Ofcom bans unfair phone charges

[Legal Beagles]

Telephone companies will soon have to stop levying extra charges that are unfair, the regulator Ofcom says.

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[Amethyst]

Re: Ofcom bans unfair phone charges

Excellent

[Guest]

Re: Ofcom bans unfair phone charges

I thought so too and about time.

We should alert those who have paid them that they are at liberty to claim them back.

[Amethyst]

Re: Ofcom bans unfair phone charges

Indeed

[Amethyst]

Re: Ofcom bans unfair phone charges

full article

Ofcom set to ban 'unfair' charges

Paying by cheque can carry a noticeable extra cost

Telecom and internet firms will soon have to stop levying extra charges that the regulator Ofcom says are unfair. The regulator is responding to complaints about additional charges for paying bills by cheque or cash, ending contracts early or paying bills late.
Any extra charges must be clear and "demonstrably fair", Ofcom says.
The draft guidance from the regulator covers bills and charges not only for home phones but also for mobile phones, broadband and pay TV.
If charges remain unclear to customers, firms will not be able to recoup more than the cost of providing the service, under the draft rules that should come into force in the autumn.
"For consumers to get an all round fair deal they need to know the full costs of the services they are buying," said Ofcom's chief executive Ed Richards
"Our proposals will encourage companies to be open and straightforward about additional charges where they feel it is necessary to include them.
"In addition, our proposals mean that, in some cases, additional charges will be subject to clear limits which would provide direct protection for consumers," he added.
Clear explanation
A year ago BT attracted widespread criticism for a decision to increase to £4.50 a quarter the extra charge on customers who did not pay their bills by direct debit.
A consumer who ends a contract early should never have to pay more than the payments left under the contract


Ofcom


Its rival Virgin charged £5 a month for administering the bill collection of customers who had not signed up for a direct debit.
Ofcom's proposed rules do not outlaw such extra charges altogether.
Instead, it says they must be "prominent and transparent" so that customers can easily make up their own minds about the true overall cost of buying a telephone service.
If a company does not do that, then the charges "should only include the provider's extra costs of collecting normal payments and not an opportunity to collect further revenue".
"This consultation and subsequent action will hopefully lead to more transparency and fairness for consumers in the telecommunications industry," said David Sinclair of Help the Aged.
"It is often the poorest and most excluded who lose out and end up paying more when charges are hidden or when contract amendments or extensions are made without the active consent of the consumer."
Legal threat
Ofcom's new rules will apply not only to bill collection charges but to charges for collecting failed and late payments.
As well as making customers more aware of these, the regulator says they should only be applied once the customer has had a "fair chance" to pay the bill and should reflect only the true cost of collecting the money.
Ofcom also wants to apply the same argument to charges for breaking a phone contract by ending it early.
"A consumer who ends a contract early should never have to pay more than the payments left under the contract period," Ofcom said.
"In fact they should often pay less than this, to reflect costs providers save because the contract ends early."
Once Ofcom's final guidance is published later this year, telecom firms will have three months to comply, or face legal action under the 1999 Unfair Terms in Consumer Contracts Regulations.

[Amethyst]

Re: Ofcom bans unfair phone charges

NEWS RELEASE FROMM OFCOM

28|02|08
Curbing unfair additional charges on consumers’ bills

Ofcom today announced proposals to curb unfair additional charges levied by communications providers on consumers’ bills.
The proposals are designed to ensure that extra charges are fair and that landline, broadband, mobile and pay-TV providers clearly market the true cost of their services.
Increasing competition has driven down headline prices and offered consumers more choice. However, falling headline prices are not the whole picture.
Consumers may also pay additional charges as part of complicated contract terms. Some providers make a range of additional charges, for example, when consumers choose to pay by cash or cheque rather than by Direct Debit; cancel a contract before the minimum period has finished; or make a late payment.
Ofcom is proposing to introduce new guidance for communications providers. This will spell out Ofcom’s view of the law and what communications providers have to do to meet their obligations under the Unfair Terms in Consumer Contract Regulations 1999 to ensure that additional charges are fair and transparent.
Once the guidance has been finalised, Ofcom is proposing to give communications providers three months to comply. Ofcom will then start an enforcement programme - where necessary through the courts.
The draft guidance has two main principles:

• providers need to be clear and up front with their consumers and do more to make it easy for consumers to understand the charges; and
• for charges that are not part of the price of a main service under the contract, these must be demonstrably fair.

The draft guidance covers a number of specific areas including:
Charges for paying bills by cash or cheque rather than by Direct Debit

• When providers advertise prices, they must make clear what any extra charges for paying by cash or cheque will be.
• If a provider does not make the extra charges prominent and transparent enough that consumers see them as part of the main price under the contract, then the charges must reflect direct costs only. They should only include the provider’s extra costs of collecting normal payments and not an opportunity to collect further revenue.
• However, where the extra charges are prominent and transparent enough, normal competition – and not regulation – will provide price discipline on behalf of consumers. Customers will then have all the information that they need to know which provider to choose.

Protection for low income households

From mid-2008, BT will offer a new service – BT Basic – which offers a low cost home phone service to those on low incomes and pensioners that are in receipt of certain government benefits. BT Basic will not include an extra charge for consumers who do not pay by Direct Debit and, in contrast to previous social telephony products, will be available to consumers who have pre-pay mobile phones and/or broadband services.
Charges for late payments and failed payments

• Providers should make consumers much more aware of these charges.
• A charge should only be made after consumers have had a fair chance to pay their bills.
• The charges should reflect only the direct costs providers incur, like the true extra cost of collecting the money.

Minimum contract periods and charges for canceling contracts

• Providers must make the length of contracts clear, as well as the costs involved if a consumer chooses to break a deal.
• Subsequent contract periods should not be imposed unless there is a clear benefit to the consumer and cost to the provider.
• A consumer who ends a contract early should never have to pay more than the payments left under the contract period - in fact they should often pay less than this, to reflect costs providers save because the contract ends early and their ability to recoup sums by selling services to other consumers.

Ofcom is seeking views on the draft guidance. The consultation is published at http://www.ofcom.org.uk/consult/condocs/addcharges and the closing date for responses is 8 May 2008. Ofcom expects to publish the final guidance in autumn 2008.
Ofcom Chief Executive Ed Richards said: “Consumers are benefiting from greater competition and lower prices. But for consumers to get an all round fair deal they need to know the full costs of the services they are buying. Our proposals will encourage companies to be open and straightforward about additional charges where they feel it is necessary to include them. In addition, our proposals mean that, in some cases, additional charges will be subject to clear limits which would provide direct protection for consumers”
Ends.
For further details please see Related Items.
Notes to Editors

1. An illustrative example of communications services providers’ current and revised advertising following Ofcom’s guidance on non direct debit and minimum contract terms can be found here: http://www.ofcom.org.uk/consult/cond...charges/mockup. The example is intended as being illustrative and is not prescriptive.
2. Frequently asked questions for consumers are available here: http://www.ofcom.org.uk/consult/condocs/addcharges/faq.

[Amethyst]

Re: Ofcom bans unfair phone charges

Q22. Are consumers going to be able to claim money back if the review sees the charge as unjustified? Can I withhold payment until the final decision is made?

We see the main benefit of this work as enabling suppliers to bring their terms into line with the Regulations [1], and we are allowing them three months to do so. There is little case law on the application of the Regulations, and our guidance should provide much greater clarity on what is acceptable or unacceptable in the future.
This doesn't mean to say that consumers cannot claim back money which they have already paid, if they feel that they have paid too much. But, that would be for a court to decide in any particular case. Ofcom’s guidance cannot force a supplier to refund any charges that have already been paid.
[1] The Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations).

[EXC]

Re: Ofcom bans unfair phone charges

Crackdown on rip-off household charges

Millions of people could be in line for compensation under Ofcom’s new guidelines


http://business.timesonline.co.uk/to...cle3465511.ece

[EXC]

Re: Ofcom bans unfair phone charges

BT angers customers with extra charge

Now you can be cut off for refusing to pay £4.50. Miles Brignall reports

• <LI class=byline>Miles Brignall <LI class=publication>The Guardian,
• Saturday March 8 2008
• Article history

About this article

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This article appeared in the Guardian on Saturday March 08 2008 on p3 of the Money news & features section. It was last updated at 00:04 on March 08 2008.


BT has cemented its reputation as one of the most complained about UK companies after telling customers who refuse to pay by direct debit that they will have their phone cut off if they fail to pay the extra charges it imposes.
Since May last year, BT has added £4.50 to the quarterly bill of customers who refuse to pay by direct debit, even if they pay the bill on the same day that they receive it.
The letters of complaint - many of them from pensioners who mistrust direct debits - have poured in to all the newspapers. Many customers have been deducting the charge from their cheques.
It emerged this week that BT has sent out a letter to all its 10.8 million customers notifying them of a new contract and warning them that in future the £4.50-a-quarter charge will be collected by a new subsidiary, BT Payments Services.
A spokesman for the company told Guardian Money this week that any customer who fails to pay the extra charge will be treated as if they haven't paid their phone bill and will be chased by debt companies. Ultimately - if they still refuse to pay - the customer will be cut off.
"Some customers have been not paying the £4.50 charge and thinking they are getting away with it because it only becomes an official debt when it gets to £10. This is not the case and we will be chasing customers for this money. The fee was introduced to reflect the increased cost to us of processing these payments." Setting up a new company to collect these fees is standard industry practice, he says.
BT has further upset its customers by announcing a 23% increase in the cost of making daytime calls, and higher line rental charges.
From April 1 the cost of making a daytime call from a BT landline will rise to 10p for the first minute, and 4p for every subsequent minute, up from 3.25p. The company has also raised the monthly landline rental from £11 to £11.75, and made evening and weekday calls more expensive. A one-hour call on a weekday evening will now cost a whopping 90p, up from just 5.5p.
To offset the higher charges, BT has introduced free weekend calls for those on its Option One package. It has also lowered the cost of its all-the-calls-you-can-make deals. However, to get these deals you have sign a 12-month contract.
BT said customers who agreed to pay by direct debit, and receive their quarterly bill by email, could avoid the landline price hike. They will pay £10.50 a month from April.
Steve Weller, head of communications at uSwitch.com, said the increase in landline costs alone would make BT £80m a year. "The announcement signals BT's ongoing intention to drive customers on to its inclusive calling plans and also to opt for paperless billing. Customers on the Option 1 and 2 tariffs will see the cost of daytime calls rocket."
· To sign up for paperless billing go to BT.com/paperfree

[Amethyst]

Re: Ofcom bans unfair phone charges

Unbelievable