Charges hiding in the small print

Offers of free laptops and modems are practices frequently used by providers to lure customers into new broadband deals.

However, people signing up to these packages are failing to look at the extra charges entrenched in providers contracts.

Over half of broadband users have not read the small print of their contract

Research by moneysupermatket.com reveals over half (55 per cent) of new broadband customers admit they do not look at the small print in contracts, leaving them unaware of a barrage of hidden charges.

The survey shows the surprise charges customers are most often stung by are late payment (36 per cent), contract termination (34 per cent), exceeding the fair usage limit (32 per cent), moving home (27 per cent) and helpline costs (25 per cent).

Rob Barnes, head of broadband and mobiles at moneysupermarket.com, said: “With so many deals out there it’s easy to be lured in by the free gifts and enter into a contract without thinking or reading about what it entails.

“If something looks too good to be true, it usually is. Some providers have other ways to make their money that they aren’t willing to be upfront about. It’s definitely a case of ‘buyer beware’ with broadband, so read the contract fully before you sign up.”

Last year Ofcom announced an investigation into the fees charged by communication providers with a report due early in 2008. With this in mind, moneysupermarket.com has taken a close look at contracts from 15 leading broadband providers. The research uncovered surreptitiously imposed small-print pitfalls and highlighted which of the providers have the least transparent contracts.

Some ’contract quirks’ include:

Virgin charges £5 per month, Sky £4 and BT up to £4.50 for non-direct debit payments.

Having no minimum contract term doesn’t mean you won’t pay a cancellation fee. Direct Save Telecom and Be charge around £50 if you cancel in the first 12 months.

Eclipse charges £69.99 plus VAT if equipment isn't returned after you cancel your contract.

Namesco charges £25 plus VAT for a failed payment. Direct Save imposes a £14.99 administration charge for a failed direct debit. BT and Virgin Media have similar fees of between £7.50 and £10.

Orange technical support calls cost up to 50p a minute.

Direct Save, Virgin, Sky and Be ask for between £15 and £40 in one off set up fees.

Barnes continued: “While we support charges that are fair and protect the broadband provider from exposure to bad customers, we are against fees imposed without users' knowledge. This ‘hidden cost’ can drastically affect a person’s decision as to which provider they go with, so these additional charges should be clearer. Ofcom needs to step in sooner rather than later, as millions of people will continue to be hit with charges they are unaware of.”