Mobile Phone Companies and the CCA

[Robbrad]

Hi All

Legal take on the following please:

I understand that Mobile Phone Companies are exempt from the Consumer Credit Agreement as they don’t provide credit and thus can place a default on your file without notice if you have agreed on a contact that they can provide financial information about you.

However in order to prove this ability (granted by a signed contract) in a court then they would have to produce the contact, right?

Now I know many of them operate a "paperless contact system" and can state that they rely on the The Consumer Credit (Exempt Agreements) Order 1989 that exempts them from having to provide or maintain a "paper contact".

However in this very act to which they rely it states that collection of payments must be no more than 4 and the length of the agreements has to be no longer than 12 months. So if an 18 month monthly payment contact exists then how can they rely on the exempt act?

[buzby]

This is the first time anyone has attempted to link the 'Exempt Agreements' order to a mobile phone arrangement - but the issue that this falls on, is that it is NOT exempt under the provision of the CCA, it simply doesw not apply as no credit is provided whatsoever.

 

The Exemption list outlines those arrangements that nominally WOULD be applicable under the strict reading of the CCA, but are not due to the exceptions listed. Therefore, with the CCA not even being on the horison for an airtime contract, the exceptions of 4/12 month arrangements are inappropriate and of no relevance.

 

Shame, really!

[Robbrad]

What if the Telco company in question has written in a letter stating that they rely on the The Consumer Credit (Exempt Agreements) Order 1989 which exempts them from having to provide or maintain a "paper contact".

 

Thus not producing a contact to prove that they have the right (of which you granted them via a contract) to alter your credit file.

 

Secondly if the company states the contact was held with another company yet they register a default against you then are they allowed to do this if you did not give them permission, surly it has to be the company the contract was with that should raise the default.

[buzby]

Just because they claim it doesn't make it right! Some jobsworth may well have done their own (invalid) research into the matter and believed it to be the reason why they don't need to, but it would be a bogus argument, and since it has no basis in law, could be mistakenly asserted, yet not make them liable under it.

 

Contracxts can be verbal, implied and virtual - because no credit is required, the CCA exemptions have no effect.

 

If the contract exists, then the terms will state who your arrangement/agreement is with. The DPA brings with it obligations to what can be done with your personal information. Most importantly, you cannot be defaulted more than once for the same debt.

 

Let's say you defaulted on a mobile contract to company A and they recorded your default, eventually selling the debt to company B. This company then pursues you for the money they say is owed, plus their charges. You cannot have your file blighted again by company B. If you are you can get it removed immediately.

 

Where it gets interesting is if company A doesn't default you, but company B does. OF the cases I've seen, company B still cannot mark your file because your original agreement was not with them. The contract may say it can be sold or re-assigned, but not much else.

Edited August 18, 2009 by buzby

[Robbrad]

Ok so the act don't cover them so they cant cite the act as a reason not to provide a contact or maintain one right? - so they still need to produce a contact which would clearly state they were allowed to change your financial information.

 

Also if company A places a default but claims company B has/maintains the contact they surly dont have the legal right to issue a default?

[buzby]

No need for a contract - as long as it forms part of their terms and contitions that you (obviously) would have read and agreed to by continuing with the transaction. Since signatures are no longer required to confirm acceptace, payment of these services is seen as the proof that the contract exists and payment of same your agreement to be bound by them... which is the reason DD and plastic is the preferred payment methods.

 

As to your second point, only the company initiating the agreement can place the default, in what you describe this is correct. They cannot then claim the contract is with another - they may have sold the DEBT on, but B cannot modify your file with a CRA, only the original firm can do this.

[Robbrad]

Ok, What if company A initiated the agreement then company B placed the default - upon complaining to company B for placing the default they state they don't have the contact company A does - then are company B allowed to place the default?

 

Eg Phones 4u initiated the mobile contract on vodaphone's network. Voda then place a default - on complaining about the default and the contract they state the contract is with phones 4u and they cant handle contract disputes - then surly its for phone 4u to log a default not voda?

[buzby]

Need more info - 'initiated' ? Posted the form? It all depends on who the actual agreement you entered into was with. If company B, A cannot do anything, and vice versa.

 

In what you outlined, P4u is an Agent for Vodafone, they are not airtime retailers, so you contract would be with Vodafone - P4u simply the sales outlet signing you up. In this case, P4u cannot affect your credit file, only Vodafone.

 

There is a Voda Rep on here and she might be better placed to look into your issue in greater detail, but P4u woulf only be an agent for the network, and if Vodafonne said the contract wasn't with them is mistaken.

 

One caveat though - there are unusual arrangements where (for example) O2 is the network, but if you sign up with Carphone Warehouse, you are using a CW contract, and their airtime - but on the O2 network. Confused?

[Robbrad]

ha ok I think I understand - I think where the error is, is that they (company B people who raised the default and were the network provider) say the contact is with company A who I registered with - this must be an error as I was paying company B for the service.

 

My question now would be do companies have to provide a default notice giving 1 week before action or is this not the case? as stated here in the 5th from bottom paragraph

 

Credit records: A mistake that can ruin your life | Money | The Guardian

[buzby]

What you describe - a 'Default Notice' is only applied to regulated credit agreements (CCA). A mobile service contract is different, in that if you don't pay them when you agreed to you account is 'in default' (no 'Notice' formally required) and when you pay it you are no longer in default (notice the use if lower and upper-case 'D') in the first case, this is a fundamental requirement of CCA contracts, but simply a point of information if they're not.

 

In the last case, you'll be in default (usually if you do not pay them by their 'due date' on the monthly invoice. This means you haven't defaulted on the contract, but are just in default at the moment - it is the Credit Reference Agencies that are building these up to be on a par with a CJ, and it is this I find obnoxious.

[Robbrad]

I think the issue I have with it is this

 

Companies who provide credit are regulated to the CCA and thus have to provide a default notice and mark a credit file with a default against the account in question

 

Companies who dont provide credit are not regulated by any credit acts but can place a default on your credit file when they dont even provide credit - is this right granted by the T&Cs or contract they produce (writing their own rules) but then this falls on the consumer to sign and agree, editing financial data and not notifying the consumer seams like it could hang on unfair contact terms - I have had a read of this http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft311.pdf and the action dosnt seam fair considering credit agencies are required to notify. Recieving a default on your credit file is a clear statement that you should not be given credit. It Does'nt seem right why one institution allowed to do what another is not and how would a consumer ever know where they stand.

[buzby]

Again - I see where you are coming from, but you miss the whole point of it.

 

Your complaint is with the Credit Reference Agencies (all 3 of them), because it is they, as part of their business practices, have insisted that the information they provide to mobile phone networks (whether the customer is 'real' and is a good risk to give a mobile phone to) has a quid pro quo - the networks can only get access to this information if they; (a) pay for it, and (b) agree to provide data on the 'new' customer so that the system becomes more accurate and iniquitous.

 

They are called Credit Reference Agencies, and back in the mists of time, this is what they did - but things have moved on apace, it should really be called a 'Consumer Risk Resource' - credit provision by their clients still plays a part, but there's much more to this, it is all about identifying the individual, who and where they live and all information that they can legally 'attach' about them is sources, from the Electoral Register to Council searches and fraud enquiries. Think of it as a 'civil' rather than a criminal record, and three firms set themselves up to be the guardian of this information with the full co-operation of the government and the data protection registrar.

 

The latter part of you comment is really subjective - the CRAs do not say 'don't give credit' they may score an individual but have no power to do anything other than pass on the information to their client company who pays for it. Whether one company will want you and another not is based on their corporate policy, and this is best indicated by firms that search for court judgements against consumers, get their details, then send them 'Re-Starter Credit Cards' at extortionate rates of interest so they can 'get back on their feet'.

 

Don't forget, the Government love this industry, CRA's are key players in their 'Responsible Lending' mantra, and are happy to assist in ensuring people do not over-extend themselves. As for it 'not being fair' - heck, what is? You just have to do what you can to make sure your not put in a situation where you can be disadvantaged, and if this means not having a mobile phone contract, then that's what you do. You don't ignore the rules, then find out too late when it all blows up, THEN complain!

[Robbrad]

Thanks Buzby. What you say is great and has been confirmed, I called Otelo who said they will investigate the matter and whether the telco conducted their behavior correctly. Also spoke to the infomation commisioner who have said they are not responsible for whether a default was raised correctly. But they are however responsible for the correct handleing of data and are intrested if this is an issue.

[buzby]

As I said, they have no interewst in the moral argument, just that the data is processed within the accepted guidelines! Good Luck!