Professor Christian Twigg-Flesner, Chair in International Commercial Law, Warwick Law School, comments on today's Ofcom ruling.

"Ofcom’s findings show long-standing consumer protection requirements are still flouted. In these cases, required information was not given at all, or not stated correctly, and in some instances, actions did not accord with the information given. Failing to provide correct information and acting in accordance with it can result in serious detriment to consumers, either by overcharging them or by preventing them from accessing a better deal. Ofcom’s enforcement action demonstrates the important role Regulators perform in the interests of consumer protection.

"Today’s announcement about Ofcom’s decision to fine EE and Virgin Media for overcharging consumers who opted to leave their contracts with either provider early highlights a perennial consumer issue.

"Consumers are frequently offered favourable charges for mobile phone or broadband contracts (as well as for other long-term arrangements, such as utilities supply contracts or gym memberships), but these charges require that consumers commit to a minimum contract period. As individual circumstances change, or better deals become available, consumers may seek to escape such contracts before the minimum term has expired.

"In the past, consumers were still forced to pay the charges for the minimum term, but regulatory intervention has since resulted in a shift towards “exit fees”. This allows consumers to escape contracts before the minimum term has expired without being forced to pay the full charges that would otherwise be payable.

"Consumer law requires that exit fees are made clear when the consumer signs up. The charges have to be stated correctly – in EE’s case, OFGEM found that EE had failed to base the exit fees on the contract rate (a discount), so overcharged customers. Virgin charged higher fees than they had told customers when they signed up."

16 November 2018

 

 

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