BT Taken To Court By Customer Over Direct Debit Contract

[Nattie]

Re: BT Taken To Court By Customer Over Direct Debit Contract

But the issue that came to court is whether the practice of charging because an individual chooses to pay by a different preferred method to the actual company is lawful or not. I agree with you that it is profiteering in terms of what it actually costs but IT IS LEGAL.

[Celestine]

Re: BT Taken To Court By Customer Over Direct Debit Contract

I'm not going to add anything to the debate because I am still very much 'on the fence' on this issue.

However, I can't get away from the concept of the 'cash payment' price being the 'true' price and the 'DD payment' method being a discount.

However this still creates the undesirable effect of penalising the poorest and those who can't get a regular bank account. And whatever Argentarius argues about the rights and wrong of that, I have met 100s of people through these forums who for various reasons cannot and are penalised simply for being poor or for having previous debt issues. The government has been pushing toward a bank account for all for many years now, what we need to address is the fact that bank accounts create debt if you make the slightest error.

What I will say is that is refreshing to see a true debate on the subject. I'm impressed to see a decent argument without mud slinging. But Argent, you have broken one golden rule of forum posting.....never use others spelling abilities as a weapon to make a point. Apart from being patronising it weakens whatever point you may have validly made.

[Tools]

Re: BT Taken To Court By Customer Over Direct Debit Contract

I pay my Virgin Telephone/TV/Broadband package by direct debit. The main reasons are ease of payment and the so called `discount` for paying by this method.

However, I do not agree that payment by other means should be at a premium to the service provider. Each payment method is valid and should not be penalised. Many people, as has been mentioned, do not have the facility to pay by direct debit so why should they pay additional monies.

One potential problem that may occur when paying by direct debit is that, if insufficient funds are in your account at the time the direct debit is called on, you leave yourself liable to further charges for a returned direct debit.

That being the case, the perceived `discount` you initially expected can indeed turn into, for man, a charge of around £35 depending on your bank account provider.

[argentarius]

Re: BT Taken To Court By Customer Over Direct Debit Contract

"Does this justify the charge" is a meaningless question in that case. Charges that don't need to be justified, don't need to be justified. Companies can charge whatever they like, to make a profit, as a core term of a contract.

'Core terms' are irrelevant to the legitimacy of a charge. It is the main subject matter as UTCCR makes clear:

Assessment of unfair terms
6. - (1) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

(2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate-

• (a) to the definition of the main subject matter of the contract, or
• (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.

By any stretch of the imagination the proccessing of your payment does not go anywhere near being the main subject matter, or as Justice Smith put it, ''the purpose'', of the contract.

Your argument there is entirely wrong. Do you not understand the word "or"?

The goods or services are telephony services, paid for by either DD or other means. The price or remuneration is a different amount, depending on the method of payment.

UTCCR doesn't cover "the adequacy of the price or remuneration". In other words, suppliers can charge what they choose for their service.

Your ''service'' argument is eroneous. Once you have paid the bill for goods or services rendered your obligations end there and so do the services provided.

I can't imagine which part of my logic you are alleging is erroneous here. But until you've paid the correct amount (which is higher if you choose not to pay by DD) your obligations have not ended.

But the biggest hole in your argument is the question you cannot seem to answer:

These kind of payment proccessing charges never existed until a few years ago so what's changed?

My argument isn't based on there being a change in circumstances, or the processing charges reflecting any form of cost recharge, as I've said numerous times. My argument is based on it being entirely legal for BT to charge a different amount to people who take a different service, where the payment method alters the form of the service.

I have also pointed out that BT have, in fact, replaced a DD discount with a non-DD supplement. Your argument that the charges are new is, in fact, false. They have existed for at least a dozen years.

I'm principlly arguing with argentarius that naked profiteering of by a regulated utility is not something one should condone.

I've already stated that, if you have an issue with a regulated utility profiteering, the correct way to challenge that is through the regulation regime, not through the courts on spurious grounds. If we were talking about any other supplier of telephony, who was not regulated, I feel that you'd still be claiming it was unfair so I think you are raising this argument as a red herring.

But Argent, you have broken one golden rule of forum posting.....never use others spelling abilities as a weapon to make a point. Apart from being patronising it weakens whatever point you may have validly made.

Whatever. It was amusing to me that the relevant person was calling a judge incompetent and couldn't even type the word properly. The "" should have indicated to you that it was just a little joke.

Many people, as has been mentioned, do not have the facility to pay by direct debit so why should they pay additional monies.

Because (apart from BT for the time being) we are in a free market, and suppliers should be able to (and are able to) charge what they like to whichever group of customers they like. I've addressed the regulation issue above in my response to EXC.

One potential problem that may occur when paying by direct debit is that, if insufficient funds are in your account at the time the direct debit is called on, you leave yourself liable to further charges for a returned direct debit.

But you are given ample notice of the DD amount and date. And the debt is due on that date whether paid by DD or not. What this comment boils down to is "people want to be able to default on their debts (by paying them late), and don't like DD because it prevents them from easily doing so".

[EXC]

Re: BT Taken To Court By Customer Over Direct Debit Contract

''Whatever. It was amusing to me that the relevant person was calling a judge incompetent and couldn't even type the word properly. The "" should have indicated to you that it was just a little joke.''

All I can see is that if my nine year old niece Georgina was so impolite as to make light of such an obvious fax pas, with the response ''whatever'', she'd be grounded for a fortnight. There is no excuse for bad manners. The word ''whatever'' indicates to me you have a lot to learn.





''we are in a free market, and suppliers should be able to (and are able to) charge what they like to whichever group of customers they like.''

[argentarius]

Re: BT Taken To Court By Customer Over Direct Debit Contract

The same to you, EXC.

It's bad manners for Kafka to call a judge "incompetent" and to question his impartiality, just because he doesn't give the judgement that Kafka would like.

If people can't understand that "" denotes a joke, that's their problem. Hence "whatever". You can treat your niece how you like, but I trust that she's actually allowed to make obvious jokes without foolish over-reaction from others.

Illustrating your posts doesn't improve their credibility either.

I don't think you are getting the point.

If a supplier says "I will only supply this particular service to people who pay by DD, and I'll charge them £x" then that's obviously a legitimate contract.

If a supplier says "I will only supply this particular service to people who won't pay by DD, and I'll charge them £y" then that's obviously a legitimate contract.

But merely because the two offers are within the same contract, you somehow impute that the difference between £y and £x is an unfair charge.

There's no logic in that position at all.

[EXC]

Re: BT Taken To Court By Customer Over Direct Debit Contract

''It's bad manners for Kafka to call a judge "incompetent" and to question his impartiality, just because he doesn't give the judgement that Kafka would like''

His comemts were entirely within forum rules, yours were not. Rules is rules, laws is laws and for someone who bases their entire argument on legalities you have invalidated just about everything you've said.

''Illustrating your posts doesn't improve their credibility either.''

The purpose of my illustration was very clear. It was not meant to improve my credibility but to question yours.

[EXC]

Re: BT Taken To Court By Customer Over Direct Debit Contract

''If people can't understand that "" denotes a joke, that's their problem.''

I'd say that's your problem. Are you seriously saying a smiley face denotes a joke? Do you have ANY evidence to back that up? And are you suggesting that a smiley face is a get out of jail card for rudness and rule breaking?

Do me a lemon.

[Celestine]

Re: BT Taken To Court By Customer Over Direct Debit Contract

I think we have now pretty much exhausted the arguments.

The claimant may appeal...there may be further legal developments.

Until then, this case will probably reflect crucially on any other potential claims.

There is to be an OFCOM review into these charges, that may change the situation somewhat.

We may not like the Judges ruling, but for the time being, we have to deal with it.

When I referred to a Golden Rule, I didn't mean a written rule, I meant a rule we all abide by out of a spirit of goodwill.

These forums tend to expose peoples 'academic' abilities quite clearly and so to create a 'level playing field' we just don't use that to make a point......even in jest.

Ironically, Kafka usually has impeccable spelling skills!

[Sapphire]

Re: BT Taken To Court By Customer Over Direct Debit Contract

I always had everything paid by direct debt till I realised the charges we were getting landed with. So I now pay either by BACS payment or by debit card. If you pay Sky by cash, debit card etc they charge you an extra £4, so last month I enquired whether I could set up a BACS payment system for them and not only have they dropped the £4 charge completly they have given me 3 months free Sky viewing as compensation for not being able to do as I requested.
Not a bad result I feel.

My Motto now is: Its always worth asking, and you might get not only the charge dropped but a bit extra as well.

[Kafka]

Re: BT Taken To Court By Customer Over Direct Debit Contract

The correspondence in this post relates a complaint to BT about their penalties for not paying by direct debit. The complaint was first lodged in August, but it took 6 weeks, 3 emails and the threat of reporting them to get any response at all. They just ignored the complaint.

The replies are an amazing account of their attempts to muddy the facts and to avoid answering any of the questions about these charges. Needless to say the last one from me has not been answered. It looks as if they have been told to stonewall any attempts to complain about these charges and just don't want to bother.

In the following post I will give some thoughts on the overview of all of this, but the correspondence makes interesting reading to show how they have tried to wriggle out of answering the questions.

Sat, 6 Oct 2007
"Residential Services" <residential.services@bt.com>
Dear Mr Kafka

Thank you for your e-mail dated 20/9/07 regarding Payment Processing Fee.. I am sorry for the delay in replying to you and for any inconvenience this may have caused.

With regards to your e-mail, I would like to inform that every single customer is important to us and we take your views seriously.

On May 1st we reduced the price of monthly line rental by £1.00 and broadband by £1.00 for customers who don't pay by Direct Debit. At the same time, a separate payment processing fee of £1.50 a month was introduced. This is not a penalty charge but a separate fee for methods of payment which cost us more to process.

So the net effect is only 50p a month more for anyone who just has a phone line with us, but anyone who takes broadband as well will be 50p a month better off.

BT's fee for non-Direct Debit payments is amongst the lowest around. For example, Virgin Media charge £5 a month. Many companies, such as Carphone Warehouse, will only accept customers who agree to pay by Direct Debit.

The payment processing fee has been introduced because some methods of payment are costly to process. But it's not just about the cost of taking the payments; following up when customers forget to pay on time does involve spending time and money.

At BT, we are committed to offering our customers a wide choice of ways to pay their bills. Whilst we encourage choice of payment, it is worth pointing out that Direct Debit has benefits for customers. It saves time and is convenient. It means that your BT bill is one less thing to worry about.

If you choose to pay by Direct Debit, we give you up to ten days from the time of receiving the bill before processing the Direct Debit payment giving you plenty of time to ask questions, and we tell you on the bill when the amount will be taken from your account. There is also a Direct Debit Guarantee which protects you and your money. If any error is made by BT or your bank or building society, you are guaranteed a full and immediate refund from your branch of the amount paid.

If budgeting is important to you, Monthly Payment Plan is a great way to manage your budget and help you spread the cost of your bills. Monthly Payment Plan is a Direct Debit payment option where a fixed amount we agree with you is debited from your account every month.

If you sign up for direct debit or monthly payment plan, between receiving your first and second bill after May 1st, we will automatically waive the initial payment processing fee.

If you do not have a bank account, but would like to take advantage of Direct Debit or Monthly Payment Plan, a basic bank account is now available to almost everyone in the UK through the Post Office or many high street banks. You can contact the Financial Services Authority for a list of current basic bank account providers.

At BT we constantly strive to give all our customers best value for money. With that in mind, last summer we announced over £200 million of price cuts and from June 1st, 2007, we are bringing back our best offer on Evening and Weekend inclusive calls as a thank you to loyal
customers. See Compare our Calling Plans | Home phone | BT.com for details.

Once again I am sorry for the problems you have experienced with BT recently.

Thank you for contacting BT.

Yours sincerely,

Amandeep Kaur
eContact Customer Service
************************************************** ***********

Dear BT

I am concerned to note that you are still levying unlawful penalty charges to my BT account. These are for refusing to pay by direct debit, although you disguise these as 'payment processing fees'.

Your answer was totally inadequate. Quite apart from the fact that it took 6 weeks to reply to a straightforward question, it brings into question the whole concept of customer care. It is a pity that some of the additional profits you are making through these charges does not get spent to improve your response times. Presumably the shareholders' profits are more important to you.

Your attempts to hide behind the level of charges other providers levy is a pathetic way to create some self congratulation. This is simply astonishing and an insult. I am not concerned about other providers, I want to know why you are taking £18 of my money each year because I will not pay the way you want me to.

In response to the fact I will not pay by direct debit quarterly, you suggest that I pay by direct debit monthly. What kind of jerk do you take me for and why are you making such stupid suggestions?

You state that the charges are not penalties by genuine service fees. If this is the case, please provide me with evidence to support this claim as I simply do not believe that this is anything other than a penalty.

If it really costs £4.50 per quarter to process a simple payment of a bill, please explain to me why you have not been charging this for decades to cover the additional 'payment processing fee' for non direct debits.

I require you to either provide justification for this exorbitant charge that has suddenly become necessary, or to confirm that you will not levy this on future bills as it is a penalty charge and hence a profit-making venture.

Please answer these questions fully, as your answers will influence future action taken regarding the account.

Yours in disgust
K.

************************************************** *******

Mon, 31 Mar 2008

"Residential Services" <residential.services@bt.com>

Dear Mr Kafka

Thank you for your e-mail dated 28/3/08 about the Payment Processing Fee. I am sorry that you feel that these charges are unlawful.

The extra fee reflects the costs of collecting non-direct debit payments. We believe that given the real difference in costs between payment methods it is fairer that the price that customers pay reflects the costs involved.

By calculating the cost we apply a general policy for all payment methods that are not automated.

We calculate the cost by averaging it out across all payment methods other than Direct Debit or Monthly Payment Plan as well as the follow up costs if customers pay late or forget to pay.

For example processing a cheque involves many more steps along the process chain then transferring money automatically by Direct Debit and therefore is more expensive.

The fee is not transaction-based, as this would unfairly disadvantage those who need to pay in several small instalments. Instead the costs are averaged on a monthly/quarterly basis across all customers using non-automated methods of payment.

This can only ever be a general policy for all customers based on the cost we as a business incur.

If you should have any further queries please do not hesitate to contact me again via e-mail.

Thank you for contacting BT.

Yours sincerely,

Stuart Hetherington
eContact Customer Service
************************************************** *
Mon, 31 Mar 2008
Dear Mr Hetherington

Thank you for bothering to respond to my last complaint in record time for BT!.

However, I am obviously seriously dissatisfied that you have basically failed to address my concerns.

In response to the fact I will not pay by direct debit quarterly, you suggest that I pay by direct debit monthly. What kind of jerk do you take me for and why are you making such stupid suggestions?

No response

You state that the charges are not penalties by genuine service fees.
If this is the case, please provide me with evidence to support this claim as I simply do not believe that this is anything other than a penalty.

No serious attempt to provide evidence, just waffle.
I pay by automated online transfer, so your discussion about cheque clearing is irrelevant. It costs no more to process an automated transfer than it does for a DD. The costs are nothing like the £4.50 figure you are trying to charge. I believe that you are openly lying about this and you have provided no evidence whatsoever to justify this profit making.

If it really costs £4.50 per quarter to process a simple payment of a bill, please explain to me why you have not been charging this for decades to cover the additional 'payment processing fee' for non direct debits.

No response.
According to the press there are 5 million BT customers being subjected to these charges. At £18 pa this is a nice little earner of £90m for BT. According to your account these are genuine costs incurred by you in processing non DDs. Are you seriously telling me that you have been weathering this for decades, and only now decided to act?
At least you had the foresight not to try to defend this with some stupid party line. This is deceitful profiteering.

I require you to either provide justification for this exorbitant charge that has suddenly become necessary, or to confirm that you will not levy this on future bills as it is a penalty charge and hence a profit-making venture.

You have done neither

Please answer these questions fully, as your answers will influence future action taken regarding the account.

You have not even attempted to do this.

You now leave me no option but to take matters further. I have already written separately to instruct you to stop contacting me about any other products and services while I remain a customer. This will be a spectacular own goal for BT and I hope that you lose many thousands of customers to other suppliers. I will certainly do my best to facilitate this.

In the meantime I look forward to dealing with your new ridiculous collection company. Presumably this is where some of the £90m will be spent? On a totally irrelevant and heavy-handed collection arm with all its rules and catches. Even for BT this one is a gem.

It is a pity that you are not prepoared to provide honest answers to these serious concerns that are shared by millions who are currently your customers. At least I gave you the opportunity of salvaging some credibility.

Yours in disgust.
K.

[Kafka]

Re: BT Taken To Court By Customer Over Direct Debit Contract

Some points from this as I see them.

1. They continue to imply that DD payments incur no cost of processing.
2. They have lumped together all other payment methods as 'non automated' even though direct transfers are an automated process for collection.
3. They imply that all non-DD payments involve a lot of work and cost, deliberately failing to differentiate the methods that are more expensive. Some business accounts only differentiate between manual and automated, so this distinction is not shared by the banks' assessment of their true costs (in one of the few examples where they reveal them).
4. The £1.50 pm cost for processing is deliberately muddled by apparently averaging out a lot of different costs incurred in collection. Amazingly, they admit to including costs for following up late payments, despite the fact that they have several other penalty charges (such as late payment fees and reconnection fees) that already cover this. This suggests that they are double counting the income from these charges in order to inflate the costs that they are seeking to recoup now.

Unsurprisingly, they will not provide any reliable data on costs in response to a customer complaint. The telling question on why these charges have suddenly become necessary to recoup has been ignored.

The report on the recent case states that the judge found these charges to be 'fair and 'perfectly reasonable', so it will be very interesting to read the specifics of the case, as OFCOM and Trading Standards have expressed very different views to this judge. However, such evidence as BT will release suggests clearly that they cannot or will not provide clear evidence on these matters. Their claims to be covering legitimate costs are misleading, and appear to be openly deceitful. Certainly, their costs applied bear no relationship to any actual charges, when measured against any available evidence.

I do not know why the judge failed to see through the clear attempts to hide the true costs by conflating different issues and by double counting some costs that they already recouped by methods that could have been enhanced. It will be interesting to see why this was not investigated fully, as appears to be the case.

The other key point is the level of the charges - plainly excessive, despite BT's desperate claims that they are fair cost-covering charges. It is bad news indeed if a judge has made a statement like this having not investigated fully either the constituents of the aggregated charges, the true costs incurred, or the ralative fairness of a system that introduces blanket penalties in a hidden way.

Perhaps the most telling factor here is the continual refusal to answer the question why these charges have suddenly become necessary. As I stated in one of my complaints, BT stand to make £90m pa out of these penalties that they seemingly never needed to claim before. Did they previously lose £90m on this as a goodwill gesture each year? If not, it would be good to know why things have changed.

For my money its very clear. They needed to recoup increasing costs and sought to introduce a new income stream from penalties, which vastly exceed the real costs. To hide this they tried to muddy the details, believing it would just be accepted by the customers, failing to realise the backlash that this would create. Their arrogant tactics show clearly that they would rather lose customers than lose face by backing down and introducing a fair system of charging.

I don't think there is any point fighting this one. Our best service to members would be to identify the best options from other service providers so that they can choose a cheaper provider with more integrity and honesty.

[argentarius]

Re: BT Taken To Court By Customer Over Direct Debit Contract

They aren't penalties.

I do not know why the judge failed to see through the clear attempts to hide the true costs by conflating different issues and by double counting some costs that they already recouped by methods that could have been enhanced. It will be interesting to see why this was not investigated fully, as appears to be the case.

Because the costs are irrelevant, because they are not penalties.

Merely repeating that they are dozens of time won't make it so.

Why won't you (and others) just accept that they charge a DD price, and a non-DD price, and the two are not the same? There's no legal reason why they should be the same.

The only way I see BT changing this is by regulation. And if you feel that's something the regulator should do, challenge the regulator. It's all very well OFCOM saying they think it's unreasonable - they haven't actually done anything about it, presumably because the regulatory framework is fixed in statute and they are unable to do so without the law being changed.

I don't think there is any point fighting this one. Our best service to members would be to identify the best options from other service providers so that they can choose a cheaper provider with more integrity and honesty.

You've never said a truer word. Although I'd miss out the "more integrity and honesty" bit and simply say that people should choose the best value provider, for whatever method of payment they wish to use. And then I would add the suggestion that MPs/OFCOM/whoever appropriate are lobbied by anyone who thinks this issue warrants pursuing (and you'll appreciate that I'm not in that group, but I don't mind giving the suggestion).


By the way, regarding BT's reams of flannel, they would make life a lot easier for themselves if they stopped talking rubbish and simply said "we want to charge it; we are legally allowed to. Pay it or choose to end your contract".

[WendyB]

Re: BT Taken To Court By Customer Over Direct Debit Contract

Guys, you are all fighting a losing battle here, might as well give up the ghost and agree to disagree.Arg will always have an answer, perhaps he's just being devil's advocate and disagreeing for the sake of it?? All answers on a postcard please:bounce:

FWIW, I'm with you lot.

[argentarius]

Re: BT Taken To Court By Customer Over Direct Debit Contract

Sometimes I am devil's advocate, but normally I say what I believe.

This whole debate was about whether this was a futile legal action, which I believed and stated it was, before the plaintiff lost in court.

I stand by that comment.

That doesn't mean that I think the charge is (necessarily) fair or reasonable. But I also don't believe it's legally required to be either of those things because, ultimately, suppliers can charge what they like for things - and should be able to, unless there's a regulatory "public good" reason why not. But in that case, changing or enforcing the regulatory regime is the way to resolve the issue, not inappropriate resort to the courts.

I think I've said enough. Interesting thread in any case.