Former customers of the collapsed dealer Excell Communications are going to court in a bid to get out of contracts they signed while the business was still trading.
The dealer went into administration in February 2011, with an estimated £1.3m in cashback claims. Customers are angry they still have to fulfil a phone contract with Orange but without getting any of the cashback they were originally promised by Excell.
Blackpool County Court is set to hear a group application by 19 former Excell customers. A date for the hearing has yet to be scheduled, with the court waiting on documents from all of the parties.
Orange is being investigated separately by the regulator Ofcom about whether it has complied with General Condition 23. The condition states providers must put in place provisions to ensure products and services are not missold; the customer is authorised to enter into a contract; consumers get the required information at point of sale; terms and conditions of cashback deals are not restrictive and retailers have had due diligence checks carried out.
Wendy Embisu, who is leading the group application, told Mobile it was unclear during the sales process that customers had two contracts - one with Excell for cashback and one with Orange for the phone contract. She said: ‘I took out a 24 month contract for £50 per month plus VAT that included a £15 cashback. Some people I know are paying £90 per month and had two phones with Excell so they are much worse off.’
The customers’ court application said: ‘To seek judgement to exonerate all obligations of the claimants, which the defendants are seeking to enforce, despite all claimants being unaware of any contractual agreement with the defendant and an investigation being undertaken by Ofcom under their General Condition 23 due to concerns regarding the defendant’s compliance in respect of its sales and marketing compliance.’
An Everything Everywhere spokesman said: ‘We cannot comment on this case while litigation proceedings are on-going. Although we are aware of Excell Communications, Orange does not hold a direct relationship with the firm. The relationship with Excell lies with distributors Midland Communications and Hugh Symons. We understand that since Excell announced its administration, Midland and Hugh Symons have been working closely with Excell customers on a case by case basis ensuring that any outstanding issues are resolved.
‘It should be noted that if we were to find any business working on behalf of Orange to have any involvement in misselling – including working with personnel who have been involved in misselling – we would terminate their account with immediate effect.’
When Excell went bust last year, administrators Begbies Traynor said Midland Communications’ decision to hold back £100,000 of commission and the dealer’s mounting cashback claims proved fatal. Excell entered the cashback market in 2007, leading to a boost in sales. However, in June 2010, the company began to offer a £15 cashback deal, which Begbies Traynor called ‘a commercially poor decision’.