Unfair default notice by vodafone

[pjryan]

I have just discovered a similar problem with Vodafone and just logged my problem with the form referenced in this thread (5881861). Hopefully something can be sorted out - it would seem that Vodafone are very quick to lodge a default and perhaps don't realise the consequences this can have.

 

In my case this is partly my own fault - I called to cancel but must have cancelled the Direct Debit too early (though still not convinced this is the case). Ironically I am still an active paying customer of Vodafone as I was accepted on a new contract with them and only discovered the outstanding amount when I called to start a new contract.

 

The problem only came to light when I was turned down for a store card and checking my credit file online revealed the problem. My Credit Score has gone from 900 or so to 600 in a month.

 

This is the first default I have ever had registered against me and while I perhaps must accept some blame for the oversight it does seem an abuse of the credit file system that my punishment is now 6 years with no credit for missing one payment in 2 years.

 

One further point on this. I was recently turned down for a contract with 02 as a result of this default. Yet a few weeks later accepted with a contract on Vodafone. So by placing this default Vodafone prevented me from moving to another provider but they allowed me back on to their network. I don't think this is what the Credit Checking system was intended to be used for!

 

I will let you know the outcome of my request but many thanks to the original poster and for the link to the form. At least I'm not alone.

Edited March 1, 2011 by pjryan
Additional Info.

[silverfox1961]

Hi and welcome to CAG

 

I have moved your post onto a thread of its own as your query will get lost otherwise

 

As you have posted up the reference number, the web team should be able to find you.

 

I would say that you shouldn't expect an answer today. Vodafone had a major systems failure yesterday so I imagine that will impact on everyone

[Lee Vodafone Company Rep]

Hi pjryan,

 

Firstly let me assure you that I've got your email and will get this looked into and get back to you as soon as possible.

 

To touch on some of the general concerns you've raised here I can assure you that we do understand the consequences/implications of recording defaults against customers' credit files and would only take this course of action following attempts to address this with the customer via our internal debt recovery processes.

 

In regard your unsuccessful application for an account with o2 and your successful one with us I would initially say that all companies use differing criteria when carrying out credit assessments checks. However, it does seem odd that your application with us was approved in light of this issue and so we'll need to take a closer look at this to see what happened.

Hi and welcome to CAG

 

I have moved your post onto a thread of its own as your query will get lost otherwise

 

As you have posted up the reference number, the web team should be able to find you.

 

I would say that you shouldn't expect an answer today. Vodafone had a major systems failure yesterday so I imagine that will impact on everyone

 

Hi Silverfox,

 

It's true to say that Monday was a challenging day but the team is working as hard as ever to ensure that we're as up to date as possible.

 

Best wishes,

 

Lee

 

Web Relations Team

 

Vodafone UK

 

 

[pjryan]

Lee,

Thanks for your response I appreciate you cannot deal with specifics on here.

 

But again it is worth mentioning that repeated attempts to settle the balance with Vodafone were met with resistance form the Debt Team there telling me it had to be paid to the Debt Recovery company. When I explained I did not have the details of the Debt Company they said they didn't have them either. They said they were unable to accept any payment. Again this all happened in the space of 3 months after 21 Months of perfect payment and my only "crime" was cancelling the Direct Debit a few days early (though I am convinced I was told the account would stop after 30 days).

 

It was only when I called to reinstate my service (and was told it would be better to start a new one) that miraculously I was able to pay off the outstanding balance of £25 on the previous account.

 

I appreciate you are investigating the specifics of this case but I am adding the additional information here in case other customers have noticed the same behaviour.

[Lee Vodafone Company Rep]

Hi pjryan,

 

Thanks for coming back to the thread.

 

By now you should've received my email confirming that your case is now under review and as mentioned in the email I'll come back to you again once I have further news.

 

I can understand your frustration here and I'll pick up the specifics of what you've mentioned when I get back you.

 

Kind regards,

 

Lee

 

Web Relations Team

 

Vodafone UK

 

[royalscot]

The problem only came to light when I was turned down for a store card and checking my credit file online revealed the problem. My Credit Score has gone from 900 or so to 600 in a month.

 

This is the first default I have ever had registered against me and while I perhaps must accept some blame for the oversight it does seem an abuse of the credit file system that my punishment is now 6 years with no credit for missing one payment in 2 years.

 

Hi PJ ,

 

Isnt it ridiculous that a company can do this to someone who clearly has no problems in paying their way

 

Defaults can annihilate peoples financial standing and lives respectively

 

I think its time to change this barbaric form of retributon and get this country on its feet again , im sure there are tens of thousands of people in the uk that are in a similiar situation but cant get the credit because of this affliction .

 

I dont think companies realise that by Defaulting people for breathing they in fact strangling this country

 

Im not being specific here this is my opinion with regards to defaults

 

rant over ...have a lovely day

 

 

kind regards

 

rs

[pjryan]

RS - and it was a good rant.

 

I agree and I think the biggest problems is that these defaults push otherwise good paying customers on to much higher interest rates often with products from subsidiaries of the same lender.

 

A Credit File is there to let Lenders make decisions on someones ability and likely hood to pay. Given the sensitivity of the information lenders have a responsibility to use it responsibly and it's clear some are not. One missed payment at the end of a 2 year contract resulted in a £25 default for a mobile broadband contract and I can't get a car loan. It's incredible.

 

I'm awaiting the outcome of my own issue with Vodafone and the next step is to write to my MP. There is a good website that makes this simple to do (theyworkforyou.com). I don't have much faith in the FSA . Any other suggestions welcome.

[silverfox1961]

A while back I contacted the ICO with some general queries. This was one of them

 

I have been noticing that companies are registering defaults for as little as £30-£40. I have also noticed that in the majority of these cases, it is down to a simple error on behalf of the customer. One example is that of one person who cancelled his broadband account before moving house and then forgot to pay the final bill. No reminder was sent and the account defaulted with no notice received. When the customer checked his credit file after being turned down for a credit card, he found the default, contacted the broadband supplier and paid the bill in full. The supplier refused to remove the default.

Does the Information Commissioners Office give any guidelines on when a default is placed on Credit Reference Agency files. Shouldn't defaults be proportionate to the debt. I would have thought that 'fairness' would come into play. Penalising someone for 6 years for such a small debt is disproportionate to someone who has defaulted owing hundreds or thousands.

 

And this is their response

 

The issue of a formal default notice is a matter that falls under the Consumer Credit Act 1974 (the “CCA”). As we do not regulate the relevant sections of the CCA, this is not a matter that I am able to advise on. However, for the purposes of the DPA, we would expect an individual’s credit history to accurately reflect their ability (or inclination) to repay any credit they are provided with. In most cases, the question will simply be a matter of whether the individual in question is liable for an outstanding amount in line with the terms and conditions of their account. If this is the case, then there is usually little we can do to have the default removed, assuming that the account has been defaulted in line with our default guidance.

However, where the amount owed is relatively small and the lender has not taken steps to inform the individual that there was still an outstanding amount owed (i.e. the individual is likely to have immediately paid the debt had they been made aware of it), it is arguable that the default is unfair, as it does not accurately reflect the individual’s credit worthiness.

 

They say that defaults fall under the CCA 1974. A mobile contract is not covered by the CCA so should VF be defaulting anyone?

The second paragraph in the ICOs response is quite telling, don't you think

[pjryan]

I came across ICO documentation posted elsewhere on this forum - I can't post the link yet but you do a search on "ICO Default guidelines" you should find it.

 

 

 

Page 3 Item 4 already interesting:

 

It is an accepted industry standard to record only serious ‘defaults’ with

credit reference agencies

 

And Also P6 Item 11 Time Framework

 

Accounts should not be routinely filed as being in default where full

payments or those due under a rescheduled agreement are fewer

than three consecutive months in arrears.

Accounts should normally be filed as being in default where those

payments due have not been received for six months

 

 

Now I think it is stretching things to argue anything under £50 is a serious default and particularly when it is applied within 3 months of the missed payment. It does seem there are guidelines to protect consumers but VF are not adhering to them.

 

Also the opening section of this documentation again makes reference to credit companies input into these guidelines. I am really not sure Mobile Companies should be issuing defaults as has been point out. Certainly not if they are ignoring industry accepted practices on the matter.

[pjryan]

Just as an update to this post.

 

Lee has helpfully investigated the issue but they have concluded the Default is fair and maintain their position. My position is the Default is unreasonable in line with the guidelines published by the Information Commisioner. In addition, Vodafone taking this action while still accepting me as a new CUstomer on a higher value contract represents a conflict of interest. A default is supposed to represent their opinion of my Credit Worthiness but how can a company record a default AND take me on as a new customer on a higher value contract. To re-iterate this Default has prevented me moving to a new provider and was lodged only 3 Months after a missed payment AFTER the end of an 18 Month contract where I still maintain I was told by the agent there would be no more to pay.

 

THis is the first Default I have lodged against my name and is now causing me untold problems (despite being for only £25!!). I have anecdotal evidence from firends who use other providers they have missed payments in the past but never had this action taken against them.

 

I will keep pursuing this matter with the Information Cmmmisioner, my MP , the FSA AND other Mobile providers who may be unaware Vodafone are carrying out this process and will carry a great deal more influence than me if there is any wrong doing.

 

In the meantime let this serve as a warning to other customers. Vodafone will happily ruin your credit file for 6 years for a balance of £25.

[silverfox1961]

Hi,

Not the outcome I would have expected however, as they have given you their final response, I would definitely go to the ICO.

 

I don't think it's worth your while informing other mobile providers. As far as I can tell, they all do the same thing.

 

What I would so is send a SAR to vodafone to get an accurate state of your acount at the time of the cancellation. It may flag up some interesting things

[pjryan]

As it happens I came across an old Debt Agency bill form O2 from a while back ( I returned the phone they said they didnt get it etc) and that had gone on for 6 months but no Default. In the end they found the phone but at least I didn't have the further complication of getting my credit file updated.

 

I'm just amazed any company would use something as serious as a Default for a balance of £25 and register within 3 Months of the amount falling due. I don't think even a Bank / Mortgage Provider would do that so there has to be some motive in their doing it.

[Human Writes]

From memory the ICO have no powers to order that Voda remove the default either - they will make an assessment as to whether or not they believe Voda has complied with the act in relation to a specific set of circumstances. If they believe a breach has occurred then they will advise Voda who would probably amend the default, Voda wouldn't be obliged to do so though. The only way that you could force the removal would be Small Claims action or possibly ADR.

 

On the topic of the ICO's guidance on defaults - I don't believe that it is relevant to this dispute. The guidance is clearly phrased as advice to credit grantors and the credit industry, it refers to loans, lenders, borrowers, credit agreements and the like throughout, however, mobile phone contracts are not credit agreements as pointed out above they are service agreements - you receive no form of credit so this advice guidance would be totally irrelevant as it refers to financial products not service agreements.

 

Don't bother complaining to the FSA either you'd be wasting your time - mobile phone contracts don't fall within their remit.

 

In relation to a default issued by a service provider you will have given your consent to Voda to pass data on how you performed during your contract to third parties including CRAs. A default on a service agreement and a default on a credit agreement are not the same thing, however, if Voda believe you have defaulted on your service agreement they'd have a right to record this data on your CRF.

 

Regarding Voda accepting you as a customer again - this would be their preogative it doesn't in my opinion have any relevance to this dispute nor does it undermine their position in relation to the dispute.

[silverfox1961]

The ICO don't do anything with regard to the Consumer Credit Act. Irrespective of whether this is a credit agreement or not, the filing of defaults come under the data Protection Act and in this case, I think principle 4 is useful

 

http://www.ico.gov.uk/for_organisations/data_protection/the_guide/the_principles.aspx

 

How can filing a default for £25 be an accurate reflection of a persons ability to pay

[Human Writes]

It's not a reflection of a persons ability to pay its an indication that they failed to pay in the past.

 

Unless the info Voda have communicated to the CRA is inaccurate I don't believe that the data subject has a right to remove it, although the op could try a notice under section 10 of the DPA which allows for data subjects to request a data controller cease processing data where it is causing damage or distress, however, I'm not sure that this would be successful either as they've already communicated the data to the CRA. A notice to cease processing would have no effect on data they've already sent elsewhere.

[silverfox1961]

I do agree with you in part however, I asked the ICO this very question and this is their reply.

 

The issue of a formal default notice is a matter that falls under the Consumer Credit Act 1976 (the “CCA”). As we do not regulate the relevant sections of the CCA, this is not a matter that I am able to advise on. However, for the purposes of the DPA, we would expect an individual’s credit history to accurately reflect their ability (or inclination) to repay any credit they are provided with. In most cases, the question will simply be a matter of whether the individual in question is liable for an outstanding amount in line with the terms and conditions of their account. If this is the case, then there is usually little we can do to have the default removed, assuming that the account has been defaulted in line with our default guidance.

However, where the amount owed is relatively small and the lender has not taken steps to inform the individual that there was still an outstanding amount owed (i.e. the individual is likely to have immediately paid the debt had they been made aware of it), it is arguable that the default is unfair, as it does not accurately reflect the individual’s credit worthiness.

[locutus]

There is no "formal default notice" tho. All Vodafone report is the payment history, the fact that CRA's choose to call it a default is up to them. As HR says, court or an ADR is the place to take the complaint, but you would have to prove that Vodafone have acted incorrectly... not an easy task.

[pjryan]

Thanks for the comments.

 

I should point out that while my ideal outcome would be to have the Default removed and that would have settled the matter , the fact that Vodafone see their action as reasonable is alarming to be honest. It is their behaviour I am hoping to challenge and have reviewed regardless of whether the outcome removes my personal Default.

 

I believe I do have to first of all establish who handles this complaint. I am involving my MP on this point as it is unclear and in particular the grey area around Telecoms companies not being handled by the FSA or potentially the ICO as these are possibly not Credit Agreements.

 

I also believe the question of Vodafone using these Default notices to restrict a Customers ability to move to another provider is relevant and worthy of investigation.

 

It is quite clear from the ICO guidelines (accepting that I have still to determine if they are even relevant) that a credit file is intended to reflect a Customers Credit Worthiness and in that event I believe it is relevant that if Vodafone did take me on as a new customer they did not see me as a credit risk. Yet they have posted a record on my file to indicate to other Mobile Providers that I may be.

 

The bottom line here is that even if Vodafone acted within the guidelines then putting a Default on someones Credit File after 3 Months over £25 is unreasonable. It prevents any ex Vodafone Customer from moving to another provider for 6 years. Yet Vodafone will accept these Customers back on to their own network.

[Lee Vodafone Company Rep]

Just as an update to this post.

 

Lee has helpfully investigated the issue but they have concluded the Default is fair and maintain their position. My position is the Default is unreasonable in line with the guidelines published by the Information Commisioner. In addition, Vodafone taking this action while still accepting me as a new CUstomer on a higher value contract represents a conflict of interest. A default is supposed to represent their opinion of my Credit Worthiness but how can a company record a default AND take me on as a new customer on a higher value contract. To re-iterate this Default has prevented me moving to a new provider and was lodged only 3 Months after a missed payment AFTER the end of an 18 Month contract where I still maintain I was told by the agent there would be no more to pay.

 

THis is the first Default I have lodged against my name and is now causing me untold problems (despite being for only £25!!). I have anecdotal evidence from firends who use other providers they have missed payments in the past but never had this action taken against them.

 

I will keep pursuing this matter with the Information Cmmmisioner, my MP , the FSA AND other Mobile providers who may be unaware Vodafone are carrying out this process and will carry a great deal more influence than me if there is any wrong doing.

 

In the meantime let this serve as a warning to other customers. Vodafone will happily ruin your credit file for 6 years for a balance of £25.

 

Hi pjryan,

 

Just to confirm that I've received your most recent email and will reply to it as soon as I can.

 

As has been stated any individuals credit file reflects how they've maintained credit/service agreements in the past.

 

Had your friends accounts being paid before the point at which their respective providers had taken action to refer matters to a debt recovery agency then a default won't have been recorded. This said, if their payments were more than thirty days late then late payment status codes will more than likely have been recorded.

Thanks for the comments.

 

I should point out that while my ideal outcome would be to have the Default removed and that would have settled the matter , the fact that Vodafone see their action as reasonable is alarming to be honest. It is their behaviour I am hoping to challenge and have reviewed regardless of whether the outcome removes my personal Default.

 

I believe I do have to first of all establish who handles this complaint. I am involving my MP on this point as it is unclear and in particular the grey area around Telecoms companies not being handled by the FSA or potentially the ICO as these are possibly not Credit Agreements.

 

I also believe the question of Vodafone using these Default notices to restrict a Customers ability to move to another provider is relevant and worthy of investigation.

 

It is quite clear from the ICO guidelines (accepting that I have still to determine if they are even relevant) that a credit file is intended to reflect a Customers Credit Worthiness and in that event I believe it is relevant that if Vodafone did take me on as a new customer they did not see me as a credit risk. Yet they have posted a record on my file to indicate to other Mobile Providers that I may be.

 

The bottom line here is that even if Vodafone acted within the guidelines then putting a Default on someones Credit File after 3 Months over £25 is unreasonable. It prevents any ex Vodafone Customer from moving to another provider for 6 years. Yet Vodafone will accept these Customers back on to their own network.

 

Any lender/service provider will use differing credit assessment criteria when processing a customer's application.

 

If necessary the ICO can review matters concerning data protection even if they involves telecoms providers. However, as Human Writes states the telecoms industry isn't regulated by the FSA and so they've be unable to assist.

 

Anyway, I'll review your last email and will come back to you shortly.

 

Kind regards,

 

Lee

 

Web Relations Team

 

Vodafone UK

Edited March 23, 2011 by Lee Vodafone Company Rep
Correcting typo

[locutus]

If necessary the ICO can review matters concerning data protection even if they involves telecoms providers. However, as Human Writes states the telecoms industry is regulated by the FSA and so they've be unable to assist.

 

Anyway, I'll review your last email and will come back to you shortly.

 

Kind regards,

 

Lee

 

Web Relations Team

 

Vodafone UK

 

I think you'll find HR says

Don't bother complaining to the FSA either you'd be wasting your time - mobile phone contracts don't fall within their remit.

 

Maybe get your tip-ex out Lee? :lol:

[Lee Vodafone Company Rep]

Just testing locutus !

 

White-wash has now been suitably applied to correct the 'deliberate' mistake you spotted.

 

Take care.

 

Lee

 

Web Relations Team

 

Vodafone UK

[millymollymoo]

This provider I'm with is not Vodaphone but they are all the same

 

What makes me laugh is that they also withold your service and still expect you to pay for the privilege of precisely that - no service!

 

Seems a win win for mobile providers.

Similar situation as you different provider which was cancelled at end of term, service was stopped, was still being billed, paid even though believed it was not owed to shut them up as it was a pettty amount, then find out three years later after applying for credit that a defaultwas registered even though paid within 10 days of the 'apparent' default date which I never knew about until I saw on credit file. I also have a new contract with them. will be dropping them like a brick in 6 months now I know!!! Idiots should not be able to provide any service!

[Lee Vodafone Company Rep]

Hi millymollymoo,

 

If you settled the account with your provider within the deadline set by their final reminder then I don't see why you would encounter any difficulties with getting the default removed from your credit file.

 

Had this situation arisen with us then I can assure you that all debt recovery action would be ceased as soon as the payment was allocated to your airtime account.

 

Can I ask if you've raised this with the provider in question at all?

 

If you have, what was their reply?

 

Best wishes,

 

Lee

 

Web Relations Team

 

Vodafone UK