Consumer complaint against O2 about unfair contract terms

11 July 2005

Complainant: A member of the public
Complaint against: O2 (UK) Ltd
Case Opened: 8 March 2005
Case Closed: 7 July 2005
Issue: Alleged unfair contract terms
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999 (“the Regulations”).

Ofcom received a complaint in relation to a number of terms in O2’s pay monthly terms and conditions. Ofcom has considered O2’s pay monthly terms and conditions.

Clause 2.4 of O2’s pay monthly terms and conditions stated:

‘We will do our best to provide service to you and any additional service requested by you (such as roaming) or if you instruct us to change your service (i.e. to bar calls) by any date we have agreed with you but our ability to do so may be affected by circumstances beyond our control and we will not be liable to you if this is the case.’

Ofcom regarded this clause as potentially unfair under paragraph 1(b) of Schedule 2 to the Regulations as it may inappropriately exclude or limit the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any contractual obligations, in particular by excluding liability for providing a faulty service or no service at all where this is within the control of the supplier.

O2 has agreed to amend this term by removing the words “and we will not be liable to you if this is the case.”

Clauses 4.1(a) of O2’s pay monthly terms and conditions stated:

‘Occasionally we may have to alter the number of your Mobile Phone, or any other name code or number associated with the service for reasons beyond our control or where we reasonably believe that the alteration will enhance your use of the service.’

Ofcom regarded this clause as potentially unfair under paragraph 1(k) of Schedule 2 to the Regulations as it gave O2 the absolute ability to withdraw or replace any number allocated to the consumer.

O2 has agreed set out the circumstances in which it may have to make an alteration to the service by including the words, “where requested to do so by a governmental authority or regulatory body or where we reasonably believe that the alteration will enhance your use of the service. If this is the case we will give you reasonable notice”

Clause 5.4 of O2’s pay monthly contract stated:

‘We may at our discretion apply a usage limit to your account (which we may alter by advising you) and may suspend your service if this limit is exceeded. As our billing system is not instantly updated each time you use the service it is possible, especially when making international calls or roaming, to exceed your usage limit. You will be liable for all charges incurred including any charges exceeding your usage limit. You may be asked to pay any charges incurred in excess of your usage limit before service is reinstated.’

Ofcom regarded this clause as potentially unfair under Regulation 5(1) of the Regulations, as it had the potential to create a significant imbalance in the parties’ rights to the detriment of the consumer.

Clause 5.4 was also considered by Ofcom to be potentially unfair under paragraph 1(k) of Schedule 2 to the Regulations. The clause may have given O2 the ability to unilaterally, and without a valid reason, change a material term of the contract.

Further, it was considered potentially unfair under paragraph 1(i) of Schedule 2 to the Regulations. The lack of clarity about the notification of a change of usage was potentially unfair since it is analogous to bin ding consumers to terms with which he had no real chance of becoming acquainted with prior to contractual conclusion.

O2 has agreed to replace this term in its entirety. The new term reads:

“We cannot set usage limits on your account and you will be liable for all Charges incurred on your Mobile Phone. We will monitor usage of the Service via your account for the purpose of controlling our credit risk and your exposure to fraudulent usage. If usage on your account gives us cause for concern we will attempt to contact you by text message or by calling your Mobile Phone. If we are unable to contact you we may have to restrict service on your Mobile Phone and/or we will have the right to bar your Mobile Phone. You will need to contact us before you can use any of the chargeable aspects of the Service. You may be required to make an interim payment before Service can be reinstated.”

Clause 6.4(d) of O2’s pay monthly contract stated:

‘You must not use or permit any other person to use the service other than in accordance with the acceptable use policies of any connected networks and (if appropriate) any relevant internet standards’

Ofcom regarded this term as potentially unfair under Regulation 7(1) of the regulations as it uses unclear phrases.

O2 has agreed to remove this clause.

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 us.

Case leader : Ian Vaughan (email: Ian.Vaughan@ofcom.org.uk)
Case reference : CW/00820/03/05

Text published when the case was opened

Consumer complaint against O2 about unfair contract terms

Complainant : A member of the public
Complaint against: O2 (UK) Ltd
Case opened: 8 March 2005
Issue: Alleged unfair contract terms
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999

Ofcom has received a complaint about terms in O2's contract "Pay Monthly Terms & Conditions", and is investigating whether any terms may be unfair.

Case leader : Ian Vaughan (e-mail: Ian.Vaughan@ofcom.org.uk)
Case reference: CW/00820/03/05