consumer
Price increases: class action lawsuit filed against Vodafone
Vodafone is facing a lawsuit from consumer advocates. photo
© Rainer Jensen/dpa
The subject was simple: “Information about your tariff,” it read. The content of the emails that millions of Vodafone customers have received since spring was not very encouraging.
The telecommunications provider is facing price increases for fixed-line internet Vodafone faces a lawsuit from consumer advocates. The Federal Association of Consumer Organizations (vzbv) announced that increasing the price of current contracts is not permitted.
A lawsuit was filed with the Hamm Higher Regional Court. It is one of the first proceedings to refer to a federal law that came into force in mid-October. Vodafone customers can thus take part in a new form of class action by entering into a lawsuit register. This will probably open in a few weeks.
In the spring, Vodafone began raising the prices for all of its landline tariffs for cable and DSL by five euros per month. For gigabit cable customers, for example, the monthly price went up from 40 to 45 euros. In total, around ten million customers were affected. It wasn’t about mobile phone customers and fiber optic landline contracts.
Vodafone emphasizes that it has adhered to applicable law. The company justifies the increase with higher costs for energy and materials, for example. The majority of German companies have increased prices in recent months due to inflation, says a company spokesman. “We have tried for a long time to buck this trend.” However, due to the sharp increase in costs, the fixed network prices had to be “moderately adjusted”. “In the future, we will continue to attach importance to ensuring that our fixed-line customers can use broadband Internet, TV and fixed-line telephony at affordable prices.”
Significant price increases
In fact, other telecommunications providers also became more expensive this year, for example 1&1. The class action lawsuit is not directed against these companies. You can’t sue all companies at the same time, but first put Vodafone, the pioneer in price increases, in its place, says the vzbv.
The telecommunications provider has granted its customers a special right of termination in the event of price increases, but this is not enough for consumer advocates. From their perspective, the Düsseldorf-based internet company should not have unilaterally increased the prices for ongoing contractual relationships, i.e. without renegotiating with customers. Service providers usually impose higher prices on new contracts. Companies also sometimes increase prices for existing customers, but are viewed critically by consumer advocates.
“The vbzv considers Vodafone’s price increases to be ineffective,” says association boss Ramona Pop. The class action lawsuit is aimed at ensuring that millions of Vodafone customers can get their money back directly. “An additional cost of five euros per month is a lot of money for many people.” The class action lawsuit makes it easy for consumers to defend themselves against the increase, said Pop. The Federal Association of Consumer Organizations announced the proposed lawsuit in May, and in the weeks that followed, more than 10,000 people reported to the vzbv.
Signaling effect to the economy
If consumers feel they have been disadvantaged in a contractual relationship, they can currently get money back through a so-called model declaratory action. However, this can be difficult. Because if the verdict goes in the consumer’s favor, an unlawful act by a company is confirmed in black and white. However, this does not result in a direct claim for payment against the company.
The citizen then has to contact the company himself, ask it to pay and, if necessary, sue again. He has a good chance in court. Nevertheless, direct confrontation with a company is likely to be a high barrier for many consumers.
The new class action lawsuit improves the consumer’s position. After a positive verdict, the court appoints a so-called administrator who receives money from the losing company. He checks the consumers’ claims and then transfers them an amount. Consumers no longer have to confront the company themselves; things are much easier for them than before.
The proceedings against Vodafone are seen as having a certain signal effect on the economy. It’s only about five euros per month, which every customer could get back. Depending on how many customers take part, it could be financially painful for Vodafone if it loses in court. In addition, a court decision could have a deterrent effect on consumers – companies could become more cautious about price increases in current contracts in the future.