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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  • ryan92ryan92 Forumite
    547 Posts
    Part of the Furniture 100 Posts Name Dropper
    Forumite
    Hope you get things sorted SayNoToO2!

    With the latest EE/T-Mobile incorrect price rises, they really seem to be EEvasive this time around ; nearly 2 weeks since my first email, 3 days after my 2nd email and no response as of yet. This is in contrast to the time when I complained about an Orange price rise which they replied within 2 days.... they must be thinking of the excuse to use on this ocassion!
    :staradmin LIGHTBULB MOMENT ;11th September 2019 :staradmin
  • blinko wrote: »
    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.

    I agree it is not about the money - it is the principle!

    I should have asked when did they impose the price increase? If it was within the last 30 days you may be able to cancel the contract due to Material Detriment.
  • SayNoToO2 wrote: »
    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"



    ****New response received from O2****




    Suite W
    Arlington Business Centre
    Millshaw Park Lane
    Leeds
    LS11 0NE

    Phone: 0845 330 0683
    Fax: 0870 600 2402
    Email: [email protected]

    13 December 2013

    Our reference: *****
    Mobile phone number: 07********

    Dear Mr *******

    Thank you for your email.

    I'm sorry you remain unhappy with our response.

    After the price increase had been applied, you changed your tariff in May 2013 to a £31 a month deal on a 30-day rolling contract. The price has remained consistent on that tariff, and your minimum term is only 30 days.

    We've reviewed things again and answered the points you've raised below:

    1. Price rise not clearly and adequately brought to my attention. As you say, you ticked a box to confirm that you had read the terms and conditions that applied to your contract. Having read the terms and conditions, you would have seen our price increase provisions highlighted prominently at the front of the contract in a summary. These terms would also have been sent to you in your Welcome Pack. You also had an opportunity to change your mind and cancel your contract for 14 days.

    As we mentioned, our clause is in line with the OFT guidance and is very similar to the example they provide of a fair term. We are also clear on how often we can put up prices and how much we can increase prices by.

    2. 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 £62. 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... 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. You had agreed to the terms of your contract including the price increase provisions highlighted prominently at the front of the contract in a summary. We are exercising our rights under the terms within that contract and providing notice in accordance with the contract, too. The term in our contract enables a price increase to occur and is not a modification to the contractual conditions. Our contract also clarifies circumstances under which customers can cancel their agreements as a result of a price increase.

    3. You cannot implement a price rise clause other than for the purpose stated in the contract. The discussion in 12.2 of the OFT guidance relates to pure discretion to increase prices, i.e. a unilateral right to set or vary a price with no boundaries or limits. The guidance differentiates that from terms that "permit increases linked to a relevant published price index such as the RPI", which"... are likely to be acceptable". Our contract sets out clear limits and boundaries for how often and how much prices can be varied by. This is acceptable and in line with OFT guidance.

    4. You cannot pass risks to me that 02 is better able to control or anticipate. You are trying to place on me a burden of an increased price based on RPI. I am not claiming that 02 is in a position to control RPI; I am claiming that 02 is better placed than I am to control and anticipate likely costs increase in its business over 18-month period. A price rise clause attempting to allocate a risk to customers in the OFT's guidance in paragraph 18 relates to passing the burden for things like loss or damage to goods or services to a customer. We are not pursuing you for damages or losses. As previously mentioned, 02 does not control the rate of inflation. 02 has tried to anticipate costs as far as possible. An RPI price increase has not been repeatedly levied against customers at any given opportunity. 02 has applied this increase once; it was a difficult decision.

    5. 02 to provide evidence that the price variation is not discretionary.

    The price increase was not discretionary.It was in line with the rate of inflation, which is not determined by 02, and also applied in accordance with our terms and conditions which clearly allow for such an increase.

    6. 02 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. As you will no doubt appreciate, inflation puts up business costs. The RPI figure is nationally recognised and according to the Office of National Statistics, an accurate and fair reflection of cost increases incurred by consumers and businesses alike. We cannot provide you with further evidence beyond a nationally recognised figure. The alternative would be to always price significantly higher than predicted inflation (e.g. 5%) in order to protect against it. This would be even less in the customer's favour given that it would result in a higher tariff over the entire course of the term. Increasing by actual inflation mid-contract means that customers benefit from the difference between a potentially inaccurate prediction and the actual rate.

    7. Given that 02 now admit that they have (as required) factored in anticipated cost increases into the initial price of my contract can 02 provide evidence that demonstrates that you have not double counted those factors when applying an RPI increase to my 18 month contract? This was the first time that 02 applied a price increase in line with RPI and we were the last mobile operator to do it. 02 cannot predict what the rate of inflation will be nor do we determine it. As mentioned, we try to anticipate likely cost increases to the extent possible. Some costs we cannot anticipate. We therefore cannot 'double count' unanticipated costs. You will appreciate that to seek to include an amount as a contingency in anticipation of prospective RPI at the outset of your contract would mean your tariff would be higher from the very start.

    We believe that the contract that you read is enforceable, and we are not able to provide you with a full refund. This is 02's final position in respect of this matter. You can contact our Ombudsman on 0330 440 1614.

    I hope this explains things.

    Best regards

    James Malloch

    Executive Relations




    Randomcurve I've sent you a PM ;-)
  • I will draft a response/claim to send to the Ombudsman, but it will take few days!

    O2 have not addressed a number of points from the second email and of course are using as a starting point that if they comply with their contract terms then they have nothing to worry about, so the argument is really are the terms fair and enforceable - and that will need the Ombudsman to decide.

    These things are tricky as we found out with T-Mobile cases, whilst the same things happened to everyone and the response and contracts were the same about 5% of claimants still lost their cases, so there is a degree of interpretation involved.

    The good point is it cost us nothing to take this to the Ombudsman!
  • SayNoToO2

    A claim for the Ombudsman Service (OS).
    I have not used the above service before (EE use CISAS) and having looked at the OS they operate in a different way to CISAS in that it seems they rely on telephone conversations as well as written evidence. I am assuming the above will fit into what ever on-line form they have, but if not there should be a way to add attachments in which case simply copy and paste the first two paragraphs under the heading "compliant" and then put - "see attached for full details". It will be best to also attach copies of all the correspondence that you have had with O2
    Please amend the below to fit your circumstance.


    Resolution sought:

    That the price increase applied to my account iscancelled. All sums taken from my account in excess of the originally agreed contract price are refunded, and that future charges are made at the value of the originally agreed contract price.


    Compliant:

    Please note this compliant is not against O2s business decision to increases prices, as a business O2 is free to make any business decision itso choses, this compliant is about the enforceability of the contract clause that O2 have relied upon to apply the price increase.

    On Date O2 wrote to me informing me of an increase in the cost of my fixed term contract price from £X to £Y which appliesfrom Date until Date when the contracted ended/willend.

    I believe that under the Unfair Terms in Consumer Contracts Regulations 1999 the price variation clause that O2 are relying is unfair and unenforceable for the following reasons:


    Without prejudice
    1. The price variation clause was not clearly and adequately drawn to my attention during the sales process

    a. Schedule 2 Paragraph 1 (i) & (L) and OFT Group 9 guidelines especially Paragraphs 9.2 and 9.4 and Group 12 especially 12.4


    Without prejudice
    2. The price variation is discretionary (capped byRPI, but not linked to anything at all)

    a. Schedule2 Paragraph 1 (J) and OFT Group 10 guidelines especially Paragraphs 10.2 and10.3b



    Without prejudice
    3. O2 cannot Implement a price rise clause other than for the purpose stated in the contract (there is no purpose stated in the contract – hence why it is discretionary).

    a. Schedule2 Paragraph 1 (L) and OFT Group 12 guidelines especially Paragraphs 12.1, 12.2 and 12.3


    Without prejudice
    4. O2 cannot pass risks to me that O2 is better able to control or anticipate
    a. Group18b of the OFT Guidelines especially paragraphs 18.2.1, 18.2.3 and 18.2.5


    Without prejudice
    b. O2 have not acted in good faith in applying a price rise to an 18 month contract.

    DETAILS

    Without prejudice
    1 – Price rise wasnot 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 is discretionary (capped by RPI, but not linked to anything at all)

    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

    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 it is a discretionary price increase. The fact that clause 5.3 places a limit on the discretion that O2 can use (RPI) it does not indicate that O2 can only increase prices if O2s costs increase, there is a World of difference between:

    · Increasing prices due to cost increases incurred by O2 and
    · Increasing prices in line with RPI

    Therefore as a discretionary price variation clause it is unenforceable under the UTCCRs

    Without prejudice
    3 O2 cannot implement a price rise clause other than for the purpose stated in the contract

    The contract does not state a reason as to the circumstances under which O2 can increase its charges therefore it is unenforceable.

    Without prejudice, the price rise letter indicates that the price rise is necessary due to inflation, however the OFT guidance states that

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

    O2 have relied on the fact that they have referenced RPI, however RPI is not a relevant inflation factor in this situation as the RPI represents a “basket of goods” which has very little – if anything – to do with the cost incurred byO2 in operating my contract - Food/Clothing/Holidays/Toys/Sports Equipment/Tobacco/Alcohol.

    The Office of National Statistics (ONS) publishes quarterly statistics that would be more relevant to my contract - Service Provider Price Indices (SPPI) for specific industries including Telecoms. The Telecoms indices show that costs have decreased.

    There is also a body of evidence within Telefonica’s Annual report for 2012 that seems to indicate that rather than O2s costs increasing they have actually DECREASED and therefore there are no grounds for applying an RPI (or any other) increase to my contract:

    · 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%

    Therefore the evidence above suggests that the price increase is less to do with O2s increased costs and more to do with O2s profit line which is specifically not allowed under the UTCCRS:

    10.4 …… Where the criteria of reasonableness are vague, or clearly meant to include the best commercial interests of the business, there will be scope for the supplier to change the bargain unfairly to the detriment of consumers, simply on the basis that he needs to protect his profit margins.


    Without prejudice
    4 O2 cannot pass risks to me that O2 is better able to control or anticipate

    O2 are trying to place on me a burden of an increased price based on RPI,however O2 is better placed than I am to control and anticipate likely cost increases in its business over an 18 month period. O2 can control/anticipate:

    · Pay increases to its staff (general wage inflation has been at 1.1% throughout 2012),
    · Cost increases associated with leases (contracts should have fixed review periods and O2 should reasonably be able to anticipate changes)
    · 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 (increase could have been factored in)

    So there should be no major cost components that O2 are unable to either anticipate or control in an 18 month contract given that O2 is:

    · An experienced telecommunications company,
    · Are operating in a mature UK market, and
    · The UK market has been relatively stable over the past few years (no hyperinflation).

    In deed O2 have a duty of care to factor in inflationary pressures into their initial contract price, and O2 have informed me that they have factored some cost increases in

    Like any business, we try to factor in anticipated costs associated with the operation of our business to the extent possible

    Therefore I have no way of knowing if O2 are now “double counting” cost increases to their advantage and my detriment, which is covered by 12.3 of theOFT guidance

    12.3 A price variation clauseis not necessarily fair just because is not discretionary – for example, a right to increase prices to cover increased costs experienced by the supplier.Suppliers are much better able to anticipate and control changes in their own costs than consumers can possibly be. In any case, such a clause is particularly open to abuse, because consumers can have no reasonable certainty that the increases imposed on them actually match net cost increases

    Given:
    · the statements in O2s annual accounts,
    · the ONS SPPI for telecoms,
    · The fact that RPI is not a relevant statistic in this case, and
    · O2s own admission that some inflationary impacts were factored into the initial contract price,
    then O2 should be put to strict evidence that their costs in operating my contract have indeed increased by RPI over and above those costs already factored in.


    5. O2 have not acted in Good Faith

    O2 appear to be saying that as they are last communications provider to increases prices and as all the others have done this, then this must be perfectly alright. This in no way demonstrates how O2 costs have increased over and above inflation pressures already factored into my initial contract price. Additionally I am aware of consumers who have had price variation clauses declared unenforceable and have had the price rise refunded.Indeed Ofcom itself in its consultation on midterm price rises identified consumer harm caused by the lack of transparency of these clauses.

    As O2 will be aware when they wrote to me as required under GC 9.6 and as a communications provider GC 9.6 is the UK enactment of USD 20/2 andthat directive is clear that ANY modification to the contract gives rise to my right to cancellation. When O2 wrote to me they never made my cancellation rights clear and have relied on my (then) ignorance of the rules to apply this price increase. This goes against the principle of open and honest dealings with me. Additionally as it appears O2 costs have actually decreased then the cost increase reason for the increase is not arcuate. It may be that O2s revenues have declined due to changes in call termination charges, but these decreases were know well in advance and could have been factored into my initial contract price, but of course a loss of revenue is NOT an increase in costs which is the pretext O2 are using for the increase, so again O2 are not acting in good faith. Indeed points 1 to 4 of my reasoning why this price increase is unenforceable shows that O2 have not acted in Good Faith.
  • Regarding my post above I think I will add another paragraph addressing O2s comment in their second email that if they included a full estimate of inflationary pressures it would harm completion. If O2 were using CISAS I would not address the point, but wait until they make their written defence, however as I am not sure that the OS service works this way it may be best to address it now. I will submit something by the weekend.
  • Regarding my post above I think I will add another paragraph addressing O2s comment in their second email that if they included a full estimate of inflationary pressures it would harm completion. If O2 were using CISAS I would not address the point, but wait until they make their written defence, however as I am not sure that the OS service works this way it may be best to address it now. I will submit something by the weekend.

    Randomcurve

    Thanks once again.

    I will submit once you have been able to add the paragraph.

    Thanks

    SayNoToO2
  • edited 23 December 2013 at 11:56PM
    RandomCurveRandomCurve Forumite
    1.6K Posts
    edited 23 December 2013 at 11:56PM
    As mentioned in earlier post I think you should add the below onto the complaint to the ombudsman as I am not sure at what further stage there would be an opportunity to address to these points

    http://www.ombudsman-services.org/communications.html


    Other pointsraised in O2s second email to me

    A. O2 Statement
    a. The term in our contract enables a price increase to occur and is not a modification to the contractual conditions.

    b. O2 are arguing that because they have a price variation clause then they can apply it – the fact is that if the clause is not compliant with the UTCCRs then the clause is not enforceable. They are also claiming that they are not modifying the contract as the price variation clause is in the contract however both Ofcom and the UTTCRs suggest otherwise:

    c. Ofcom addressed this point in its statement on mid-term price increases which was published on 23rd October at paragraph 3.31 which is as follows:

    i. 3.31 We noteSky 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

    d. Additionally the OFT guidance to the UTCCRs at 10.2 clearly demonstrates that a “variation clause” is a modification to the contract:

    i. 10.2 If a term could be used to force the consumer to accept increased costs or penalties, new requirements, or reduced benefits, it is likely to be considered unfair whether or not it is meant to be used in that way. A variation clause can upset the legal balance of the contract even though it was intended solely to facilitate minor adjustments……………………”


    B. O2s statement:
    a. A price rise clause attempting to allocate a risk to customers in the OFT's guidance in paragraph 18 relates to passing the burden for things like loss ordamage to goods or services to a customer. We are not pursuing you for damages or losses

    b. OFTguidance at 18
    i. 18.2.2 Particular suspicion falls on any term which makes the consumer bear a risk that the supplier could remove or at least reduce by taking reasonable care

    c. The guidance at 18.2.2 is clear that it is a burden for ANY risk, whilst the example the OFT quote does not relate to price, it should be remembered that the example is just that – an example. O2 are clearly trying to pass the burden of increased cost onto me.

    C. O2 Statement
    a. The RPI figure is nationally recognised and according to the Office of National Statistics, an accurate and fair reflection of cost increases incurred by consumers and businesses alike.

    b. This is factually incorrect. RPI has been recognised by ONS as a “flawed statistic” in that its calculation does not meet current international standards:

    c. From the ONS http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/march-2013/stb---consumer-price-indices---march-2013.html#tab-Retail-Prices-Index--RPI--and-RPIJ-

    i. Retail Prices Index (RPI) and RPIJ

    ii. In accordance with the Statistics and Registration Service Act 2007, the Retail Prices Index and its derivatives have been assessed against the Code of Practice for Official Statistics and found not to meet the required standard for designation as National Statistics. The full assessment report can be found on the UK Statistics Authority website.


    D. O2 Statement
    a. We cannot provide you with further evidence beyond a nationally recognised figure.

    b. If O2 cannot produce evidence that their cost have increased by RPI (over and above those parts of its costs that O2 have already acknowledged have had inflationary pressures factored into my 18 month contract) then how can I be sure that O2 are not both double counting those factors already applied AND are merely attempting to benefit their profit line? A practice that the UTCCRs are designed to protect me from. The burden of proof that O2 are not double counting and that their costs have increased by RPI lies with O2 (Schedule 2 Paragraph 1 (Q))


    E. O2 Statement

    a. The alternative would be to always price significantly higher than predicted inflation (e.g. 5%) in order to protect against it. This would be even less in the customer's favour given that it would result in a higher tariff over the entire course of the term. Increasing by actual inflation mid-contract means that customers benefit from the difference between a potentially inaccurate prediction and the actual rate.

    b. I do not think that a discussion on competitive practices in the mobile phone industry is at all relevant to the fairness and enforceability of this clause,however as a counter argument to O2 assumptions above then O2 would have to price competitively and honestly when setting initial contract prices, as if it sets too high a factor for inflation then it will not be competitive, this coupled with the fact that O2 cannot pass on cost increases gives O2 a real incentive to control costs which is what drives a competitive market and prevents consumer harm from price variation clauses . O2 are free to pass on cost increases to new customers not already “trapped” in fixed term contracts and itis the very fact that O2 are trying to pass on costs to “trapped” customers that distorts the initial market price and competition.


    F. O2 statement
    a. This was the first time that 02 applied a price increase in line with RPI and we were the last mobile operator to do it.

    b. O2 appear to be saying that as they are last communications provider to increases prices and as all the others have done this, then this must be perfectly alright. This in no way demonstrates how O2 costs have increased over and above inflationary pressures already factored into my initial contract price, nor proves that the O2 term is enforceable. Neither does it demonstrate that O2 have acted in Good faith. Additionally I am aware of consumers on contrast outside of O2 who have had price variation clauses declared unenforceable and have had the price rise refunded. Indeed Ofcom itself in its consultation on midterm price rises identified consumer harm caused by the lack of transparency of these clauses.
  • Thank you for submitting the form


    Your enquiry reference is: ********

    We will be in touch within 10 working days to confirm whether your complaint is one that we can handle. At this time we may ask you to provide some more information to support your complaint. This might include:
    • A copy of a disputed bill
    • Letters or emails you have sent to the company
    • Letters or emails to you from the company
    • Photographs or
    • More information about the problem.
    It is important that you let us have this additional information as soon as possible. If you have already sent some documents to us you will not have to send these again.

    Putting things right


    When we have all the information about your complaint, we will decide how best to handle it. If we propose a remedy that you are happy with, the company will be required to put this in place and we will make sure that this happens.
  • Dear ******

    Thank you for your telephone call received on 20 January 2014 about O2.

    Ombudsman Services can deal with complaints about the level of service you have received or about a supplier’s failure to follow the rules set by Ofcom. Ofcom regulates the communications industry and sets the general conditions that all providers must meet. Provided it operates within this framework, a provider is entitled to make commercial decisions about how it does business and what products it offers. Examples of this are the decisions to increase prices or the terms and conditions of a business.



    Ofcom does not deal with individual complaints between customers and communications companies. It collects information from a range of sources including Ombudsman Services: Communications as part of its market monitoring activity and keeps markets under review to ensure that all providers comply with the relevant legislation and obligations.



    We understand that you are unhappy with O2’s action. However, as your complaint is about a commercial issue we are unable to help.

    For confidential and impartial advice, contact Citizens Advice. Visit www (dot) adviceguide (dot) org (dot) uk or call 08454 04 05 06.

    For more information about Ombudsman Services visit our website

    www (dot) ombudsman-services (dot) org
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