Vodafone default - Termination fee

[kconroy]

Hi,

 

I have a default registered on my credit from Vodafone for £768. I am about to attempt negotiate some sort of payment or payment plan. However, before i do i would just like to see if someone has any advice on whether it is legal that the amount is so high and what they would recommend i do in this situation.

 

The current balance is made up of:

 

£51.93 which was due for payment on 13/05/11

£53.18 which was due for payment on 15/06/11

£46.41 which was due for payment on 14/07/11

£45.87 which was due for payment on 15/08/11

£44.38 which is due for payment on 14/09/11

 

These invoices total around £240 and the rest i assume is a early termination charge which must be around £525. The mobile phone was restricted on 8th July 2011.

 

Any help of advice would be appreciated. Thank you.

[sequenci]

Hello there.

 

Vodafone are likely to have charged you line rental to the end of the contract period. The restriction of the service will have little to do with the contarctual term, they just barred calls as you didn't make payment. The reason why there is a contract period is usually due to the subsidisation of a handset.

[kconroy]

Thank you for your reply sequenci.

 

Is it right that i am charged for line rental for the entire contract period even though i did not get to use the phone for the entire contract. My point is that if i were to pay that i am effectively paying for one and a half years worth of phone usage i never got to use.

 

I understand this is probably highlighted in in my terms and conditions but i do not even have them to look over. I contacted Vodafone and they simply referred me to my point of sale for a copy of the agreement, which i do not have.

 

They also sent me a simple letter in which they request "you consider this letter as the copy of your Vodafone contract..." The letter makes no reference to any terms and conditions at all let alone any termination fees.

[sequenci]

Yes, they can charge for the whole term.

 

Where did you sign the airtime agreement?

[kconroy]

I can't recall though i think it think it may have been online through phones4u but i can not find any emails or documents to verify this. The closest thing i have to a copy of agreement is the vodafone letter they ask to consider a copy of the contract, which states the mobile number, price plan, line rental and contract term, that is it.

 

If they want me to consider that letter the contract, which is what they say, and the 'contract' fails to mention any terms and conditions or termination fees, is the termination charge still valid?

[kconroy]

Also, does anyone have any input on this…

 

I have just been reading through OFCOM’s Guidance on Unfair Terms in Contracts for Communications Services. In particular the part on Early Termination Charges, and the Fairness Test on ETC’s at pages 137 onward;

 

We consider it likely to be unfair if a supplier sought to recover in an ETC a sum that would put it in a better position than if the consumer had performed his contractual obligations (and no more). Put another way, in our view it is unlikely to Ofcom review of additional charges be fair if the ETC is more than the supplier could recover in damages at common law where the consumer breached the relevant contract.

 

This seems fair enough, Vodafone can recover charges that would have put it in a position had I performed my contractual obligations and no more for the entire term.

 

However, it is following that I would think makes the charge unfair.

 

…Accordingly, in setting ETCs, we consider a supplier must make a reasonable preestimate of the position it would have been in had the consumer done what the contract obliged him to do (and no more) (i.e. the losses it incurs because the contract is not performed for its fixed term). All we consider the supplier may fairly recover in an ETC is a sum that reflects that position. That involves making a reasonable pre-estimate of the costs it saves and the losses it can mitigate, and deducting those from the fixed contractual retail payments outstanding on termination.

 

So Vodafone should have made a pre-estimate of the costs it saved from not having to perform the contract and deduct them from the early termination charge.

 

I received a £526 early termination charge. It was a 24 month contract, from January 2011 to January 2013. The contract was cancelled in September 2011 with £241 in unpaid invoices. The contract therefore had 15 months to run. The line rental was £34.16. So if I has performed the entire contract and nothing more that would have been equal to 15 months line rental at £34.16 which is £512.40. Vodafone, according to the guidance, should have deducted the costs it saved from not having to perform its side of the contract for 15 months from this total of £512.40. They have not done this and instead charged £526 which places them in a better position had than if I had performed my contractual obligations and no more, which is against the guidance.

 

If the term providing for the ETC had the effect in [A1.70] it would put the supplier in

a better position, and the consumer in a worse one, than they would be in without

the term.

[Lee Vodafone Company Rep]

Hi kconroy,

 

In regard to the cancellation fee I can confirm that this would be VAT exempt and also subject to a further discount of 2% in accordance with our regulatory requirements.

 

If you'd like to discuss payment arrangements further you're welcome to email me with your details via the Contact us form here quoting the code WRT135 - CAG Forum in the subject line.

 

Once sent you'll receive an automated reply with a reference number. To ensure that it reaches me could you update the thread with this and I'll get back to you as soon as possible?

 

Kind regards,

 

Lee

 

Web Relations Team

 

Vodafone UK

[kconroy]

Hi Lee,

 

Thank you for replying, the reference number is WRT135 - CAG [#11360732]‏.

[kconroy]

Just to let you know i have just had another automated reply,this time with ref: WRT135 - CAG [#11360787]‏.

[Lee Vodafone Company Rep]

Hi kconroy,

 

Thanks for coming back to me.

 

I've received your emails and so rest assured that I'll get back to you as soon as I can.

 

Kind regards,

 

Lee

 

Web Relations Team

 

Vodafone UK