Putting the CON back into CONtract
What sort of contract is it where one party can change the terms at will and the other has to suck it up ?
Mobile networks unfairly make up to £90m a year thanks to contract Ts&Cs which allow them to raise the price of fixed-rate tariffs, consumer reviews site Which? has claimed. We've highlighted this kind of behaviour before, most notably when Orange customers faced a 4.34 per cent monthly price rise last November, bit Which? …
Don't think anyone is changing the terms "at will" ... people have signed up to a contract which has in its terms the ability for the phone company to increase prices in line with inflation - and they are now complaining when this has happenned. Perhaps they should have taken more care when they signed up in the first place.
"people have signed up to a contract which has in its terms the ability for the phone company to increase prices in line with inflation... Perhaps they should have taken more care when they signed up in the first place."
Maybe they should, but most people do not read the full T&Cs when signing up to these. I know "I didn't read it" is no excuse, but this is how it is.
Also, when a customer is tied in to a contract for a long time (e.g. 2 years), the fact that the price can be increased during this term without the option to cancel is unfair (IMHO). A fixed term contract should not allow mid-term price changes, as most people would have the expectation that the prices involved form part of the contract. Any terms which alter a contract from what would reasonably be expected should be made clear to the customer, not burried in the T&Cs.
Well said Dr Mouse.
I gather one of the criteria by which a price rise is permissible is that it is 'reasonable'; yet it seems (to me in any case) what may be reasonable may have to take into account the legitimate expectations of the consumer formed by the big advertising £XX PER MONTH!!, and as such the burying of the increase clause in the finest of the fine print, may be 'UTCCR unfair'* **TAKING INTO ACCOUNT the lack of intention to create legal relations on the latter basis in the mind of our punter.
It is just a form contract after all! B2B is of course different but plain vanilla consumer...
*Unfair Terms in Consumer Contract Regulations 1999 (as amended).
** Or even unfair according to the Unfair Commercial Practices Regulations 2008
Absloute rubbish. If you ask to look at the contract in a mobile phone shop you are meant with looks of blank incomprehension. The kids in the shop don't even know what a contract is and they certainly haven't got a copy of it. As for the piece of paper you sign; it doesn't have the full Ts&Cs on it, it refers to another document, uses magic asterisks etc etc. There is no way of checking the details of a deal when buying a mobile on contract and the staff are stupid, actively obstructive or both. I do agree that people shouldn't sign up for things they don't understand, and I personally don't. However most people are less cynical and get stung.
Another useful rule of thumb is to not do deals with people who can afford more expensive lawyers than you...
The last one I signed (from 3) certainly has all the T&C on it - I've just checked the copy they gave me.
I checked it in the shop for a variation term - tho admittedly that was because the other networks had already jacked up their prices before I took it out.
"not do deals with people who can afford more expensive lawyers than you..."
You mean businesses then? You only buy from sole traders in the market? Rent property from a sole trader landlord who is less well off than you? Don't pay council tax, use gas and electricity, or have a bank account?
Your suggestion really doesn't stand up to scrutiny... :)
While it might technically be OK to have the T&Cs permit price variations, what is being challenged is the fairness of this type of clause.
Is it FAIR for the telco to increase the price over the duration of the contract (irrespective of the T&Cs)?
Given these contracts are typically for a maximum of 24 months, it really isn't fair for the telcos to have the right to increase the prices during those 24 months - inflation is a fact of life, and while the rate may vary slightly from month to month, prices are always going up, and almost every other industry factors that into their contracted prices.
Now that most companies are tying customers into two-year contracts, this is a particularly loathsome trick. I've been with my current provider for quite a few years and I have multiple contracts with them. I think it might be time to switch some of them off if this devious underhand practice is what they do to such long term customers..
I completely agree that they should be allowed to increase prices in line with inflation, but NOT in the middle of a fixed-term contract.
If I signed up for a contract with a "free"(tm) high-end handset, I would probably be tied to a 24 month contract. If I am tied to the contract, at the price designated at the outset, so should the operator. They should not be allowed to increase the price during that contract term without a reasonable get-out option for the customer.
Glad I'm not on a contract. If my operator increases the cost, I can leave immediately. I'd rather save up for the phone I want and buy it outright than be tied in (and I pay less in the long run, too).
I would have agreed in the past, and did the same (purchased handset, and have monthly contract) a couple of years ago - however, I'm planning to change phone later this year, and have been reviewing the options now. It appears that the idea that one will "pay less in the long run" no longer holds true. I've run the numbers several times with multiple suppliers for "high end" handsets currently (Galaxy S3 for example) and in all but 1 scenario, a phone with a 24 month contract is now the cheaper option. So one will now need to again pay a premium for flexibility in contract. It's not a lot though.. maybe £30 or so over the 2 years (though with some contract options, it can be over £100!).
I've always found it comes out about an even break between a contract and a buying a phone out right, I've got a HTC sensation (the week it came out) on £25 a month from Orange so that's £600 over 24 months. When it launched the sensation was £500 (and even now it's around £250). I'll sell it when I upgrade, get say £50 for it, that's £50 left, 50/24 = £2.08 a month for 200 minutes, unlimited texts and 750MB data, the other £22.92 is just an interest free loan on the phone, I'll take that.
On 18 months I'd be quids in, but they were having none of that.
And of course you could always argue I'm a sucker for getting it on the week of release, but I'm happy this will last me 2 years, I don't need to upgrade to the latest greatest all the time, just once so it lasts.
Plus it never hurts your credit rating paying a contract every month, I know my Orange payments show on there in green.
and if you don't agree with it, then don't sign it!
That this is technically a form of price fixing where all telcos' have the same terms regarding mid term contract price changes is whats criminal.
What can the consumer do when all the houses conspire to stack the decks in their favor!
What do you think would occur to our national economic output if every individual consumer read every term and condition of every consumer agreement they entered into?
In any cases the most important clauses aren't in the contract - they're implicit and formed by legislation and by the common law! The consumer contract to some extent is typically just a weapon, a partisan argument one side will attempt to wield in the event of dispute!
Sorry to have to call fail.
After Three told me they were increasing their prices, I studied the terms and conditions which don't seem to actually allow them to vary the terms without me having the right to withdraw from the contract, however their customer services teams are adamant that section 4.1 provides them this right.
I have been through the full complaints process with Three to no avail, I've contacted OfCom who won't get involved with me because they consider it a 'commercial matter', rather than a basic contract dispute. Ombudsman Services Communications won't get involved for the same reason. Which basically leaves me having to go through the small claims court which I'm quite happy to do because I can't stand companies hiding behind their terms and conditions knowing the customer has little or no way of properly challenging them, and you can be sure that if WE were potentially breaching the T&Cs they'd be enforcing them zealously.
So I'm having a chat with a solicitor today to see about the small claims process. I'm going to do it just out of principle, even if it does end up costing me.
Hope you get the go ahead to drag Three into the County Court. Interesting to see if they even defend the action -- more likely they will try to settle on the steps of the court because they will not want to risk a decision against them in case it provokes an avalanche of other small claims.
This is what I'm hoping for, it would make sense to back down from the few who properly challenge them rather than face a potentially embarrassing public backtrack.
If you look at Orange's T&Cs, they have a very clear section which details that in any 12 month period, they may increase the monthly tariff by no more than the most recent RPI index. Three do not have this however, which is why I feel pretty confident that if it goes to the small claims a judge will back me up. I've read also that if there are any vague terms in a contract, the benefit of the doubt will be given to me as I didn't draw up the contract.
Fingers crossed but I'm definitely fighting them all the way on this one out of principle.
"If you look at Orange's T&Cs, they have a very clear section which details that in any 12 month period, they may increase the monthly tariff by no more than the most recent RPI index"
So you can get 2 increases in a 2 year contract... one 2 months in, and one 12 months after that.
Smells of an unfair contract to me.
The small claims court is fantastic. You won't be out of pocket much if you represent yourself - costs about £40 and the defendant can't claim their costs against you if they win (and you can't claims yours if you win other than the £40).
Also, if you represent yourself the judge doesn't expecrt you to have know all the legal ins and outs so you won't be tripped up by not following protocol (unlike say if you tried to represent yourself at a libel trial).
My guess is that as soon as you serve the small claims papers they'll drop the matter as they wouldn't want a precendent set (yes I am aware that county courts don't set legal precendent as such but it would still lead to a sh*t load of similar actions).
Absolutely. Those who failed to notice and take seriously a minor clause buried in pages and pages of legalese saying an operator might raise prices if they feel like it (even though none ever have until quite recently), while the shop salesperson is telling them about their new toy's features and asking them all manner of questions are clearly entirely to blame.
I don't know how anyone could ever think otherwise.
Just as a matter of interest, did you fully read El Reg's terms and conditions before posting that comment?
I think as someone pointed out, when you take out a phone contract you dont get a "contract", you get a single A4 sheet with the Term, price, discounts and any other relevant details of costs with a small print section that says, by signing this you agree to the T&Cs located at MobileCompanyWebsite/TandC.htm which is hard to read in a shop without a laptop or the phone your about to purchase.
The thing with three is that they changed the T&Cs to include section 4.1 in May 2012 and back dated the change to May 2011, there are several people on forums that have a copy from January 2012 which does not include the "RPI price increase" section.
It's probably time that we followed the Belgian example and stopped the mobile companies locking up phones. This would have the side effect of discouraging them from offering "free" phones with contracts to distract customers from the high cost of calls (did you know that texts cost so little to the operators that they can't actually calculate how little). Would also end the free upgrades every couple of years that encourage customers to ditch perfectly functional phones.
Hopefully we will eventually see the mobile companies forced to separate the selling of contracts from the selling of phones so that they'd have to compete more transparently. Would give other retailers a chance to offer phones in and perhaps lead to more competitive prices for phones and air time.
"(did you know that texts cost so little to the operators that they can't actually calculate how little)"
I know that, originally, SMS were designed to fit in unused space in the GSM protocol (I don't remember exactly where, was years ago I read it). This would make text messages on the same network, effectively, free. Obviously this may have changed, but if you consider it is 140 bytes of data, proabably plus some headers/other protocol overhead, which means that even at a very inefficient 256 bytes and 4p/msg it's being charged at over £160/MB.
In the end, they charge what the market will allow. If enough people are prepared to pay £100 for something that costs you a penny, you will charge it and make £99.99 profit on each.
Problem is you can't negotiate contract terms with any of these giagantic corporate companies. That's banks, insurance, mobile phones, etc, etc...
At the same time, in many cases you must have what they're offering so really you have no choice but to accept the contract they give you without any ammendments.
I noticed a few years ago that Halifax changed the overdraft terms for customers so the charges for being overdrawn would be much higher. As a customer there would have been nothing you could do to avoid paying the higher charges. Unless you brought your account back in to the black of course. Not really possible to avoid having your standing charge increased on your mobile phone bill though.
You have to be pretty financially inept to be tied into a mobile phone contract in the UK these days anyway. They no longer subsidise the phones, you are simply buy the phone on the good old never-never.
Fools who sign up to these contract deals deserve to be ripped off.
Actually they can be a very efficient way of buying hardware and airtime, especially if you factor in the opportunity cost involved in paying a large lump some upfront.
After rebate and what I got for selling the phone without opening the box, I pay about minus two pounds per month for 300 minutes, 500 texts and half a gig of data, over the life of the contract.
Wow, you actually managed to sell the phone for more than the contract will cost you over its lifetime - well done! I'm sure the mobile companies must hate customers who manage to get deals like that. Any hints on where to find them?
(Although how you calculated the lifetime of the indefinite contract is questionable, but I guess you're on-the-ball enough to cancel the contract as soon as you pass the minimum term.)
Pardon? Do you know what 'the never-never' refers to? It's generally used to refer to hire-purchase agreements which is exactly what mobile phone contracts are if they include the phone and not just air-time.
Alternatively, you can of course lock yourself into a one or two year air-time only contract if you really want to forgo the ability to switch provider and take advantage of lower prices and better deals as they come along. A fool and his money are easily parted.
@ AC 16:04
Never-never may refer in your book to HP, my understanding is it equals 'never' paying something off, the clue being in the words. But let's differ on that.
As for my being a fool and my money easily parted, well, when entering any financial commitment, one balances the risk prices may collapse, with the chance they won't. However, when we speak of prices rising or falling, what is most important is not the rise or fall but the base from which the rise or fall starts.
Additionally, mobile operators often do charge more for the absence of the tie-in.
As I said, I pay minus two pounds a month for my contract. The fool in this instance was the merchant who made a deal with me.
So I disagree thoroughly with everything you wrote.
T-Mobile did this to me earlier in the year. They did indeed send me a letter with the words "you won't be able to cancel your contract early because of this..."
Of course I was unhappy when I received the letter. I, like many others worked on the assumption that the price was an inherent part of the contract and would be fixed for the duration.
However, they are only allowed to increase the prices in line with inflation once a year. For me this meant an increase of roughly £1.50 per month. I am part-way into an 18-month contract so overall this will cost me a total of about £25.
It's not worth making a fuss about really. It would have cost me more to buy the handset up front.
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