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Labor has called on the advertising watchdog to fast-track new rules to protect consumers from misleading marketing that could encourage them to sign up for mobile and broadband deals this Christmas that cost them hundreds of pounds more than they expected.
The call follows the close of a consultation by the Committee of Advertising Practice (CAP) – which writes the codes that all UK advertisers have to follow when running ads in any media – into whether telecoms companies are telling customers clearly about their price increases. is campaign
Telecoms companies make billions of pounds a year by increasing the price of mobile and broadband bills during the contract period, but this isn’t always clear when customers sign up for a deal.
Companies including BT and Vodafone have said they will continue to use the annual price increase method of 3.9% plus the rate of inflation as measured by the Consumer Price Index (CPI) in January.
Inflation is currently running at a 41-year high of 11.1%, meaning customers who sign up for a new two-year contract offered in some of the deals currently available over the Christmas period could find themselves paying up to £240 more than they thought. .
“Proposals to make telecoms pricing more transparent and easily understood are essential,” said Lucy Powell, Labour’s shadow culture secretary. “As inflation continues to rise and families come under increasing pressure, urgent action is needed to protect consumers from mid-contract price increases they did not expect and cannot afford.
“Advertising authorities should speed up action before Christmas, so consumers are not caught unawares.”
Telecoms regulator Ofcom – which has said a record 8 million households have struggled to pay their bills – has told internet companies to “think hard” about continuing to make big increases.
On Thursday Ofcom launched its own investigation into sales practices used in the UK telecoms market – dominated by BT, EE, Virgin Media O2, Sky, Vodafone, Three and TalkTalk – after complaints that customers were not told about mid-contract pricing. Increases when they sign up.
The consultation by CAP is looking into issues where telecom operators do not explain terms related to increases like retail price index and consumer price index – two different measures of the rate of inflation – and do not clearly tell consumers that the initial prices will not amount. They will pay by the end of their contract.
Other points include promoting deals before the annual price hike every April, so customers only get the offer for a very limited time.
The CAP consultation may take an extended period of time to eventually translate into new rules introduced into the UK Advertising Code – and new guidance issued to telecoms companies – which is enforced by the Advertising Standards Authority (ASA).
Broadband company Hyperoptic has written to the chief executives of the ASA and Ofcom, as well as the head of the CAP and the culture secretary, to use “emergency interim measures” to formally implement new guidance on marketing and advertising mid-contract price increases.
“The Christmas and New Year sales period is a popular time of year to sell broadband products, with advertisers focusing more on ‘deals’, appealing to the need to save money,” says Dana Tobak, chief executive of HyperOptic. letter. “Yet for operators who use price hike clauses, the advertised prices will be applicable for a very short time before the April 2023 price hike. The practice of mid-contract price hikes is hurting real consumers.”
Labor has said it will crack down on mid-contract price rises if it is elected, pointing out that broadband and mobile are the only utility sectors in which they are allowed.
Sectors such as energy and gas suppliers cannot increase prices mid-contract unless VAT rates change.
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