Today, CAP and BCAP are publishing new guidance to help protect consumers from the misleading advertising of mobile and broadband contracts that include mid-contract price increases.
Many providers include clauses in their contracts that mean consumers’ monthly costs will increase on an annual basis, usually based on inflation plus an additional percentage. That means the initial price consumers are paying will go up in future by an unknown amount - sometimes only a few months from when they take out the contract, depending on the time of year – and often more than once. It is therefore crucial that information about the future price increase is clear to consumers in the ad itself, to avoid creating a misleading impression that the initial stated price will remain the same throughout the contract period.
Other contracts include clauses that allow providers to raise the price during the contract at their discretion – in those cases the customer has the right to exit without paying a penalty fee, however it is still important for them to be aware of the possibility when selecting a contract. Where mobile or broadband contracts with this characteristic are sold together with other services, such as content streaming or device payment, terminating a variable contract might have implications for the status of those other products. Consumers should be made aware of this as it may also be material to their decision to choose a particular product package.
The guidance makes clear that ads are less likely to mislead consumers when:
- They do not state or imply that a price will apply for the full minimum term of the contract, if that is not the case – for example, claims such as “£X for X months” or “fixed for X months” are unlikely to be acceptable if the price is due to rise and any subsequent qualifying information is likely to contradict rather than clarify the claim.
- Price claims are qualified with equally prominent information alerting consumers to the presence or possibility of a mid-contract price increase
- The details of what the increase will be based on are featured prominently relative to the price
- Inflation terminology is presented in a way that is clear and simple to understand.
- They include the full amount the consumer will pay after the increase, once the relevant rate is known
- They make clear where terminating a variable contract due to a price increase will impact other linked services.
The guidance will take effect on 15 December 2023, following a six-month grace period to allow advertisers to makes necessary changes to their campaigns.
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