Own-initiative investigation into Lycatel in respect of the sale and advertisement of its international calling cards

12 January 2011

Complainant: Ofcom own-initiative investigation
Complaint against: Lycatel Distribution UK Ltd ("Lycatel")
Case opened: 22 March 2010
Investigation closed: 7 September 2010
Case closed: 12 January 2011
Issue: Whether Lycatel has breached any relevant consumer protection legislation and/or has failed to comply with its obligations under the Communications Act 2003
Relevant instrument(s): Including, but not limited to, Part 8 of the Enterprise Act 2002, the Consumer Protection from Unfair Trading Regulations 2008, the Unfair Terms in Consumer Contracts Regulations 1999 and General Conditions 10 and 11 of the General Conditions of Entitlement

Update note: 12 January 2011

The deadline for Lycatels compliance with the undertaking it gave to Ofcom in September 2010 was 3 December 2010.

The undertaking included a requirement on Lycatel to remove its post-call fee and change the advertising of its international calling cards to ensure material information, such as fees and charges, is provided to consumers in a clear and intelligible manner.

Ofcom welcomes the changes Lycatel has made to its advertising materials and terms and conditions, and is of the view that Lycatel is now compliant with the undertaking.

Ofcom will now be examining the terms and conditions and advertising practices of other international calling card providers as part of Ofcoms own-initiative monitoring and enforcement programme (see related item).

End of Update note

Ofcom has concluded its investigation into Lycatels international calling card advertisements and terms and conditions by accepting a written undertaking from Lycatel.

Ofcom found that Lycatels advertisement of its international calling cards is likely to constitute misleading actions and misleading omissions in potential contravention of the Consumer Protection from Unfair Trading Regulations 2008 ("CPRs"). Ofcom also reached the view that the post call fee in Lycatels calling card terms and conditions is likely to be found unfair by a court and contrary to the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCRs).

Ofcom engaged in consultation with Lycatel to bring the potential contraventions to an end and to ensure there would be no repetition of those potential contraventions in the future. The outcome of this consultation is the commitment by Lycatel to comply with the law in the form of an undertaking enforceable in the courts.

Lycatel has cooperated fully with Ofcoms investigation and has committed to undertake changes to its advertisements so they:

a. clearly state to consumers the headline number of minutes that they will receive and that minutes are reduced by certain fees and/or charges in a manner which is clear, intelligible and unambiguous;
b. provide consumers with material information in a manner which is clear, intelligible or unambiguous, including but not limited to, connection fees, maintenance charges and the fee charged at the end of a call ("the post call fee");
c. ensure that material information such as terms and conditions is displayed in clearly legible font; and
d. do not use the post call fee term in its current form.

Lycatel has undertaken to replace existing advertisements in the market place by the beginning of December 2010.

Having secured outcomes for consumers that are consistent with Ofcoms statutory duties, Ofcom has now closed its investigation into Lycatel. Ofcom will actively monitor compliance with the requirements of the undertaking.

Text published when case was opened

Ofcom has opened this investigation following receipt of complaints to Ofcoms Advisory Team, Consumer Direct and after discussions with Trading Standards Offices, concerning the terms and conditions of Lycatels international calling cards and its advertising practices.

Ofcoms investigation will consider whether Lycatel has engaged in conduct which infringes any relevant consumer protection law and whether it is complying with its obligations under GC10 and 11.

If you are a consumer and wish to discuss this case please contact Ofcom's Advisory Team on 020 7981 3040 or 0300 123 3333.

Case Leader: Miriam Martin ( e-mail: miriam.martin@ofcom.org.uk)
Case Reference: CW/01046/03/10