Digital Serve ISP: alleged unfair contract terms

25 February 2005

Complainant: A member of the public
Complaint against: Digital Serve Internet Service Provider
Case opened: 18 November 2003
Case closed: 14 April 2004
Issue: Alleged unfair contract terms
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999

Ofcom has considered two sets of terms and conditions: Digital Serve Internet and V21 Internet.

Ofcom received a complaint in relation to a number of terms and conditions used by Digital Serve in its customer contracts for Internet service provision.

Ofcom wrote to Digital Serve, highlighting concerns about a number of the terms in its Internet service contract. Digital Serve explained that its Internet services were provided by V Two One Limited ("V21"), and that it also adopted V21's terms and conditions. Ofcom has therefore considered the terms and conditions of both Digital Serve and V21.

Paragraph 2.3 of both sets of terms and conditions states that the period of subscription will continue to run in circumstances where the supplier reasonably suspends the account. Ofcom considers that this term is potentially unfair since it provides no reciprocal arrangement where the customer cancels the account. Digital Serve and V21 have agreed to delete this term.

Paragraph 4.2 of both sets of terms and conditions states that where the account is continued despite non-payment, any unpaid monies would attract interest at 8% above the Barclays Bank base rate. Ofcom considers this term potentially unfair since it is unclear as to how the interest is calculated. Digital Serve and V21 have agreed to amend this term to state that the interest will be specified annually and calculated on a daily basis.

Clause 7.1 of both sets of terms and conditions states that either party may terminate the account without cause or notice. Ofcom considers this term potentially unfair since it allows the supplier to terminate a contract of indeterminate duration without notice even where there are no serious grounds for doing so. Digital Serve and V21 have agreed to amend this term to state that the supplier must give one month's notice of cancellation of the contract.

Clause 7.5 of both sets of terms and conditions states that in the event of termination of the account the customer would not be entitled to a refund of subscription. Ofcom considers this term potentially unfair since it permits a supplier to retain sums paid by a customer. Digital Serve and V21 have agreed to amend this term to state that in the event of termination of the account the customer would be entitled to receive refunds of subscriptions paid for whole months but not for part months.

Clause 7.6 of both sets of terms and conditions states that in the event of lawful suspension of the account the customer would not be entitled to a refund of subscription. Ofcom considers this term potentially unfair since it permits a supplier to retain sums paid by a customer. Digital Serve and V21 have agreed to amend this term to state that in the event of lawful suspension of the account the customer would be entitled to receive refunds of subscriptions paid for whole months on a pro rata basis, but would not be entitled to receive refunds for part months.

Clause 4.4 of both sets of terms and conditions states that the customer is not entitled to exercise any right of set-off or other deduction against monies due to the supplier. In the absence of evidence of consumer detriment Ofcom's position has been reserved in respect of this clause. Ofcom will revisit this term in the event that any evidence arises of potential or actual unfairness to the detriment of consumers and, if necessary, take formal enforcement action under the Unfair Terms in Consumer Contract Regulations 1999.

On the basis of the above, Ofcom has decided to close the investigation.

It should be noted that Ofcom does not have the power to "clear" terms under the Regulations. Only a court has the power to determine whether a term is unfair under the Regulations. Ofcom is therefore able to consider any further complaints regarding these Terms and Conditions in the light of the evidence presented to it.

Case Leader: Andrew Walker (e-mail: Andrew.Walker@ofcom.org.uk)
Case Reference: CW/00705/10/03

Text published when the case was opened

Digital Serve ISP: alleged unfair contract terms

Complainant: A member of the public
Complaint against: Digital Serve Internet Service Provider
Case opened: 18 November 2003
Issue: Alleged unfair contract terms
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999

Oftel has received a complaint about a number of terms in Digital Serve's Terms and Conditions for its Internet services. Oftel is investigating the complaint.

Case Leader: Andrew Walker (e-mail: andrew.walker@ofcom.org.uk
Case Reference: CW/00705/10/03