Feeds

Ofcom warns telcos over hidden customer penalties

Embiggen that small print, you

Security for virtualized datacentres

Telecoms companies must be clearer about additional charges they levy and must help customers to understand them better, telecoms regulator Ofcom has said.

From April Ofcom will take action against any that do not comply with newly-clarified rules, it said.

Telecoms contracts must comply with the Unfair Terms in Consumer Contracts Regulations, which regulate standard terms in contracts that companies have with consumers. These terms are regulated because they are not negotiated and must be accepted by consumers if they want a product or service.

Last year Ofcom expressed concern about additional charges levied on customers for their telephone, internet and television services. It said that it feared that some charges for late bill payments, early contract termination and other activities were unfair, and that competition in the market for the services was not keeping charges low.

It has now produced guidance on these areas on what kinds of terms are fair and what are unfair. It said that companies have until April to review and change their contracts. From then it will begin to take action. Ofcom has the power to seek enforcement orders against companies that do not comply with telecoms law.

The guidance covers charges for payments by methods other than direct debit; itemised billing; late payments; the early ending of contracts; and automatically renewed contracts.

Ofcom's guidance says that if companies want to levy charges that are greater than the cost to them of the customer's behaviour, they must make that clear so that market competition can take effect and people can choose alternative services if they like.

If the charges only reflect the actual cost to the business of the customer's behaviour, though, then the notices about the charges can be less prominent.

"When communications suppliers advertise prices, they may set out certain extra charges – like non-direct debit charges – in a prominent and transparent way such that the consumer recognises that they are part of the price for the services they are buying," said an Ofcom statement. "Where these extra charges are prominent and transparent enough, normal competition – and not regulation – can be the principal mechanism through which consumer interests are met."

"But if a provider does not make these charges prominent and transparent enough, and they are separate, additional charges, the charges should reflect direct costs only," it said. "Some extra charges, like late payment charges, should always reflect only the supplier’s direct costs."

Ofcom said that companies should not levy late payment charges on customers who withhold a part of their bill that is in dispute.

It also said that minimum notice periods to end a service agreement should reflect the actual time that it takes to end a contract, and that for mobile phone contracts this should be much less than 30 days.

Ofcom said that it would take action from April.

"Telecoms and pay-TV companies now have until the beginning of April to make any necessary changes to their terms and conditions," it said. "After that, Ofcom will consider the best way to make sure they comply with the law."

See: The guidelines (two page/217kb pdf)

Copyright © 2008, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
FCC, Google cast eye over millimetre wireless
The smaller the wave, the bigger 5G's chances of success
It's even GRIMMER up North after MEGA SKY BROADBAND OUTAGE
By 'eck! Eccles cake production thrown into jeopardy
Mobile coverage on trains really is pants
You thought it was just *insert your provider here*, but now we have numbers
Don't mess with Texas ('cos it's getting Google Fiber and you're not)
A bit late, but company says 1Gbps Austin network almost ready to compete with AT&T
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.