BROADBAND CUSTOMERS are slapped with price increases of up to 67 per cent once introductory offers come to an end.
So says a scathing report from Citizens Advice, which has hit out at internet service providers (ISPs) for imposing a "loyalty penalty" on customers, 35 per cent of whom are unaware that they could face price hikes by staying on the same broadband contract after their initial deal ends.
Citizens Advice cast its eye over basic broadband deals offered by the UK's big five ISPs and found that prices go up by an average of 43 per cent, or £9.45 extra a month, at the end of the fixed contract period, adding £113 a year to a customers' bill.
Here's a breakdown of the 'loyalty penalties', according to the findings:
- BT 12 month contract: £198 (67 per cent increase)
- Sky 12 months: £120 (53 per cent increase)
- EE 18 months: £90 (36 per cent increase)
- TalkTalk 24 months: £66 (28 per cent increase)
Virgin Media's 12-month plan was the only one that didn't impose a loyalty penalty when the initial term of the contract ended.
Gillian Guy, chief executive of Citizens Advice, said: "Loyal broadband customers are being stung by big price rises once their fixed deal ends.
"People often choose their broadband deals based on the price that works for them - but our evidence shows that many do not realise the price will rise after the end of the fixed deal. With people staying with their supplier for an average of four years, these extra costs can run into hundreds of pounds.
"Older customers and those who have less money are more likely to stay with their supplier for longer meaning their loyalty penalty could reach over a thousand pounds.
"The government has rightly put energy firms on warning for how they treat loyal customers - the actions of broadband firms warrant similar scrutiny. Extra protections for vulnerable consumers are also a must."
Citizens Advice is calling on ISPs to up their game and be clearer about how much services will cost once initial deals end, be it in their advertising or by sending a text to a customer when their due to see a price increase.
It's also asking for extra protections for the vulnerable, having found that those aged 65 or over are twice as likely as younger customers to have been in the same contract for more than 10 years.
Citizens Advice is asking for Ofcom to wade in on the situation, saying: "The report recommends that Ofcom should define the vulnerable consumers who would be worst affected by broadband contract prices rises and explore ways to minimise the impact on them.
"One option could be to look at how a price cap, similar to the pre-payment meter cap in the energy market might work for broadband customers." µ
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