Ofcom studies surge in ‘stealth’ charges

Victors_Bruvver

Most of this has been discussed here before but I thought the report in yesterday's Times on the subject is a little comforting that Ofcom are taking an interest. Not on the list is the matter of set up costs and the charge that is made when calling a number that is engaged and answered by 1571 without any warning.
Ofcom studies surge in ‘stealth’ charges
Ofcom is to clamp down on “hidden” charges levied by mobile phone and broadband companies amid fears that consumers are being misled.
The telecoms watchdog has recorded a surge in complaints from customers angered by unexpected charges levied for itemised bills, non-direct-debit payment and premium-rate technical helplines.
Early next year Ofcom will launch a consultation document about the charges, which can increase monthly bills dramatically. It wants to establish whether they are “fair, transparent and justified”.
Fierce competition for mobile and broadband customers has forced operators to cut prices over recent years. A study by Ofcom found that families in Britain enjoyed some of the lowest prices for telephone, broadband and television in Europe. The battle has led some operators, including Carphone Warehouse, to offer “free” broadband to customers who sign up to certain calls packages.
Steve Weller, of USwitch, a price comparison service, said: “All these companies are competing on headline prices and are bringing those down. But they are then having to recoup their costs via other ways.”
Orange, the mobile phone company, charges customers £1.50 each month on top of their rental and call costs to receive an itemised paper bill. Some customers have also been surprised to discover that a claim on their mobile phone insurance with Orange will result in a £15 administration charge.
Despite frequent complaints about poor customer service, many companies also levy charges to fix problems. Last summer, Virgin Media switched its broadband technical helpline to a premium-rate number charging 25p a minute. It claims that this was necessary to deter customers from calling about non-broadband issues.
Penalties for payment by means other than direct debit are also common. Orange charges an “administration” fee of £3.50 a month for each phone on an account not paid by direct debit, Virgin Media charges £5 a month. BT has a fee of £4.50 per quarter. BT introduced the charge in July because “some payment methods are more costly to process than others”. Most mobile companies also penalise customers who wish to be released early from 12-or 18-month contracts. Typically, they must pay the full monthly rental due for the remainder of the contract. Late payment of a bill and having a service restored when it has been suspended after late payment can also trigger a charge.
Mr Weller said that customers could be caught out because the “stealth” charges often are not levied for the first three months of a contract. The fees appear on a bill only in the fourth month, when customers may have stopped scrutinising their bill.
Ed Richards, head of Ofcom, said: “Consumers of communications services see headline prices fall, but they must not be misled . . . they need confidence that any additional charges are fair, transparent and justified.”

Withheld numbers
The hidden charge checklist

- Not paying by direct debit
- Itemised paper bill
- Premium-rate technical helplines
- Early termination of contract
- Late payment of bill
- Having service restored after it has been suspended after late payment
- “Administration” fees for insurance claims

BritBrat

Did it say anything about those flying pigs that just passed over?

We are talking about Ofcom right?

They should also look at evening the competition by making sure every provider of telephone services should have to allow an install of the requested service and not just rely on BT doing it first.

BexTech

Yeah, OFCOM a completely toothless useless organisation.

Ypaymore

Ofcom in fact announced this nearly 7 Months ago.
http://www.ofcom.org.uk/media/news/2007/06/nr_20070606a

So dont hold your breath.

BritBrat

Ofcom in fact announced this nearly 7 Months ago.
http://www.ofcom.org.uk/media/news/2007/06/nr_20070606a

So dont hold your breath.

Looks like they like to pretend they are doing something but really they are just getting paid for old rope.

Victors_Bruvver

Ypaymore wrote: »

Ofcom in fact announced this nearly 7 Months ago.
http://www.ofcom.org.uk/media/news/2007/06/nr_20070606a
So dont hold your breath.

It has happened before with the press suddenly stumbling across something that they think is new. Anyway, does it matter that it has been re-reported and even possibly being finally acted upon by Ofcom? Yes I know about 'pigs will fly' but better to live in hope. Perhaps now that these so called stealth charges are being discussed we should ask MSE for a sticky to warn against them and even include the Dump 1571 posting from Heinz.

I've got to be positive because Gordon Brown said in his New Year message today "For Britain, 2008 will be a year of real and serious changes" and he should know!!!!!

wantmemoney

I think The Times journalist may have wrote the story because of this:

http://www.ofcom.org.uk/complain/landline/nonddcharge/
For a number of years BT has applied a price differential between customers who pay their accounts by direct debit and those who pay by other means. This reflects the increased processing and debt management costs associated with payments not made by direct debit. Such differentials are common practice amongst communications providers and utility service providers.
From 1 May 2007 BT changed the way in which this differential is presented on their bills. Prior to 1 May 2007 it was shown as a discount for those customers making payment by direct debit. However, it is now shown as a charge for those customers making payment by other means. BT has combined this change with an increase of £1.50 a quarter in the charge (from £3 to £4.50).
The increased charge will not apply to the Light User Scheme, In-Contact and BT Basic, special tariff schemes provided by BT under the Universal Service Obligation for customers on low-incomes.
Direct debit discounts (or charges for customers not paying by DD) are commonly used by telecoms companies and by companies in other sectors to reflect the lower costs of processing payments by direct debit and reduced debt management costs.
BT has charged customers who pay by direct debit less than customers who pay by other means for several years. However, the increase from May raises an issue of how much it may be reasonable to charge.
Following complaints from consumers, Ofcom has launched an industry wide review of additional charges that are made by communications providers, including the charge made to consumers that do not make payment by direct debit.
Ofcom's review will examine consumers’ awareness of and attitudes to these types of charges. The review will consider whether additional charges are sufficiently transparent, whether the charges or their levels are unfair and what action, if any, is necessary.
Ofcom expects to publish a Consultation Document with our findings in January 2008. We will be seeking views from all interested parties before publishing our final conclusions.

:rolleyes:

Heinz

Ofcom expects to publish a Consultation Document with our findings in January 2008. We will be seeking views from all interested parties before publishing our final conclusions.

From previous experience, there are a few words missing from that final sentence.

It should read, "We will be seeking views from all interested parties before ignoring any which don't agree with the text we've already agreed with the telcos and publishing our final conclusions."

Ypaymore

The quote from Ed Richards used in the recent Times Article is the one given in the earlier Ofcom press release i highlighted.

Not something he said recently, or on a another subject.

"Ed Richards, head of Ofcom, said: “Consumers of communications services see headline prices fall, but they must not be misled . . . they need confidence that any additional charges are fair, transparent and justified.”

Is