Unfair cancellation clauses: the rip offs must end
Yesterday it emerged that a number of gyms were being ordered to review unfair cancellation fees in their contracts. This opens a Pandora's box. There is a spectacular level of unfairness embedded in contracts for all sorts of products and services that we're forced to sign up to if we want to get on with everyday life.
So where are these hidden fees lying?
The OFT brought a case against a gym company that asked customers to sign up for lengthy contracts. If they then tried to cancel during the term they would be charged very chunky cancellation fees. The High Court had ruled that the contract terms breached the regulations by giving the company an unfair right to demand disproportionate cancellation fees.
The company operating the gyms, Ashbourne, has had to write to its 700 gym managers to recommend they change their contracts. The OFT has also suggested that anyone trapped by a lengthy contract with these sorts of unfair terms contacts their gym and then the OFT if they are having trouble cancelling.
And while this is excellent news for gym members who joined in a flurry of January enthusiasm and have been trying to cancel ever since, it's a drop in the ocean of unfair cancellation charges.
I have recently moved house and come across a shocking array of charges. Some I knew full well about when I signed up, the trouble is that I didn't have any choice. When I join Virgin Media, for example, I told them I would only be living in the property for six more months and only wanted a six month contract, but their minimum was 12 months, so they explained I would need to pay for the full 12 months and a cancellation fee - making a competitive broadband deal an absolute joke. Sadly it was a joke I couldn't afford to avoid as cable was the only one of five internet providers I had had any success with in that property.
Other charges I knew nothing about. On moving, my motor insurance premium went through the roof, so I cunningly shopped around for a far better deal, bought that, and then cancelled the policy. It was only then I found out about the cancellation charges listed on page 23 of the small print. I had only just renewed my policy a couple of months earlier, but the cancellation fees meant I was paying £400 for the privilege of having car insurance for two months. It's something everyone should bear in mind when they buy with Budget.
Who is to blame
So far, the OFT hasn't bothered with these sorts of things. On the one hand they have a point. You pay your money and you take your chances. It's up to the buyer to check the fees and make a choice.
But what when there isn't any realistic alternative, and what about when the fees are listed on page 23 of the small print? You have to ask yourself whether these fees are really fair, whether it's a wise move to inflict them and leave customers felling so wholeheartedly ripped off. Surely if you're offering such a good product you shouldn't have to make it so punitive for customers to leave in an effort to force unhappy people to stay with you.
But what do you think? Have you come across any shocking fees like this? Let us know in the comments.