8/1/2007 10:24:00 AM
Ofcom: code must curb mis-selling
Ofcom has launched a new code of practice for mobile retailers designed to curb ‘slamming’ and dodgy cashback offers, hoping the move will see off the need for new laws.
Slamming, the widespread practice of a reseller misrepresenting itself as an operator, is being targeted, as is the business of offering cashbacks that are hard to recover.
The new sales code is being backed by all five networks. Among a host of rules, Ofcom states: ‘The expression “calling on behalf of [network]” should not be used.’
Cashback offers should no longer need original statements as proofs and must allow a minimum 60-day redemption period.
Ofcom chief Ed Richards (pictured) said: ‘We expect this new voluntary code of practice to stamp out mis-selling in mobile; if it does not, we will not hesitate to step in to protect consumers.’
Ofcom said there was 'growing evidence' that those selling mobile services were confusing or misleading consumers.
Ofcom is currently receiving in the region of 400 complaints per month about cashback promotion schemes which do not reimburse customers and cold calling.
The code of practice sets out minimum business standards, including prohibited sales and marketing practices; how retailers must comply, including details of proactive monitoring by MNOs and possible sanctions; due-diligence exercises to determine which retailers should be engaged; and how complaints to MNOs should be monitored and handled.
The main body of the code:
The representatives of all organisations selling and promoting mobile services should
be properly trained and have sufficient understanding of the products and services
they are promoting and selling. Topics to be covered in any training process should,
at a minimum, include
• the relevant operator’s customer terms and conditions,
• the terms and conditions applied by the reseller (if applicable)
• the process for ordering the mobile handset and subscribing to the network
• the relevant principles of consumer protection law,
• details of the tariffs offered by the operators and charges that will be incurred
by customers and methods of payment;
• customer cancellation processes and
• procedures for handling customer complaints.
a) All approaches to current or prospective customers should be made at an
appropriate time of day. For example, if the approach is to be made by telephone,
the call must be made at a reasonable time of day, say after 8.00am and before
b) Customers that have signed up to the Mailing Preference service, Telephone
Preference Service, the Fax Preference Service and the E-mail Preference
Service must have their wishes respected.
c) All data used to contact prospective customers must be obtained in a manner
that complies with UK data protection law.
d) All automated calling equipment should be used in a way that is compliant with
Ofcom’s policy for preventing the persistent misuse of electronic communications
e) At the start of any telephone call with a consumer, the caller must introduce
himself/herself clearly and fully and state the purpose of the call, for example:
“Hello, my name is …………… and I am calling from [organisation], an authorised
dealer for [network].”
The expression ‘calling on behalf of [network]’ should not be used.
f) Representatives should not abuse the trust of vulnerable customers; e.g. those
who are elderly or whose first language is not English.
Sales and marketing campaign records including recordings of conversation should
be maintained by the organisation making the sale or conducting the marketing
campaign for six months. These should include the date and the time of the
conversation with any contacted person and sufficient information to permit the
identification of the representative involved, so as to assist in dealing with any
subsequent complaint or inquiry, if required.
Entering into a contract
Before accepting an order, the reseller must take all reasonable steps to ensure that
the contacted person understands that he/she is entering into a contract, the key
features of that contract and the names of the contracting parties.
Once the contacted person has agreed to place an order, he or she must be
furnished with the appropriate information, which, at a minimum, should include:
a. A clear statement that a contract is being entered into, and the key
features of that contract including;
i. any minimum period of contract,
ii. minimum contract charges, and
iii. any early termination charges.
b. The name of the company or companies with which the customer is
contracting and its contact details (generally the reseller for the
handset, and the operator for the airtime. Sales incentives can come
from both parties. The details of each must be made clear to the
customer, if applicable).
c. Details of the cancellation rights that apply to the product and /or
services the customer is purchasing, including the period in which any
cancellation rights can be exercised and confirmation that the
customer has the right to change his or her mind without cost during
the cancellation period.
If any part of the offer to the consumer contains a sales incentive, the consumer must
be provided with a clear written statement as to which legal entity (i.e. dealer or
mobile operator) is making the offer and is undertaking to meet that obligation. The
terms of the offer must be clearly and prominently stated in writing, be made in good
faith and not be unduly restrictive.
For example, in relation to a cash back offer, the following terms should be regarded
- a requirement that the customer submits their original statements – copies of
statements should be acceptable proof;
- charge for processing a cash back claim;
- a requirement that cash back claims are submitted within an unreasonably short
period (such as anything less than 60 days, for example);
- terms stating that a cash back payment will not be made if the customer has an
outstanding balance on their account.
The following sections cover the mobile operators’ undertakings
Mobile operators (or, their appointed distributors, as applicable) will carry out due
diligence on all organisations with whom they contract and appoint to promote the
operator’s network services. In particular they will:
• Carry out a credit reference search and check that the company does not have a
history of failing to meet its undertakings to creditors.
• Check the organisation against any information supplied to the operator by
Ofcom and/or the local Trading Standards office to ensure that the organisation
concerned has not had contracts terminated with other mobile network operators
for breaches of this Code.
• Check that the directors of the organisation concerned have not been directors of
other resellers that have filed for bankruptcy or gone into administration owing
money to the operator’s customers
• Make spot checks, on a sample basis, to assess whether due diligence
information remains up-to-date and relevant.
• Reserve the right to request copies of the retailers customers terms and verify
that that are compliant with the operator’s minimum business terms (which will
include reference to applicable laws)
Handling of complaints
The mobile operators have in place processes for handling complaints about the sale
and promotion of their mobile ser