Investigation into the accuracy of Cheers International's billing system and/or failure to publish full details of its tariffs and charges

11 October 2004

Complainant : A member of the public
Complaint against: Cheers International Limited ("Cheers")
Case opened: 11 October 2004
Case closed: 24 March 2005
Issue: Possible failure of Cheers International to operate an accurate billing system and to publish full details of its tariffs and charges
Relevant instruments:

  • General Conditions 10 and 11 of the General Conditions of Entitlement which govern transparency and publication of information and metering and billing.
  • Sections 94 to 104 of the Communications Act 2003 governing enforcement of the General Conditions.
  • Part 8 of the Enterprise Act 2002.
  • The Control of Misleading Advertisements Regulations 1988 ("the CMARs") and The Unfair Terms in Consumer Contracts Regulations 1999 ("the UTCCRs").

On 10 February 2005 , Ofcom issued a notification to Cheers under section 94 of the Communications Act 2003, setting out the failure of Cheers to comply with General Condition 10. Ofcom also advised Cheers at the same time that it considered certain advertisements used by Cheers to constitute misleading advertisements for the purpose of the CMARs. Furthermore, Ofcom also advised Cheers that it considered that certain of the contract terms used by Cheers constituted unfair contract terms, contrary to the UTCCRs.

Ofcom gave Cheers until 11 March 2005 to become compliant with General Condition 10 and to provide Ofcom with undertakings to secure compliance with the CMARs and UTCCRs.

Cheers has now made the necessary amendments to its website to ensure that clear and up-to-date prices, terms and conditions for its calling cards are published and made available to consumers. Cheers has additionally provided Ofcom with signed undertakings as regards its terms and conditions and the manner in which its calling cards are advertised so as to ensure compliance with the CMARs and UTCCRs.

On the basis that Cheers now appears to be compliant with its obligations under the General Conditions, CMARs and UTCCRs, Ofcom has concluded that it is appropriate for it to close this investigation. Ofcom will, however, continue to monitor the conduct of Cheers and other calling card companies to ensure that these companies continue to comply with their obligations and that consumers remain adequately protected.

Case Leader: Martin Hill (e-mail: Martin.Hill@ofcom.org.uk)
Case Reference: CW/00794/10/04

Text published when the case was opened

Complainant : A member of the public
Complaint against: Cheers International Limited
Case opened: 11 October 2004
Issue: Possible failure of Cheers International to operate an accurate billing system and to publish full details of its tariffs and charges

Relevant instruments:

  • General Conditions 10 and 11 of the General Conditions of Entitlement which govern transparency and publication of information and metering and billing.
  • Sections 94 to 104 of the Communications Act 2003 governing enforcement of the General Conditions.
  • Part 8 of the Enterprise Act 2002.
  • The Control of Misleading Advertisements Regulations 1988 and The Unfair Terms in Consumer Contracts Regulations 1999.

Update note - 10 February 2005

Following investigation, Ofcom has concluded that, contrary to General Condition 10, Cheers International ("Cheers") has failed to adequately publish accurate and up to date information on its website regarding:

  1. the terms and conditions that apply for the use of its pre-paid calling cards; and
  2. the charges it levies for calls made by consumers using those calling cards.

Pursuant to section 94(3) of the Communications Act 2003 ("the Act"), Ofcom has issued a notification to Cheers setting out its failure to comply with General Condition 10 and giving Cheers until 11 March 2005 to comply with the General Condition. If Cheers does not comply with General Condition 10 by this date, Ofcom may issue an enforcement notification under section 95 of the Act and/or may impose a penalty on Cheers under section 96 of the Act.

In addition, Ofcom has also concluded that certain advertisements used by Cheers constitute misleading advertisements for the purposes of the Control of Misleading Advertisements Regulations 1988. Furthermore, Ofcom also considers that certain of Cheers' contract terms constitute unfair contract terms, contrary to the Unfair Terms in Consumer Contracts Regulations 1999. Ofcom has therefore started a consultation with Cheers under Part 8 of the Enterprise Act 2002 with a view to securing undertakings to remedy both breaches. Cheers has until 11 March 2005 to agree undertakings with Ofcom, otherwise Ofcom can seek to apply to the court for an enforcement order under section 215 of the Enterprise Act 2002.

End of Update note

Wandsworth Council's Technical Services Department has passed on a consumer complaint to Ofcom about potential overcharging or inaccurate charging on one of Cheers International's calling cards.

Ofcom is investigating the possible failure of Cheers International to accurately bill consumers for calls made using its pre-paid calling cards. In addition, Ofcom is also investigating whether Cheers International has failed to publish full details of all the tariffs and charges that apply for the use of its pre-paid calling cards and whether Cheers International's advertisements may be misleading. Ofcom considers that Cheers International may be in breach of its obligations under General Conditions 10 and/or 11 of the General Conditions of Entitlement, the Control of Misleading Advertisements Regulations 1988 and/or the Unfair Terms in Consumer Contracts Regulations 1999.

Consumers buy pre-paid calling cards with a certain amount of credit from retailers such as newsagents. The consumer then uses an access number, together with a PIN number, to make phone calls using the credit on the card. At present, the most common use of pre-paid calling cards is to make international calls.

Case Leader: Martin Hill (e-mail: Martin.Hill@ofcom.org.uk)
Case Reference: CW/00794/10/04