Mobile Phone Contract - Price Rise Refunds

edited 14 May 2014 at 10:18PM in Mobiles
1.6K replies 135.2K views
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  • From Ofcom's Report on Price Rises in Fixed term contracts - we can use this in response to O2's (Telefonica's) statement that they are not modifying the contractual conditions!



    3.31 We note Sky and Telefonica’s question as to whether a price increase in accordance with a price variation term can be considered to be a “modification to the contractual conditions” covered by Article 20(2). We consider that a price increase constitutes a change to the price agreed at the time the contract was concluded and is therefore a “modification to the contractual conditions”. The price variation term merely enables (or purports to enable) that change to occur.
  • blinkoblinko Forumite
    2.4K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    My phone bill has been increased by Talk mobile from £10 p.m to £10.31 really makes me angry that they can do this and get away with it !!!
  • blinko wrote: »
    My phone bill has been increased by Talk mobile from £10 p.m to £10.31 really makes me angry that they can do this and get away with it !!!

    I'm not sure they can "get away with it".

    Is you contract fixed term? And is it for mobile phone or a "home" service?

    If the contract is fixed term (up to 24 months) the same protection under the UTCCRs is applicable (for mobile or home services). So if you are still in the "fixed term" part of your contract you should be able have the price rise refunded. - see posts 1-3 and 11-12.
  • blinkoblinko Forumite
    2.4K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    it is a standard regular walk on car phone warehouse and pick up a new mobile and contract thing ma jig, I will have to double check or request a copy of the invoice.

    I am not at pains due to the 31p increase a month it's the sheer entering into an agreement and then the price rises. If they had said 1st 12 months are going to be £10 and then the next £11 I would've been fine with it.

    I will find out my exact contract and report back, will also report back any success or failure I have.
  • Below is a full response for O2 - feel free to edit as necessary.

    A couple of points.
    I have written paragraph 1 based on my experience of on-line phone ads/ contracts, so please change if this does not fit your circumstances.
    Whilst my original word document is all nicely spaced and bulleted I know from past experience that both formatting and spacing (especially between words) can go a little off when coping across to the Forum so please amend the layout as necessary.
  • Your reference: ******
    Mobile phone number: ************

    DearMr Malloch,

    Thank you or your correspondence of XXXXX. I have considered the response received, and still believe – as detailed below – that the price variation clause in our contract is unenforceable by O2. In light of my response below I request that O2 reconsiders its’ position on the price increase as applied to my contract and repay all sums taken under the price variation clause as originally requested. If on review O2s’ position remains unchanged can you state that this is O2s’ final position in order that I may progress this with the Ombudsman

    Regards.



    XXXX



    Without prejudice
    1 – Price rise not clearly and adequately brought to my attention.

    MY contract was entered into on line, and whilst there was a box to check that I had read the T&Cs the narrative with that box did not state “I have read the T&Cs which contain a price vacation clause”. All screens prior to this screen only ever mention the monthly price in relation to the fixed allowances and fixed length of the contract. There was no mention of “initial monthly price” or “variable month price” just a fixed number of months and a price. Therefore I had no expectation that the contract would contain a price variation clause and I entered into the contract with a genuine belief and expectation that the bargain I had signed up for was a contract with fixed allowances, for a fixed term and with a fixed price.


    Without prejudice
    2 The price variation isdiscretionary (capped by RPI, but not linked to anything at all)

    My reference to Schedule 2 Paragraph 1 (J) was in relation to the O2 price variation clause 5.2 being discretionary and I will address this point further in 3 below. However I disagree with your interpretation that you are not varying the terms of the contract, the term I agreed to was a monthly payment of £61. Indeed as you will be aware Ofcom addressed this very point in its statement on mid-term price increases which was published on 23rd October at paragraph 3.31 which is as follows:

    3.31 We note Sky and Telefonica’s question as to whether a price increase in accordance with a price variation term can be considered to be a “modification to the contractual conditions” covered by Article 20(2). We consider that a price increase constitutes a change to the price agreed at the time the contract was concluded and is therefore a “modification to the contractual conditions”. The price variation term merely enables (or purports to enable) that change to occur.

    I would further argue that the fact you wrote to me giving me 30 days’ notice as per your obligations under GC 9.6 and USD 2002/22/EC is further evidence that this is indeed a modification to the terms of our contract.


    Without prejudice
    3 You cannot implement a price rise clause other than for the purpose stated in the contract.

    Whilst your Clause may be “very similar” to the example to the one in the OFT guidance the guidance also states (12.4) that they are only “likely to be acceptable”, it does categorically state that they are acceptable. This also needs to be read in conjunction with 12.2:

    12.2 Any purely discretionary right to set or vary a price after the consumer has become bound to pay is obviously objectionable……... It also applies to rights to increase payments under continuing contracts where consumers are 'captive' – that is, they have no penalty-free right to cancel

    12.4 Terms which permit increases linked to a relevant published price index such as the RPI are likely to be acceptable

    Whilst the contract states how often and by how much prices can be varied there is no reference in clause 5.2 as to the grounds on which O2 can increase prices, hence why it is a discretionary price increase. The fact that clause 5.3 places a limit on the price variation (RPI) does not indicate that O2 can only increase prices if O2s costs increase. Your response refers to the contract “talking about RPI” you do not state that the contract “only allows price variations in line with cost increases”, and that is because the contract does not state that. There is a World of difference between:
    · Increasing prices due to cost increases incurred byO2 and
    · Increasing prices in line with RPI


    Without prejudice
    4 You cannot pass risksto me that O2 is better able to control or anticipate.

    You are trying to placing on me a burden of an increased price based on RPI. I am not claiming that O2 is in a position to control RPI; I am claiming that O2 is better placed than I am to control and anticipate likely costs increase in its business over an 18 month period. O2 can control/anticipate:

    · Pay increases to its staff,
    · Cost increases associated with leases
    · Maintenance costs
    · Call termination charges – which are fixed and agreed and published in advance by Ofcom and have decreased approximately 50% between December 2011 and May 2013.
    · Cost of the “spectrum” was incurred in April 2000 and therefore not subject to any cost increase.
    · Utility charges

    So I am at a loss as to what costs O2 are unable to anticipate or control?


    Without prejudice
    5 O2 to provide evidence that the price variation is not discretionary

    Your response does not provide any evidence to support O2s claim that the price rise is not discretionary


    Without prejudice
    6 O2 to provide evidence that the price increase applied to my contract is an accurate reflection of cost increases incurred in operating my contract –over and above those already factored into the initial contract price

    Your response does not address the point of proving that O2s costs in operating my contract OVER and ABOVE those factored in to the initial price have increased by RPI. You state in response to my point 7 below that O2 have indeed factored in some anticipated cost increases into the initial price of the contract– and the burden of proof lies with O2 to provide evidence that your costs have increased over and above those factored in. In respect to RPI the “basket of goods” referred to has very little – if anything – to do with the cost incurred by O2 in operating my contract - Food/Clothing/Holidays/Toys/Sports Equipment/Tobacco/Alcohol etc. You will also know that the Office of National Statistics (ONS) publish Service Provider Price Indices (SPPI) for specific industries including Telecoms.The Telecom indices show that costs have decreased between 2005 and 2012 by some 12%. A review of Telefonica’s own Annual report for 2012 contains the following year on year operating expense price decreases:

    · Page 83 & 90 Company Worldwide Operating Expense decreased by 4.9%
    · Page 110 European Operating Expense have decreased by 15.5%, and
    · Page 111 European Mobile phone Operating Expense has decreased by 14.8%

    So please provide evidence that O2s’ costs in operating my contract OVER and ABOVE those factored into the initial price have increased by RPI, which was the reason stated in your price increase communication.


    Without prejudice
    7 O2 to provide evidence that the initial price of the contract had not already factored in any anticipated cost increases associated with the operation of my 18 month contract

    Given that O2 now admit that they have (as required) factored in anticipated cost increases into the initial price of my contract can O2 provide evidence that demonstrates that you have not double counted those factors when applying an RPI increase tomy 18 month contract?
  • Thanks randomcurve!!!

    Reply submitted to O2...

    We'll report back soon.

    Please EVERYONE remember to show your support and LIKE our facebook page... Search "SayNoToO2"
  • Welcomed news this morning...

    Most other UK mobile networks, OTHER than O2... have signed up to change their policies.

    Future price rises will have the option for customers to leave their contract WITHOUT PENALTY!!

    bbc.co.uk/news/uk-25196425

    Another example of O2's underhanded practices?

    Please like our SayNoToO2 facebook page facebook.com/SayNoToO2
  • Randomcurve I am still waiting for the response from O2 after I sent your last response.

    I wonder would you send me your email address on a private message on our facebook page?
  • SayNoToO2 - I've sent you a PM via MSE
This discussion has been closed.
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