiff has recently paid Virgin Media £240 in early exit fees.
Although he was a customer for more than 18 years, when he moved into a new build property and the service wasn’t available, he was slapped with the charge because he was still in his minimum contract term.
He’s not alone. Scores of customers who have had to pay out the fee have spoken to us and the firm is now being investigated by the regulator.
Bill Malpus, Kirsty Louise Smith and Kevin Sinclair were all charged early exit fees by Virgin
Kevin Sinclair who lives in Reading had to pay Virgin Media £222 for cancelling his contract early. He wanted to take the service with him but as it physically wasn’t available he had to pay the penalty fee.
Meanwhile, Kirsty Louise Smith from Leeds paid out £143 when she had to leave her council property and cancel the service as it wasn’t available at her new address.
Stefan Watkins is another example. He was living in rented accommodation when he joined Virgin in 2014. The landlord decided to sell the property so he was forced to move out, and although he wanted to take the contract with him, which he was a year into, it wasn’t available at the new property so he had to pay £240.
Bill Malpus, from Merseyside, a Virgin Media customer for 15 years, was charged £210 in exit fees when it wasn’t available in the new build home he moved into.
This is just a small sample of angry customers we’ve heard from over the past year who feel they’ve been unfairly penalised for having to move home.
Exit fees are charged by all providers if you leave a contract early and they are required to be ‘fair and reasonable’ and to reflect the work carried out and the loss to the company of the contract ending early.
Bill Malpus, from Merseyside, was a Virgin Media customer for 15 years and when he moved into a new build property, where the service wasn’t available, he was charged £210 in exit fees
But Virgin is the only major telecoms provider to charge this fee when someone moves home and it’s not available in the new property.
This is clearly written in the terms and conditions of the contract, which are also online, but what’s unclear is exactly how much the firm loses when this happens – especially if the new homeowner sets up an account with Virgin.
The company is currently being investigated by the regulator to see if it is breaking consumer law by charging customers who move home the early exit fee. Ofcom is looking into whether the penalty fees act as a disincentive for customers to switch providers.
It will also investigate whether the early fees comply with the rules in the Consumer Rights Act 2015 on early termination charges.
Kirsty Louise Smith paid £143 when she had to leave her council property and Virgin wasn’t available at her new address
We approached Virgin with a dossier of customer case studies and requested an interview with one of the senior management staff at Virgin – but our request was declined.
In response to the dossier, a Virgin Media spokesperson said: ‘We urge all of our customers to consider the length of contracts before entering into them. Our contracts are designed to apply over a specific period. We tell customers that the details of early disconnection fees are on our website to help ensure they have sight of them.
‘For customers who feel they need more flexibility we have 30 day rolling contracts – these give people the freedom to enjoy our services without a long-term commitment.
‘The cost of early disconnection fees depends on a number of factors, including the services taken and the duration left on a contract.
‘If a customer cancels while still in contract our agreement states that an early disconnection fee will be applicable.
‘Virgin Media is investing to expand its network meaning more people will be able to take their services with them when they move home.’
Virgin says its terms and conditions state you may have to pay if you break the contract early
Dan Howdle, spokesperson for Cable.co.uk said: ‘Though Virgin Media has been known to relent in situations where services are not available at the new address, it does not do so as a matter of policy, but rather reactively if a complaint is made. That means that movers who prefer to avoid conflict will end up paying this grossly unfair cancellation charge.
‘If you went on holiday and the hotel you had chosen was overbooked, you wouldn’t expect to have to pay for the entire stay regardless. Charging people for services you are not making available to them is simply unfair, and Virgin Media needs to take a hard look at its policy in this regard.’
We have also heard from two readers who were able to get around paying the penalty fee.
Phil Sparrow told us when he was charged the fee he called Virgin’s customer service centre and asked for an address where he could make a complaint.
He wrote to Virgin at its customer service centre in Swansea detailing how long he had been a customer and how he thought the fee was unfair. He received a letter back explaining that he would not be charged the fee.
Denise Armstrong from Hertfordshire said when she took out the contract with Virgin she asked if it would be ok if she moved home, as at the time she was actively looking for a new place. Five months later she did move and was slapped with a £240 fine from the company.
Kevin Sinclair from Reading had to pay Virgin Media £222 for cancelling his contract early
She said: ‘I fought and fought, not letting go, using channels such as social media, and finally they relented and refunded my excessive exit penalty.
‘You can get the money back if you push – I even asked them to check their sales calls – and argued the point that I had been misled because I was told I would be able to move and wouldn’t be penalised.’
Therefore, if you think you’ve been wrongly charged the exit penalty, and you weren’t made aware of it when you signed up, it’s worth calling Virgin in the first instance to ask it to waive the fee.
If you have no luck, you could try writing to the customer service department if you believe the fee is unfair or you weren’t made aware of it. You could also make an official complaint with Virgin and if the matter hasn’t been acknowledged or resolved after eight weeks, you can take your complaint to the free-to-use independent adjudicator service CISAS.
There are no guarantees your complaint will be upheld, as Virgin does put the clause in its terms and conditions, but we have seen two examples of the fee being waived. If you have success, please let us know by emailing Rebecca.Rutt@thisismoney.co.uk.
IS VIRGIN LEGALLY ALLOWED TO CHARGE THESE EXIT FEES?
We got in contact with an expert in contract law to find out if Virgin Media was allowed to charged this fee.
David Marchese, partner at Gordon Dadds, said: ‘The Consumer Rights Act 2015 says terms of consumer contracts that are unfair to the consumer cannot be enforced.
‘The Office of Fair Trading (OFT) made a systematic study of unfair terms in consumer contracts in 2001. It said if a consumer signs up to a contract for a service, for which they agree to pay, over a fixed period of time, unless the contract clearly gives a consumer the right to terminate early, they are not entitled to do so.
‘However, a contract that says if the consumer terminates early they must pay a fee is potentially unfair, for the following reason. English contract law says if a party to a contract breaches it, they are liable to pay compensation for the other party’s losses resulting from the breach.
‘But this rule is modified and in particular the ‘innocent’ party (in this case, the service provider) has a duty to ‘mitigate’ their loss and to find reasonable ways of reducing it, such as when a customer terminates a contract early, if they then find another customer to replace them.
‘If the ‘innocent’ party does not do so, it can’t claim the amount that could have been mitigated, so the customer will have at least a partial defence.
‘Therefore if a contract says a consumer has to pay a certain sum of money, whether or not the service provider can easily find another customer to replace them, it is potentially unfair.
‘This is because, the clause may overrule the legal right of the consumer – to set up a defence against the provider to say it should have mitigated its losses before charging the fee.
‘This point was considered by the OFT in its 2001 Unfair Terms Guidance, in which they asked certain companies to delete early termination charges, and I personally think that it holds some persuasive force today.’
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