The regulator for the UK's communications industries last week
closed two investigations into the sale of pre-paid calling cards,
after providers O2 and Wanadoo agreed to amend some of the terms in
their contracts with subscribers.
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.
