For too long slamming (when resellers pretend to be calling from or connected to a customer’s current operator, but switch them to another network), and dodgy cashback offers, have been a telecoms scourge, particularly in the mobile sector. Now the industry has developed a Code of Practice designed to tackle these practices and Ofcom has just published it. Emily Devlin reports.
Who: Ofcom and the Mobile Network Operators (MNOs)
When: 31 July 2007
Law stated as at: 31 July 2007
Ofcom published a Code of Practice, signed by the 5 major MNOs, (O2, Vodafone, T-Mobile, Orange and 3) that aims to stamp out the practice of misleading marketing and mis-selling in the mobile industry ("the Code").
The Code has been produced in response to the significant number of complaints (currently around 400 per month) Ofcom has been receiving from mobile customers that had been misled by resellers, either because they had been:
- offered cashback promotions that did not reimburse them as promised; or
- cold-called by resellers claiming to be from, or authorised by, their current provider, and then find themselves signed up to another network (a practice known as "slamming").
The Code sets out how the MNOs will expect their resellers to conduct themselves, particularly in matters such as staff training and customer contact. MNOs will now undertake due diligence on all resellers and incorporate the terms of the Code into their contracts with resellers. A complaints procedure is provided for, together with an escalation process that could result in an MNO terminating its reseller's contract if there have been continuing complaints.
Why this matters:
The mobile market is intensely competitive and the sheer number of complaints received, both by the MNOs and Ofcom, reflect the lengths resellers will go to sign up new customers. O2, for example, sued two resellers that had "slammed" its customers, Communications Direct and Landmark Communications, and received large out of court payments from them both, together with undertakings not to mislead customers into thinking they were calling on behalf of, or from, O2. Whereas those proceedings were issued on the basis of trade mark infringement and passing off, the Code will now provide a formal structure whereby MNOs may regulate the behaviour of their resellers and hopefully engender a sea-change in the manner in which mobile contracts are sold.
The Code is also part of Ofcom's new reactive strategy to protect the consumer and it has been very clear that a failure to implement and adhere to the Code will leave it no option but to regulate.