4/30/2010 11:48:00 AM
Orange clawbacks threaten indies
Up to 10 independent retailers will be hit hard by hundreds of thousands of pounds in clawbacks under Orange’s ‘code 79’ clause.
Code 79, which Orange started to enforce at the start of the year, states that dealers will have the total value of a contract ‘clawed’ back if a customer defaults for up to four months.
Previously, dealers would receive 50% commission if they could show that they had gone through the right steps to connect a customer.
Industry sources said up to 10 independent dealers could be in danger. Many dealers have already faced thousands of pounds of clawbacks, with some saying they are now reluctant to connect Orange.
One dealer said: ‘We’ve been speaking to Orange, it’s a fundamental change from what they’ve done before. In terms of connecting Orange, it makes you think twice – it’s not great.’
‘Dealers feel outraged because code 79 customers have paid at least one bill to Orange, but Orange have said that they are still going to clawback. A lot of those customers might be late paying their bills, but later on resume payments.’
It is understood that Orange has backdated the clawbacks from September 2009, increasing the amount dealers owe even further.
One source said: ‘The customers were already credit checked by Orange and accepted, but they then allow the dealer to take all the risk.’
Meanwhile, Orange and Intek have stopped working together, which some said is a result of code 79. The company continued connecting Orange through its b2b sales team and website, after passing on its retail estate to Shebang at the start of 2010, but that agreement has now ended.
Since January, Intek Communications has been focusing on its online and b2b business, but it is unclear what will happen to it now.
An Orange spokesperson said: ‘We have informed our indirect partners that we have moved to a 100% clawback policy when a customer defaults on the payment of their bill within the first 120 days. Orange continues to pay strong commission for good quality high value connections.’