Are these administration charges even legal?

JR_Ryan

So, I'm sick and tired of being nickel and dimed to death, to use an american phrase. I have a contract with 3 mobile (month by month, SIM only) that is supposed to be £15 a month, but that is only if you sign up for a direct debit. If not, it's suddenly £19 a month. So, point 1) is this not a discriminatory practice? People who can afford to sign up with direct debit and happily forget about it, get a discount, but those who have real monthly shortages need the flexibility of being able to pay manually to avoid the bank charges that come with missed DD payments. On their part there is no extra work that needs doing, it's all still automatically handled on their end. So, why are those who need the financial flexibility to keep in good standing being punished by a higher rate?

Of course sometimes, I'm not able to make a timely payment (hence the reluctance to go DD) and I get a written reminder from three, fair enough, but this reminder comes with a Bank Giro encouraging me to sign up to a DD, and for this slip of paper (not for the letter, just for the bank gyro) they charge me £4 on my bill. So, point 2) SURELY this is usury? There is no feasible way that this slip of paper costs £4 to print, the entire process is automated so there are NO administration costs to cover, and there isn't even a need to use the bank gyro in the first place, it is just there as a suggested payment method to encourage DD. I can (and do) still pay manually online, and thus have zero need for a bank gyro. For their part, the DD doesn't even ensure a secure method of payment, so it's not like they are suggesting it in order to secure their regular payments. If the money ain't there, they're still not going to get it even with a DD, all that happens is I get charged for missing a scheduled payment.

Meanwhile, the printed bill they send me (which is the only way I can access my bills unless I sign up for DD) is a summary only. If I want an itemised bill it costs another £1.50 on top to send out. Remember though that every bill is accompanied by a bank gyro, so there is effectively a £4 charge for receiving a paper bill, but if I want to know where my call charges come from I have to pay a total of £6.50 every month. Point 3) This is yet another way to discriminate against the poor, as e bills would save money and time, and provide a clear and itemised view of the call charges which could be reviewed regularly to ensure nothing out of the ordinary, but are ONLY available to those with stable enough finances to agree to DD.

This is industry practice, of which I'm certain many of the MSE community will be well familiar with, not just in phone but many other services. But to me it seems at best incredibly unjust and exploitative, and at worst downright illegal. So, can anyone out there tell me if there is anything illegal or discriminatory about this practice, or if there are or have been any attempts to bring this sort of thing to trial?

Thanks for reading!

philatio

You've pretty much answered your own question there.

It's much easier and cheaper for them if you pay by DD. They're pretty much guaranteed to get their money on time, each month. Less costs for them.. pass that on to the customer.

You admit that you're late in payment sometimes... so they have to chase you for money... which costs them.

It's fair.
Why should people who pay on time subsidise someone who doesn't?

Well done 3.

OlliesDad

I don't think that it is in any way illegal. Although you may not understand the additional costs, there is likely to be some. For example, I imagine that one off payments need to be reconciled some how by the company and that will cost money (taking the money from DD will be cheaper than being given it by another form).

Also, their bank may charge them for receiving payments by bank transfer/card payment.

The bad debt that arises from non-DD customers is likely to be higher, and therefore they increase the price to dissuade customers from using that form of payment.

If you have issues with committing to regular payments you may be better off on PAYG.

ETA: Ofcom looked into this and this is the outcome:

http://stakeholders.ofcom.org.uk/consultations/addcharges/faq

tykesi

Another case of 'I don't like it so it MUST be illegal' - seems to be a lot of that on MSE.

Bring it to trial :rotfl:

:T

InsideInsurance

As long as it doesnt go against an outlawed "ism" (eg racism) then a merchant can charge whatever it wants for its product and can differentiate between channels, payment method etc.

Credit card processors normally apply rules that additional charges for paying by cards can only reflect the total cost incurred but in this case its irrelevant as the merchant is discounting for DDs not loading for card payments.

You need flexibility, they want certainty, the compromise is you paying a little more in exchange for that flexibility.

An itemised bill is also a service so free to charge what they want subject to outlawed isms again.


The law is clear on breach of contract issues in that costs must be proportional to the actual losses caused to the business, though this can be done on an average cost rather than explicit to you. The chaser letter is only one part of the cost, you'll also have bad debt provisions, the bad debt department's salary, office they work in, their IT equipment, the IT/HR staff that support them etc. You'd be hard pressed to argue against a £4 fee for a failed/late payment.

giraffe69

If I want an itemised bill it costs another £1.50 on top to send out. Remember though that every bill is accompanied by a bank gyro, so there is effectively a £4 charge for receiving a paper bill, but if I want to know where my call charges come from I have to pay a total of £6.50 every month.

Well it's £5.50 not £6.50 if my arithmetic is correct. Still £6.50 sounds worse.

CynicalScotsman

There is the cost of:

-Letter
-Postage
-Envelope
-The Cost of your post office payment - natwest charge £10 if you are not a customer
-Charge from their bank for accepting an electronic payment
-Additional processing time at their end.

Its fair and its a reasonable charge.

visidigi

Not to mention that Automated printing, packing, posting and delivery system is not free. The implication there is zero cost is laughable.

Custom systems such as these are exceptionally expensive and require plenty of maintenance.

Its like asking why should someone who earns more pay more tax. By your theory we should all pay the same tax (I wish).

SuperHan

Make sure there's always £15 in your bank. It's not difficult, if you have say £16, just don't buy anything else until you've paid the bank DD.

If you're a slow payer, you're costing them the staff that they have to employ to chase slow payers. If everyone paid automatically and on DD, they would need less staff and have a more guaranteed cash flow cycle.

Just manage your money better and save £4 a month. It's not as difficult as you make out. I have to have >£700 in my bank on the 23rd of each month for my mortgage. Now can you imagine how tricky that is....

arcon5

JR_Ryan wrote: »

So, I'm sick and tired of being nickel and dimed to death, to use an american phrase. I have a contract with 3 mobile (month by month, SIM only) that is supposed to be £15 a month, but that is only if you sign up for a direct debit. If not, it's suddenly £19 a month. So, point 1) is this not a discriminatory practice? People who can afford to sign up with direct debit and happily forget about it, get a discount, but those who have real monthly shortages need the flexibility of being able to pay manually to avoid the bank charges that come with missed DD payments. On their part there is no extra work that needs doing, it's all still automatically handled on their end. So, why are those who need the financial flexibility to keep in good standing being punished by a higher rate?

Of course sometimes, I'm not able to make a timely payment (hence the reluctance to go DD) and I get a written reminder from three, fair enough, but this reminder comes with a Bank Giro encouraging me to sign up to a DD, and for this slip of paper (not for the letter, just for the bank gyro) they charge me £4 on my bill. So, point 2) SURELY this is usury? There is no feasible way that this slip of paper costs £4 to print, the entire process is automated so there are NO administration costs to cover, and there isn't even a need to use the bank gyro in the first place, it is just there as a suggested payment method to encourage DD. I can (and do) still pay manually online, and thus have zero need for a bank gyro. For their part, the DD doesn't even ensure a secure method of payment, so it's not like they are suggesting it in order to secure their regular payments. If the money ain't there, they're still not going to get it even with a DD, all that happens is I get charged for missing a scheduled payment.

Meanwhile, the printed bill they send me (which is the only way I can access my bills unless I sign up for DD) is a summary only. If I want an itemised bill it costs another £1.50 on top to send out. Remember though that every bill is accompanied by a bank gyro, so there is effectively a £4 charge for receiving a paper bill, but if I want to know where my call charges come from I have to pay a total of £6.50 every month. Point 3) This is yet another way to discriminate against the poor, as e bills would save money and time, and provide a clear and itemised view of the call charges which could be reviewed regularly to ensure nothing out of the ordinary, but are ONLY available to those with stable enough finances to agree to DD.

This is industry practice, of which I'm certain many of the MSE community will be well familiar with, not just in phone but many other services. But to me it seems at best incredibly unjust and exploitative, and at worst downright illegal. So, can anyone out there tell me if there is anything illegal or discriminatory about this practice, or if there are or have been any attempts to bring this sort of thing to trial?

Thanks for reading!

By pay manually you mean pay late. DDs are most often not even drawn until a couple of weeks after the bill was issued.

meer53

However you pay, you owe them money each month. So by saying "pay manually" you want to choose when to pay them regardless of when your payment is due ?

Surely it makes more financial sense to pay by direct debit, thus saving you money ?

You can get Sim only contracts for much less then £15 per month.