Mobile mis-selling crackdown

16 September 2009

Man-front-page-imageMobile service providers and retailers engaging in dishonest, misleading or deceptive conduct could be fined under new Ofcom rules that come into force today.

The new rules state that providers must:

  • not mis-sell mobile phone services;
  • make sure the customer intends and is authorised to enter into a contract;
  • make sure consumers get the information they need at the point of sale;
  • make sure that the terms and conditions of cash back deals offered by their retailers are not unduly restrictive; and
  • carry out certain due diligence checks in respect of their retailers.

Providers who breach the rules could be fined up to 10 per cent of relevant turnover.

Following a significant increase in the number of complaints about cashback schemes and other forms of mis-selling in the mobile market, the mobile network operators introduced a voluntary Code of Practice in July 2007 to tackle mis-selling and cashback issues. This voluntary Code did not lead to a significant reduction in complaints so in March 2008, Ofcom proposed new mandatory rules – called a General Condition.

Since Ofcom proposed to introduce new rules complaints have fallen from over 600 to fewer than 200 per month.  But Ofcom wants to stamp out this practice altogether.

Examples of mis-selling:

1. A consumer had been in a contract with Provider A for around 16 months. The signal on the phone was very poor and he rang up to complain 2 months ago. Provider C persuaded him to pay for a new handset on the proviso that the handset would solve the signal problem. It didn't. Because of the ongoing signal problem consumer enquired about leaving his contract only to be informed that he had signed up to a new 18 month contract when he purchased the new handset and he would have to pay the remainder of contract if he wanted to leave.

2. A consumer took out an 18 month contract with Provider B and was told the price was £17 per month but was charged £35 per month. The consumer refused to pay this and Provider A failed to help the consumer. The consumer’s debt was passed to the debt collectors as he did not pay and he has now a black mark on his credit history.

3. A consumer called on behalf of his 16 year old daughter. The consumer was on holiday and when he came back he had a letter to say that his contract had been upgraded and extended. His daughter explained that she was forced to accept the contract. He has called Provider C and was advised that the contract was sold through an agent. The consumer wanted Provider C to take action and cancel the contract but he was advised they could not do it as it was taken through an agent. The consumer feels this is not right as the contract was in his name, he pays for the bills and his daughter is under 18.

What you can do

If you believe you have been mis-sold a service by a mobile service provider, you should first complain to it directly.

If you became a customer of the company due to it mis-selling to you directly, you should follow its complaints procedure.

If your dispute is still unresolved, and you are a residential or small business customer, you can raise the matter with the relevant Alternative Dispute Resolution (ADR) scheme.

If the mis-selling was performed by a retailer/reseller and you have been unable to resolve the issue with them, you may wish to go to Advice Guide, a self help website from the Citizens Advice Bureau, to see if they can advise or assist you.

You may also want to let the mobile service provider know about your experience with the retailer/reseller selling their services.

If you are a business customer of over 10 employees then you will need to seek your own independent legal advice.