EE/Orange/T-Mobile - Reclaim ALL price rises AND cancel contract re T&C change

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Further or in the alternative

EE’s is transferring the risk of inflation to me – which it is better able to control or anticipate than me.

EE is required to take reasonable care when setting up the contract (including the price) and EE cannot transfer inappropriate risks (e.g. inflation) to me as per UTCCRs Schedule 2 Paragraph 1 (L) OFT guidance 12.3 and OFT guidance Group 18 clauses – 18.2.1:

12.3 A price variation clause is 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

18.2.1 A contract may be considered unbalanced if it contains a term the supplier is better able to bear. A risk lies more appropriately with the supplier if:

• It is within their control

• …….

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

Proof that EE should be able to mitigate the risk of inflation can be found both by looking at the environment in which EE operate and EEs statement to Ofcom during Ofcom’s review of price variation clauses conducted in 2013.

Operating Environment:

The background to EE and the UK Mobile market is:

• The UK Mobile market is a mature market (20+ years);
• EE (including its predecessor companies) has over 20 years’ experience within the market
• The Contract is short term; and
• The UK economy has been stable over the last few years (no hyper or unexpected inflation).

In a short term contract either:

• EE HAS factored anticipated inflationary pressures into the initial price of our contract – in which case the price variation clause is not being used for the purpose stated (OFT 10.3b) and is being manipulated to suit the interests of EE (OFT 10.3 (b) and is therefore unenforceable.
  OR
• EE HAS NOT factored in potential cost pressures into the initial contract price when EE is best placed to control and anticipate them – thereby demonstrating that EE has not taken reasonable care when setting the initial contract price (OFT 18.2.2) has not applied the required professional diligence (CPRs), and is attempting to transfer an inappropriate risk to me (OFT 18(b) 18.2.1 and 12.3). The price variation clause would therefore be unenforceable.

In our short term contract drawn up by EE (an experienced market player –with the majority market share) in a mature market, in a stable economy EE should have factored inflationary pressures into the initial price of our contract. If EE has then there is no basis for a midterm price increase, and if it has not then it has failed in its duty of care, but either way the price variation fails the test of fairness under the UTCCRs.
As far as I can tell EE are better placed than I am to control and anticipate likely costs increase in its business over a 24 month period. EE 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 substantially over the years.
• Cost of the “spectrum” was incurred in April 2000 and therefore not subject to any cost increase.
• The cost of the handset – which was incurred before the contract started and therefore cannot be subject to inflation
• Utility charges

EE statements to Ofcom:
In the Ofcom publication “Decision to issue Guidance on General Condition 9.6
Non-confidential version” Publication date: 23 October 2013, EE are quoted at paragraph 4.56 as follows:

4.56 EE agreed that operators are able to forecast a number of cost categories related to their own network and operations reasonably accurately. However, it said CPs are also subject to price increases and, in particular, energy costs, costs of sites, rent for its retail shops and commercial rates have all gone up significantly over the past year (and some of these costs had risen faster than RPI). EE said that operators should be able to pass on to customers any costs or revenues that they are unable to accurately plan e.g. regulatory decrease of certain revenue streams such as wholesale mobile termination rates.

Clearly the UTCCRs do allow the recovery of lost revenues, only cost increases (in limited circumstances), and as EE have clearly stated that they are able to anticipate a number of cost categories in my contract, then they have either been negligent in not so doing, or are double counting inflation associated with those elements where EE have already factored in inflation. Even shop rents/ energy prices EE should be capable of making an informed estimate of likely increases, or mitigating risks by hedging energy costs or negotiating better lease terms/looking for different premises for example.

Given the above two scenarios above (Operating environment and EEs statements to Ofcom) I am at a loss as to what cost increases EE never anticipated when setting the initial contract price? As EE appear to have failed in their duty of care, and not applied the Professional Diligence expected (CPRs) when setting the initial price they cannot transfer the risk to me and therefore the price rise should be held to be unfair and unenforceable.

Without prejudice

EE have breached the principles of Good faith

Under the UTCCRs a term is unfair (and therefore unenforceable)

A standard term is unfair 'if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer'– Regulation 5(1). Unfair terms are not enforceable against the consumer.

The requirement of 'good' faith embodies a general 'principle of fair and open dealing'.1It means that terms should be expressed fully, clearly and legibly and that terms that might disadvantage the consumer should be given appropriate prominence – see below. However transparency is not enough on its own, as good faith relates to the substance of terms as well as the way they are expressed and used. It requires a supplier not to take advantage of consumers' weaker bargaining position, or lack of experience, in deciding what their rights and obligations shall be. Contracts should be drawn up in a way that respects consumers' legitimate interests.

Given the arguments above I believe that the contract does not meet the requirements of good faith, and is therefore unfair and unenforceable.

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.

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PLEASE BE AWARE OF TEH BELOW. This is a Gross breach of contract AND breaks the unsolicited goods and services act. Include it in your CISAS case if this happens to you.




If in your communication with EE you at any point get a message from the Executive office, with words to the effect of:

To prevent you contacting our Customer Services Team, I have taken the opportunity to provide your PAC below for both of your numbers.

No: 07xxxxxxxxx & 07xxxxxxxxx
PAC: Oxxxxxxx
Expiration Date: 07/09/2014

As advised, should you use the PAC provided above, early termination charges will be applied to your following bill.

CALL EE IMMEDIATELY - I got this on a few days ago (9th August), emailed them to say I would not be using it (i made it very clear in my email) but didn't have a chance to call.

Today i have had my account suspended for exceeding my credit limit (there isn't a chance with EE my data is capped at 2gig and i get reminders, any everything else is unlimited) and are holding me to a £220 ransom to get my account unlocked.

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Post 1 of 8




Summary


My claim is for two separate and distinct cases against EE.


Please note that I have only become aware of the consumer protection afforded to me under Ofcom Regulations, The Unfair Terms in Consumer Contract Regulations and the Unfair Trading Regulations, following research and taking advice after EE imposed a 2.7% price increase in my contract in May 2014. Prior to that I was unaware of the protection offered to me, and how EE have been avoiding their obligations to me under these regulations. My ignorance was largely due to EE not applying professional diligence, and using misleading behaviour when notifying me of both the change in Terms and Conditions and price rises.


Claim 1 - Refund of Prior Price Rises


I believe the price variation clauses used by EE are unfair (and therefore unenforceable) under the Unfair Terms in Consumer Contract Regulations (UTCCRs). Additionally the advertising methods used by EE in terms of the price plan names are misleading under Ofcom General Condition 23.2 (GC 23.2) and the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). I also request that the adjudicator considers this case whilst bearing in mind that under UTCCRs Schedule 2 Paragraph 1 (L) Office of Fair Trading (OFT) guidance states:


12.1 The OFT's objections to variation clauses generally are set out under Group 10. If a contract is to be considered balanced, each party should be sure of getting what they were promised in exchange for providing the 'consideration' they agreed to provide. A clause allowing the supplier to increase the price – varying the most important of all of the consumer's contractual obligations – has clear potential for unfairness.


Due to the above I request that any sums taken over and above the originally agreed contract price for the core subscription services under any price variation clause in any mobile phone contract is refunded immediately. Further I request that £50 compensation is awarded to reflect the anxiety caused when EE first used the hidden price clause and the lack of duty of care EE has displayed in both the drafting of the contract and then relying on a term that its legal staff should have known (as per the CPRs) was unfair under the UTCCRs.


Claim 2 - Penalty Free Termination of Contract due to a Change in Terms and Conditions.


I believe that the change in Terms and Conditions (T&Cs) advised by EE and effective from 26th March 2014 gives rise to my right to a penalty free cancellation under the contract T&Cs, the UTCCRs, and Ofcom General condition 9.6 (GC 9.6). Additionally the wording of the notification used by EE was such that it did not alert me to the fact that EE was giving itself the right to increase the quantum by which prices could be increased, nor that EE was replacing an unfair (and therefore unenforceable) contract term with one which may pass some of the tests of fairness under the UTCCRs. I also believe this shows that EE have not acted in good faith with the regards to the change in T&Cs and have breached the CPRs.


Due to the above I request that my contract is terminated backdated to 30 days after my initial cancellation request (with any sums taken from my account in connection with services from that date being refunded). Additionally I would request that the sum of £50 compensation is paid for EE s lack of duty of care (professional Diligence)/misleading notification/not acting in good faith due to the wording of the text notification and subsequent internet explanation of the effect of the change in the T&Cs.


Generally


It should also be noted that whilst EE have responded to my initial email claiming to have addressed all the points raised it is clear from a simple reading of my request compared to their response that EE have either not read my email or have not understood it and therefore have not responded to my request other than to allow this case to be heard by CISAS.

Details of the refund request are at appendix 1.1

Correspondence is in relation to this is at Appendix 1.2 to 1.X

Details of the Penalty Free cancellation request are at Appendix 2

Correspondence is in relation to this is at Appendix 2.2 to 2.X

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Page 2 of 8

Appendix 1 – Refund of previous price increases.

Details.

The price variation clause was not clearly and adequately drawn to my attention, GC 23.2, and CPRs

One of the tests of fairness in the UTCCRs is contained in the Office of Fair Trading (OFT) guidance at 12.4 as follows (Schedule 2 Paragraph 1 (L)):

12.4 A degree of flexibility in pricing may be achieved fairly in the following ways.

• Where the level and timing of any price increases are specified (within narrow limits if not precisely) they effectively form part of the agreed price. As such they are acceptable, provided the details are clearly and adequately drawn to the consumer's attention.

I assert that when entering the contract I was not given adequate notice of the existence of the price variation clause (the most important clause of all according to the OFT) at the time of entering the contract. None of the pre contract literature (including the order summary attached) contained a reference to the price variation clause. The price of £31pm was only ever referred to in terms of the fixed elements of the contract (Call, Text and Data allowances) and the length of the contract (24 months), and was never qualified with a word such as “Initial” or “variable” to indicate that the price was not fixed .
USE THE FOLLOWING IF YOU PURCHASED ON LINE
At the time of purchase I did have to “Check” a box confirming I had read the T&Cs however this alone cannot constitute “adequate notice” as:

• There was no secondary box to “check” that specifically stated that the contract allows EE to vary the price i.e. clearly and adequately drawing the clause to my attention
• There is no opening summary within the contract in large type drawing my attention to the price rise clause contained within the detail of the contract
• Under UTCCRs “have read and understood” declarations cannot be used by EE as evidence of clearly and adequately drawing to my attention the price variation clause as per the UTCCRs guidance issued by the OFT as follows:
  • 18.5.5 'Have read and understood' declarations.
  • Declarations that the consumer has read and/or understood the agreement give rise to special concerns. The Regulations implement an EU Directive saying that terms must be clear and intelligible and that consumers must have a proper opportunity to read all of them (see Part IV). Including a declaration of this kind effectively requires consumers to say these conditions have been met, whether they have or not. This tends to defeat the purpose of the Directive, and as such is open to serious objection.
  • 18.5.6
  • In practice consumers often do not read, and rarely understand fully, any but the shortest and simplest contracts. It might be better if they tried to do so, but that does not justify requiring them to say they have done so whether they have or not. The purpose of declarations of this kind is clearly to bind consumers to wording regardless of whether they have any real awareness of it. Such statements are thus open to the same objections as provisions binding consumers to terms they have not seen at all – see Group 9

USE THE FOLLOWING IF YOU PURCHASED DIRECT FROM EE ON THE PHONE
When entering into my contract via a call to the EE sales centre I was informed that there were T&Cs attached to my contract, however I was NOT informed that those T&Cs contained a price variation clause as required under the UTCCRs to ensure that the clause was clearly and adequately drawn to my attention. If EE should argue otherwise then I put EE to strict proof, by the provision of a recording of the sales call that the clause was clearly and adequately drawn to my attention.



USE THE FOLLOWING IF YOU PURCHASED IN STORE
The sales person never made clear to me that the contract contained a price variation clause, nor does the face of the contract clearly highlight that it contains a price variation clause.



I therefore entered into the contract with the legitimate expectation that the price was fixed for the term of the contract.Therefore the manner in which the contract was entered into did not satisfy the UTCCRs requirement that EE should have “clearly and adequately” drawn the price variation clause to my attention and should be deemed unfair and unenforceable



Further Evidence that the price variation clause was not “Clearly and adequately” drawn to my attention can be found in the Welcome letter which EE sent to me. This document clearly summarises the main parts of my contract and clearly shows the monthly price and the number of months – there is no mention that the price can be changed.



Additionally Olaf Swantee (Chief Executive of EE) has in an open letter to “Which” concerning price increases in fixed term contracts (Dated 9th July 2014) stated:
“….Following Which's Fixed Means Fixed campaign, we've introduced, changes and are now providing new customers with improved choice and transparency in all our pay monthly plan pricing.
‘We now explain when customers sign up or renew their contract that the price of our pay monthly plans will increase once a year in line with inflation”
http://www.which.co.uk/campaigns/mobile-phone-price-rises/ee-olaf-swantee-response/



It is clear from the above that EEs own Chief Executive recognises that EE have changed its methods so that there is now “transparency” and that they “now explain” that prices will increase. This is clear evidence from the very top of EE that previously this was not the case.
I put EE to strict evidence to prove that I was informed that the contract contained a price variation clause at the time my contract was taken out. If EE disputes my claim that its advertising at the time did not contain clear guidance that the price was variable, then I put EE to strict evidence by provision of such adverts which were being used when I entered into my contract.



I also ask the adjudicator to consider the name of the price plan that I was contracted to – “Panther 26”, the name of the plan corresponds with the (initial) monthly contract price and is further evidence that I genuinely believed I was signing up to a fixed term contract at a fixed price and is further evidence that the contract does not meet the “clearly and adequately” fairness test
The adjudicator should consider Ofcom GC 23.2 in relation to the plan name:
Mis-selling prohibition
23.2 When selling or marketing Mobile Telephony Services, the Mobile Service Provider must not:
(a) engage in dishonest, misleading or deceptive conduct;
I believe EE linking the plan name to the initial monthly cost falls foul of the Ofcom GC 23.2 (a) in that if the price is not fixed then the name is misleading and deceptive and is part of the reason as to why I believe a degree of compensation should be considered by the adjudicator.
Further under the CPRs (Regs 5 & 6) paragraphs 7.6 and 7.7 state:
Misleading information generally
7.6 These are actions that mislead by:
• containing false information OR deceiving or being likely to deceive the average consumer (even if the information they contain is factually correct), and
• the false information, or deception, relates to one or more pieces of information in a (wide-ranging) list - which includes at paragraph 7.7 (g) “the price or….”
and
• the average consumer takes, or is likely to take, a different decision as a result.

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Page 4 of 8

Further or in the alternative

The price rise has not been used for the purposes stated in the contract

The price rise letter attempts to explain that the price rise is “Due to Inflation”. I put EE to strict Proof* that the costs of administering my contract have increased by RPI over any 12 month period where EE have applied an RPI increase and that those pressures are over and above any inflationary pressures already factored into the initial price set by EE.

*The burden of proof lies with EE to prove that EE’s costs have indeed risen as stated and not on me to prove that they have not:

UTCCRs Schedule 2, paragraph 1, states that terms may be unfair if they have the object or effect of:(q) ………., unduly restricting the evidence available to him or imposing on him a burden of proof which, according to applicable law, should lie with another party to the contract.

A reading of EE’s Accounts for the year ended 31st December 2012 clearly states that over that period EE’s Margins have increased and its costs have reduced as follows:

Quote from EE’s accounts “lowering the cost base”:

Our Company: Progressed lowering cost base

During the year we made substantial progress simplifying and streamlining the business to reduce costs. Our Network Optimisation programme completed the year on track. 2,659 sites were decommissioned, 39% of which occurred in Q4. We completed supply chain and retail IT systems integration. We also refurbished our entire retail estate giving all customers access to sales and service in all our stores, and announced plans to close 78 redundant stores in 2013.

We reduced indirect costs by 3.1% yoy. We achieved an annual run rate of £369m in gross opex savings or 83% of the £445m annual run rate goal and are on track for £3.5bn+ NPV in synergy savings by 2014.

This has improved our full year adjusted EBITDA margin to 21.2%, with H2 adjusted EBITDA margin reaching 22.0%. We generated free cash flow (EBITDA minus capex) for the year of £479m, following investments in network and IT transformation projects to improve the customer experience and lower long term operating costs.

Further EE’s Quarter 1 results press release clearly presents to the market that the price rise was a revenue maximising initiative - it makes no mention of associated costs only adjustments to price:

Initiatives

–Introduced post paid RPI price adjustments

–Launched competitive prepaid offers in April that more effectively monetise data (T-Mobile Smart Packs and enhanced Orange Dolphin)
–Further extended 4G smartphone range

Additionally the major cost components of my contract were incurred before the contract was taken out or have decreased substantially:

• The cost of the hand set was incurred before I took out my contract and therefore should have no inflation associated with it
• The Cost of the 3G network was incurred in April 2000 and so cannot therefore have inflation associated with it
• Any profit element within the contract price cannot have inflation applied to it under the UTCCRs
• Call termination charges – which are fixed and agreed and published in advance by Ofcom and have decreased over the past few years by over 50%.

Therefore it is highly unlikely that EE’s costs have increased by RPI over and above any inflation initially factored into my contract price then there are no grounds (other than a profit motive) for EE to increase the price of my contract and therefore the clause should be held to be unfair and unenforceable.

Additionally further evidence that the price increase is not linked to EEs actual cost increases can be found EEs response to my email. In that email EE state:
“….we are committed to investing significantly in our network ….”
Investing in the network has nothing to do with maintaining the network and running my contract.
As an RPI price increase cannot possibly be a reasonable reflection of the actual costs increases incurred in running my contract it cannot have been used for the purposes stated in the contract (notwithstanding the fact that there are no reasons given in the contract - that is why it is discretionary) should be deemed as unfair and unenforceable,


Further or in the alternative


The price rise has not been used for the purposes stated in the letter.
The price rise letter attempts to explain that the price rise is “Due to Inflation”, as follows:
“Why are you increasing your prices? - Due to inflation, which DIRECTLY IMPACTS the costs of running our business we’ve had to re-evaluate out prices and introduce an increase…..”
And
“Where did this increase come from? – We’ve used the RPI which …. is a measure of the increase in prices for consumers and businesses on average across the country over the last 12 months”
I believe that the use of RPI is flawed statistic in its use in this contract and is not a suitable proxy of EE’s costs as the price rise letter states. The RPI is based on a basket of goods which has little – if anything – to do with the costs incurred by EE as it includes:

• Food/Beverages
• Tobacco
• Alcohol
• Clothing
• Holidays
• Toys
• Sports Equipment

Therefore I do not believe that RPI is a relevant statistic as per UTCCRs Schedule 2 Paragraph 1 (L) -OFT guidance 12.4 which states that a term may be fair if:
• Terms which permit increases linked to a relevant published price index such as the RPI are likely to be acceptable
The guidance cites RPI as an example –it does not say that RPI is a relevant statistic in all cases. In this case the ONS provides Service Provider Price Indices for specific industries including Telecommunications; this would have been a better approximation of EE’s costs. This statistic is published by the ONS and the relevant indices show that telecommunications costs have DECREASED since Quarter 2 of 2009:
Services Producer Price Indices, Quarter 1 2013 ONS published 22nd May 2013
Business telecommunications
Annual rate -0.4 %, up from -8.9% last quarter. Last higher in quarter 2 2009 (0.7%). Quarterly rate 0.0%, up from -2.3% last quarter. Last higher in quarter 2 2012 (2.1%).
As most indicators (including EE’s own accounts) suggests that operating costs for EE have decreased over the years then there is no basis for EE to claim that the basis of the price increase is due to inflation that “DIRECTLY IMPACTS” on its costs. Therefore the price rise should be declared unfair and unenforceable as it is not being applied for the reason stated in the price rise letter (and of course there is no reason stated in the contract – as this is a discretionary – and hence unfair clause).

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I have posted various versions of EE T&Cs on the FightMobileIncreases.com website for ease of reference, plus details of the notification of the change in T&Cs and a table showing al price increase the have been applied.
http://fightmobileincreases.com/figh...nd-conditions/


Email 1 is also available to download:
http://fightmobileincreases.com/figh...gn-against-ee/