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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  • SayNoToO2 wrote: »
    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...



    Now what RandomCurve???
  • SayNoToO2 wrote: »
    Now what RandomCurve???



    I've sent you a PM and will respond on the forum later.
  • edited 21 January 2014 at 8:44PM
    RandomCurveRandomCurve Forumite
    1.6K Posts
    edited 21 January 2014 at 8:44PM
    I said in an earlier post that the rationale of why price rise clauses are not enforceable as argued in my previous posts had not been tested in court - well now they have (sort of)!

    My son started an action against EE in the Small Claims Court in December, his claim was based on all of the arguments presented in this forum, and today he RECEIVED A CHEQUE FROM EE REFUNDING THE PRICE RISE, plus interest, plus postage costs and the court fee!:j.

    EE decided to settle "out of Court" and in the accompanying letter state that "settlement does not admit liability or the merits of the claim" (strange then that they decided to send a cheque!). So it seems EE at least are keen to stop a court making a ruling!

    So if you are an EE/Orange/T-Mobile customer and are miffed at having a mid term price hike - then contact EE as per the template letters on this forum.:)


    And regardless of who your contract is with - the arguments are still the same


    I'll post the "summary" part of my sons claim - you will see it echo's what is in the earlier posts.
  • edited 21 January 2014 at 8:46PM
    RandomCurveRandomCurve Forumite
    1.6K Posts
    edited 21 January 2014 at 8:46PM
    My sons "summary" case against EE, which EE settled out of court:


    SUMMARY
    I contend that the price variation clause is not compliant with the UTCCRs and is therefore unenforceable. A summary of the reasoning and relevant sections of the UTCCRs and the associated OFT guidance groups is below.

    Under the UTCCRs and the associated OFT guidance on variation clauses, price variation clauses are unfair and unenforceable if:

    • The Price variation clause is discretionary (Schedule 2 Para 1 (L))
      1. Schedule 2 Paragraph 1 (J) and OFT Group 10 guidelines especially Paragraphs 10.2 and 10.3b
    • It has been used for a purpose other than stated in the contract (Schedule 2 Para 1 (J))
      1. Schedule 2 Paragraph 1 (L) and OFT Group 12 guidelines especially Paragraphs 12.1, 12.2 and 12.3
    • It is transferring a risk that a provider is better able to control or anticipate than the consumer
      1. Group 18b of the OFT Guidelines especially paragraphs 18.2.1, 18.2.3 and 18.2.5 and 12.3
    • Has not been clearly and adequately drawn to the consumers attention
      1. Schedule 2 Paragraph 1 (i) & (L) and OFT Group 9 guidelines especially Paragraphs 9.2 and 9.4 and Group 12 especially 12.4
    • The contract in relation to the price variation clause and its reasoning are not transparent and therefore are unfair and unenforceable
      1. Group 19 of the OFT Guidelines (Regulation 7) especially Paragraphs 19.7, 19.8, 19.9 and 19.10
    Because of all of the above does not comply with the overriding principles of good faith.

    Additionally EE rely on the provisions of GC 9.6 as a source of power to give it the right to increase prices. However EE would be aware that GC 9.6 is supposed to be the embodiment of Universal Service Directive (USD) into UK law which allows consumers to exit their contracts without penalty if any modifications to the terms are made. By not having due regard to the source and ultimate meaning of GC 9.6 EE has relied on my ignorance (at the time) of the protection offered to me under the USD and this goes against the principle of acting in Good Faith.


    Directive 2002/22/EC of the European Parliament and of the Council
    7th March 2002


    Chapter IV – End User Agreements
    Article 20 – Contracts
    Paragraph 4

    4. Subscribers shall have a right to withdraw from their contracts without penalty upon notice of proposed modifications in the contractual conditions. Subscribers shall be given adequate notice, not shorter than one month, ahead of any such modifications and shall be informed at the same time of their right to withdraw, without penalty, from such contracts, if they do not accept the new conditions.





  • SayNoToO2 wrote: »
    Now what RandomCurve???



    I need some details as to what was said on the phone, but basically 2 routes:


    1. Challenge the Ombudsman pointing out that CISAS take on this type of case, you can even contact Ofcom and seek their advice; or
    2. You can start a Small Claims Proceeding - as you can see from my earlier post EE settled out of court based on this exact same argument, so I guess they are scared of something!
    Route 1 is the most interesting, as it would be fun to see how Ofcom respond.
    Route 2 is the easier option (you have all the paper work from your emails - you just need to complete a simple form (I can help), but it will cost you £35 (you get it back if you win or if they settle out of court). You can't claim compensation at the SCC only costs e.g. postage, paper, interest.
  • I've asked Ofcom to give a view on whether or not The ombudsman Service can rule on this issue or not -see below


    Did anybody else notice the O2 adverts in the Metro on Friday where they state (in bold and about 3 times) that prices will increase by RPI (this is how the contracts should have always been advertised)? As you can see from my email below I am pushing Ofcom to confirm that if O2 actually increase prices during the FIXED TERM, then consumer will be allowed to walk away from the contract penalty free!






    Thank you for your prompt response to my previous email, and whilst I would have preferred a full response to the points raised I realise that Ofcom are not prepared to comment further at this stage.


    The point of this email is to seek Ofcom's help with two connected points.


    1. Regarding my contention that due to the arguments put forward in my email dated 29th October below [refers to all the points made in earlier posts regarding the UTCCRs not allowing companies to increase prices in short term contracts]. Is this something that a consumer can take to CISAS or The Ombudsman Service to adjudicate on, or would this fall outside of their remit and therefore would have to go via the small Claims Court?


    2. I have noticed that O2 have begun advertising their fixed term contracts clearly stating that they will increases prices Mid-term by RPI. Can Ofcom confirm that as consumers will still be in a fixed term contract, if O2 do increase prices Mid Term this would be a modification under 2002/22 as enacted by GC 9.6 and will therefore give the consumer a right to a penalty free exit? I.e. the fact a mid-term price hike has been clearly advised before the contract was entered into is irrelevant as the whole point of Ofcoms review on Mid Term Prices hikes was to protect consumers from increases during the fixed period. So to increase prices mid-term O2 would need to write to consumers under GC 9.6 and at that point a consumer can exit their contract penalty free, under Ofcom’s definition of Material Detriment.


    Regards
  • SayNoToO2 wrote: »
    Now what RandomCurve???


    I found the below on the Ofcom website (as Ofcom have yet to respond to my clarification request) It clearly states that if you have a dispute as to whether or not a term is fair the adjudicator can act. I suggest you email the link and the quote below and ask the "Ombudsman Service: Communications" why they are not taking on your case (copy Ofcom into your email [EMAIL="Lynn.Parker@Ofcom.org.uk"][email protected][/EMAIL])


    http://consumers.ofcom.org.uk/tell-us/telecoms/contracts/
    Unfair terms



    If you believe any of the terms and conditions in your ‘phone or broadband contract are unfair, you should contact your provider.


    If this doesn’t resolve your problem, ask your provider for a deadlock letter. This enables you to take your complaint to an Alternative Dispute Resolution (ADR) scheme.


    ADRs act as an independent middleman and will examine the case from both sides and reach a decision they think fair. If eight weeks have passed since you first formally complained you can contact the ADR directly.


    There are two ADR schemes – Ombudsman Services: Communications, and the Communications and Internet Services Adjudication Scheme (CISAS). All service providers must belong to one of the schemes.


    Your provider will tell you which scheme it is a member of, or you can use our ADR checker.
  • edited 19 February 2014 at 8:10PM
    RandomCurveRandomCurve Forumite
    1.6K Posts
    edited 19 February 2014 at 8:10PM
    I found the below on the Ofcom website (as Ofcom have yet to respond to my clarification request) It clearly states that if you have a dispute as to whether or not a term is fair the adjudicator can act. I suggest you email the link and the quote below and ask the "Ombudsman Service: Communications" why they are not taking on your case (copy Ofcom into your email [EMAIL="Lynn.Parker@Ofcom.org.uk"][email protected][/EMAIL])


    http://consumers.ofcom.org.uk/tell-us/telecoms/contracts/
    Unfair terms



    If you believe any of the terms and conditions in your ‘phone or broadband contract are unfair, you should contact your provider.


    If this doesn’t resolve your problem, ask your provider for a deadlock letter. This enables you to take your complaint to an Alternative Dispute Resolution (ADR) scheme.


    ADRs act as an independent middleman and will examine the case from both sides and reach a decision they think fair. If eight weeks have passed since you first formally complained you can contact the ADR directly.


    There are two ADR schemes – Ombudsman Services: Communications, and the Communications and Internet Services Adjudication Scheme (CISAS). All service providers must belong to one of the schemes.


    Your provider will tell you which scheme it is a member of, or you can use our ADR checker.


    The above is what the Ofcom website says, so I contacted Ofcom and asked:


    1. Regarding my contention that due to the arguments put forward in my email dated 29th October below. Is this something that a consumer can take to CISAS or The Ombudsman Service to adjudicate on, or would this fall outside of their remit and therefore would have to go via the small Claims Court? (Thae argumenst are al lthe ones I have put forward on this forum)


    The response was:


    1) The ADR schemes will take on a case if it falls within their own terms of reference. They determine whether a complaint falls within their remit on a case-by-case basis by considering, among other things, the nature of each individual complaint. You should therefore contact the relevant scheme provider directly


    I will go back to Ofcom and ask them to clarify - as surely Ofcom would have given the ADR some terms of reference!

  • Did anybody else notice the O2 adverts in the Metro on Friday where they state (in bold and about 3 times) that prices will increase by RPI (this is how the contracts should have always been advertised)? As you can see from my email below I am pushing Ofcom to confirm that if O2 actually increase prices during the FIXED TERM, then consumer will be allowed to walk away from the contract penalty free!

    2. I have noticed that O2 have begun advertising their fixed term contracts clearly stating that they will increases prices Mid-term by RPI. Can Ofcom confirm that as consumers will still be in a fixed term contract, if O2 do increase prices Mid Term this would be a modification under 2002/22 as enacted by GC 9.6 and will therefore give the consumer a right to a penalty free exit? I.e. the fact a mid-term price hike has been clearly advised before the contract was entered into is irrelevant as the whole point of Ofcoms review on Mid Term Prices hikes was to protect consumers from increases during the fixed period. So to increase prices mid-term O2 would need to write to consumers under GC 9.6 and at that point a consumer can exit their contract penalty free, under Ofcom’s definition of Material Detriment.


    Regards

    http://stakeholders.ofcom.org.uk/binaries/consultations/gc9/statement/guidance.pdf - Ofcoms Guidance on contracts found at the provided link already confirms that consumers who sign up to a contract that clearly states price rises at point of sale cannot leave a contract penalty free under GC9.6

    The more prominent extracts to the above argument are below, however you can read the full document at the above link:

    A1.4 Ofcom sets out below a series of examples, for illustrative purposes, of modifications to the agreed core subscription price likely to meet the material detriment requirement (example 1) and of agreed core subscription prices that do not involve contract modifications (examples 2 and 3). The position in examples 2
    and 3 depends on the relevant price terms being sufficiently prominent and transparent that the subscriber can properly be said to have agreed on an informed basis, at the point of sale, to the relevant prices.


    Examples
    A1.13 The importance of the core subscription price in the subscriber’s choice of contract means it should be clear to the subscriber before entering into any contract what the price offered and agreed is. The subscriber should be able to compare offers,
    make informed decisions and rely on the price agreed. An increase at the CP’s discretion, changing it to a price the consumer might not otherwise have chosen to pay over other offers on the market is, or is likely to be, materially detrimental.


    A1.14 These examples of the application of this guidance are for illustrative purposes:

    • Example 1: discretionary price increases

    The subscriber agrees and enters into a 24-month contract for services on terms that the core subscription price will be £10 per month. The contract also contains a term to the effect that the CP may increase the agreed core subscription price by up to a certain amount, percentage or index-linked level (such as RPI). Ofcom is
    likely to treat any exercise of the discretion to increase this agreed price during the fixed minimum term of the contract as a modification meeting GC9.6’s material detriment requirement.
    Ofcom’s concern is with the application of price and price variation terms which give the CP discretion as to, for example, the possibility, amount and/or timing of a price increase. We are likely to take a similar approach to that above to the application of
    contract terms that reserve such discretion and/or are to the same or similar effects as those in example 1.

    • Example 2: agreed prices

    The subscriber agrees and enters into a 24-month contract on terms that the core subscription price will be £X per month for the first 12-months (or some other period) and £X + £Y (or £X + Y%) for the second 12-months (or some other period). On the basis that the relevant price terms are sufficiently prominent and transparent that the subscriber can properly be said to have agreed on an informed basis, at the point of sale, to the relevant tiered price(s), Ofcom would not regard the application of the agreed price in the second period as a modification of the contract capable of meeting GC9.6's material detriment requirement.

    • Example 3: agreed prices

    The subscriber agrees and enters into a 24-month contract on terms that the agreed core subscription price will be £X per month for the first 12-months (or some other period) and £X + RPI for the second 12-months (or some other period). On the basis that the relevant price terms are sufficiently prominent and transparent
    that the subscriber can properly be said to have agreed on an informed basis, at the point of sale, to the relevant tiered price(s), Ofcom would not regard the application of the agreed price in the second period as a modification of the contract capable of
    meeting GC9.6's material detriment requirement.


    A1.15 As set out above, the position in examples 2 and 3 depends on the relevant price terms being sufficiently prominent and transparent that the subscriber can properly be said to have agreed on an informed basis, at the point of sale, to the relevant tiered price(s). Where that is so, the application of the agreed price(s) at the relevant time(s) would not be a modification of the amount he or she has agreed and is bound to pay. Most clearly, this proviso as to prominence and transparency could be met where CPs market offers, and enter into contract terms, in a way that sets out with equal prominence that the contract price is £X in period 1 and £Y in period 2 (or some other periods)

    As O2's new contracts (23/01/14 onwards, the point in which the new rules come into force) fall under the terms set out in example three, there is no ability for a consumer to claim material detriment under the agreement as the price increases are prominent at time of signup and the consumer has made their decision to complete the transaction in the knowledge that price rises/decreases will (not may) happen

    http://www.telecoms.com/217342/o2-updates-contract-terms-to-sidestep-ofcom-ruling/ - This link also provides an Ofcom press statement that O2's terms and conditions do not contravene GC9.6
  • edited 21 February 2014 at 12:40AM
    RandomCurveRandomCurve Forumite
    1.6K Posts
    edited 21 February 2014 at 12:40AM
    rmas21920 wrote: »
    http://www.telecoms.com/217342/o2-updates-contract-terms-to-sidestep-ofcom-ruling/ - This link also provides an Ofcom press statement that O2's terms and conditions do not contravene GC9.6

    Yes I found the Ofcom ruling after I made the post. The interesting thing is that the original Ofcom consultation full document published in October was 92 pages long and did NOT include the X+RPI "exclusion", but on 22nd January Ofcom published updated guidance and re issued the full report (with the original October "issued date") which had suddenly grown to 95 pages and included the paragraphs you have highlighted.


    The whole "Mid-Term" price hikes issues was not just supposed to be about "hidden clauses" - which were always unenforceable if you challenged your operator, it was supposed to be that during the FIXED period the provider should not be allowed to increase the price.


    It will remain to be seen if O2 can get away with this jolly wheeze (with the collusion of Ofcom), as there are other elements of the Unfair Terms in Consumer Contracts Regulation (UTCCRs) which may make the clause unenforceable. Those arguments are all laid out in this Forum (see post #42).


    "SayNoToO2" is considering the next steps, as The Adjudicator has refused to take on the case. So he will need to either appeal that decision (it is about T&Cs and that Adjudicator is supposed to rule on that) or take it to the Small Claims Court.
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