O2 iPhone Contract - How to cancel?

kojak488

First, I'm oblidged to say that this is NOT legal advice. I am not liable if there is an error with the following information given.

Right now I'm looking to cancel my O2 iPhone contract that I took out sometime last year. There is still probably 6+ months left on the contract so the cancellation fee will be high (I haven't called O2 yet). My plan, though, is to argue that the cancellation charges are unfair and you too can do the same thing.

There is a piece of legislation called the Unfair Terms in Consumer Contract Regulations 1999, which is a Statutory Instrument (SI) that has been taken into effect, that covers, obviously, unfair terms in consumer contracts. So presuming your iPhone was not taken out as part of a business your contract with O2 is covered under these reguations.

I won't go through all the logistics of how the legislation works; you'd need to pay a lawyer for such a thing. However, I will mention that attached to the SI is something called 'Schedule 2'. It's a "INDICATIVE AND NON-EXHAUSTIVE LIST OF TERMS WHICH MAY BE REGARDED AS UNFAIR". Basically if there is a term in your contract that is listed under Schedule 2, then it can be--though isn't automatically--listed as unfair. More importantly, though, is that Schedule 2 is "non-exhaustive", which means that even if your term isn't on the list that doesn't mean it isn't unfair.

Using this SI I'd suggest you look through your contract with O2 (or just throw it at them and see how they react). Section D of Schedule 2 basically says that if there's a term in the contract that says you must pay a cancellation fee--or if O2 keeps your pre-paid money--that only applies to you, then it may be unfair. What that means is that if there is not an identical fee/charge to O2 for cancelling the contract, which I bet there isn't, then the term may be unfair. Thus, if the cancellation term is unfair it is not binding and you would not be required to pay the cancellation fees.

You can always throw that at them and see what happens.. it can't hurt. Though to go through with it you'd have to be prepared to take them to Small Claims Court.

Jon_01

It's not a cancellation fee. You agreed to a contract of x months. All the network is doing is charging you for the contract that you agreed to.

A cancellation fee maybe classed as above but this is covered by contract law and minimum terms ect.

kojak488

Jon 01,

It is a cancellation fee. You can call it by another name, but it's symantics. Yes I know it's paying the full amount of the contract, but that isn't the point here.

The issue here is that there are provision in the contract with O2 that govern cancelling the contract. You can see it under Section 8 titled "Ending the Agreement". Basically it says, as you'd expect, that if the consumer contracts they are required to pay the amount due for the minimum duration of the contract.

What's important here is that this section makes no mention of O2 paying the consumer if O2 cancells the contract. So if you look at Schedule 2 of the aforementioned SI you'll see that such a situation is, quite possibly, an unfair term. Per the legilsation unfair terms are not valid. Therefore, you could actually cancel the contract for no cost.

It's all to protect the consumer for unfair bargaining power, which O2 has by issueing standard form contracts (the ones they print and you sign with no negotiating).

kojak488

I also just finished getting off the phone with O2's Retentions department. I wrote that reply while I was on hold. I spoke to a very (although initially rude) young lady who was, as I expected, of little help. She 'spoke with her supervisor' who reinforced her point of view that I'd have to pay £300+ to cancel my contract that was in effect until 2010. I then asked to speak with the actual supervisor.

I rexplained the problem with the gentleman with no avail. However, they he did wind up waiving my cancellation fee. Do you know why?

If he didn't I informed him that I'd escalate it to the Director of Telecommunications per the aforementioned SI. The Director then had the power to issue an injunction and, more importantly, issue a review to all of O2's similar contracts with an identical term. Basically if he'd gone down that road I made it very clear it was possible that all similar O2 customers could wind up being able to cancel their contracts free of charge.

Obviously they let me go as a form of damage control. It's better to lose one bloke's fees than many, many more. Especially when I mentioned how many customers are anxious to leave with Orange and Vodafone able to carry the iPhone soon.

It's all about bargaining and feeding them the correct information to get the result you want. Some people call it social engineering.. others might consider it blackmail. In the end O2 did the right thing.

OneADay

kojak488 wrote: »

What that means is that if there is not an identical fee/charge to O2 for cancelling the contract, which I bet there isn't, then the term may be unfair.

You might or might not have managed to cancel the contract - wait to see your final bill. I call it blackmail as the extra cost of lost business goes on higher tariffs for other customers in the end.

In any event the quote above is not true as there is an obvious cost to O2 or any network provider in losing the value of the phone which they have already paid for.

kojak488

OneADay wrote: »

You might or might not have managed to cancel the contract - wait to see your final bill. I call it blackmail as the extra cost of lost business goes on higher tariffs for other customers in the end.

In any event the quote above is not true as there is an obvious cost to O2 or any network provider in losing the value of the phone which they have already paid for.

See that's the brilliant bit. I wrote down all of the information taken on the call: names, date, time, what was decided, what was talked about, etc. So if they do wind up charging me it won't work as the supervisor and I formed a verbal agreement as to what would happen, which they'll uphold. There's no need to worry about anything like that; I've dealt with such situations before and win every time.

The quote you mention is true. Any "obvious cost" does not impact how the term is regulated. First, my contract makes no mention of how the phone is dealt with; it can't because it's their standard form contract. I paid £99 for my phone while others paid more or less. Is that reflected in any of the contracts? No. They make no mention of it.

So they may give me some value, but it's not equal value as I already paid X amount of money for the phone. The SI makes it clear that it needs to be an equivalent amount, which it then isn't. Additionally, if what you said held true, it'd be on a case by case basis of a comparison on how much of the phone sale did O2 lose out on against how much the cancellation fee is. If the two aren't equivalent, then it's an unfair term.

OneADay

On that basis, o2 and other networks would quickly start to adopt the American system which I think means paying up front for the phone and then paying monthly service costs. I for one do not want that but seemingly that is what will happen if the scenario you point out in the T&C is upheld in court.

tizhimi

OneADay wrote: »

On that basis, o2 and other networks would quickly start to adopt the American system which I think means paying up front for the phone and then paying monthly service costs. I for one do not want that but seemingly that is what will happen if the scenario you point out in the T&C is upheld in court.

I would rather buy a phone and then get a sim only plan, that way you get more flexibility and the deal you want, rather than the phone you want and not the tariff or vice versa.:beer:

OneADay

tizhimi wrote: »

I would rather buy a phone and then get a sim only plan, that way you get more flexibility and the deal you want, rather than the phone you want and not the tariff or vice versa.:beer:

It works out a lot more expensive if you want a decent phone. Anyway I am happy with moving around and getting cheap deals with "free" phones. I stick to the period of the contract as a rule (especially as I get cashback deals). I dread the thought of having to buy a phone every 12 months and then paying for the service (like I say the US does and its not cheap over there, even if you look at it in pounds rather than dollars).

DarkConvict

OneADay wrote: »

It works out a lot more expensive if you want a decent phone. Anyway I am happy with moving around and getting cheap deals with "free" phones. I stick to the period of the contract as a rule (especially as I get cashback deals). I dread the thought of having to buy a phone every 12 months and then paying for the service (like I say the US does and its not cheap over there, even if you look at it in pounds rather than dollars).

I agree, if we have to start paying for phones first, i would probably not buy one until mine breaks. So then the mobile phone manufactures would be down on profit instead.