Ofcom opened investigations into the two providers during the summer, following complaints from the public over the terms and conditions in O2's "Pay as you Go" service and Wanadoo's "AnyTime" service.
The question for the watchdog was whether any of these terms breached the UK's Unfair Terms in Consumer Contracts Regulations, which came into force on 1st October 1999. These rules apply to standard contract terms used with consumers in contracts made after July 1995 and state that a consumer is not bound by a standard term in a contract with a seller or supplier if that term is unfair.
Ofcom has powers to act against the use of unfair terms, if necessary by obtaining a court injunction. Ultimately, however, only a court can decide whether a term is unfair.
O2
- Ofcom's investigation focused on terms for O2's Pay as You Go mobile service that:
Allow O2 to change the name, code or number – including the mobile phone number – connected with the service "for reasons beyond our control or where we reasonably believe that the alteration will enhance your use of the service". Ofcom found that this allowed for a unilateral amendment without a valid reason, and the term has now been amended. - Remove an obligation on O2 to refund unused credits if the phone is lost or stolen. Again Ofcom found this to be potentially unfair, as it allowed the company "to require any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation." The term, and the benefits of insurance, are now being highlighted in the contract.
- Allow O2 to assign the contract to a third party at any time. This was found to be potentially unfair, as it gave no guarantee with regard to the service quality, and the term has been amended to take account of the objection.
- Allow O2 to disconnect the phone, and annul the phone credits, if unused for six months. Ofcom found that this was potentially unfair, and while not reworded, the term is now to be put in bold. Ofcom has agreed to look at the term again if evidence of actual unfairness comes to light.
- Allow O2 to reconnect at its discretion, and to charge a reconnection fee. Ofcom found the levying of a fee to be unfair, particularly if the disconnection was caused by a fault of the provider. The term has been ameded to reflect this.
- Allow O2 to amend the contract at any time, with the amendments taking effect from notification – the means of which is entirely in O2's discretion. This discretionary aspect was regarded as potentially unfair as, said Ofcom, it might be in such a manner that does not give the customer the chance to check out the changes. The term has been amended.
Wanadoo
Ofcom's investigation into Wanadoo's AnyTime service focused on terms that:
- Exclude all liability on the part of Wanadoo "for errors, inaccuracies or omissions in relation to all information provided by it in connection with the Member Services," and for all information contained on its web site. This was potentially unfair, said Ofcom, as it allowed the provider to limit its customer's rights even "in the event of total or partial non-performance or inadequate performance by the seller or supplier of any contractual obligations." The term has been amended.
- Relate to Wanadoo's liabilities in connection with losses suffered by the customer, including losses from viruses received through the service and economic losses. The term also limited the liability to be faced by the company in any twelve-month period to £500. These clauses were found to be potentially unfair as they limited customer's rights in the event of failure by Wanadoo to perform its contractual obligations. The terms have been amended, and the liability limit increased to £5,000.
- Allow Wanadoo to transfer, sub-contract or assign the agreement and the provision of the services. Again, Ofcom found this to be potentially unfair, as it could allow a transfer, without consent of the customer, where it may be of detriment to that customer. The term has been amended – but only in respect of sub-contracting. Ofcom has reserved the right to look again at this clause in the event of evidence of unfairness coming to light.
- State that the agreement supersede any earlier agreement. The watchdog found this unfair, as it could potentially limit Wanadoo's obligations in respect of "commitments undertaken by his agents". Again, this has been amended.