Penalties for not paying by direct debit

[The Phantom]

This is all covered by the Direct Debit Guarantee, which (as we all know) is worth slightly less than the electrons it's carried on. On a more serious note, it's a damn good argument for insisting they give the money back - it's unfair to you specifically because your not paying by DD has come about not by your choice but by their mistakes. The whole non-DD fee is still a grey area (thanks to the incompetents at the OFT who gave out a figure, the incompetents at OFCOM who gave their approval, and the incompetents at TS who won't touch it with a barge-pole), but you being made to pay for their mistakes is cut-and-dry extortion.

 

Absolutely

We now told Talk Talk to get up their bike

We changed to Toucan, our 18 month contract with TT was up today

[Prime]

I have a minor quibble about the template letter.

 

The word "refute" should be replaced with "deny".

 

"Refute" implies an acceptance that their evidence proves their assertion.

 

refute - Definitions from Dictionary.com

[lawbunny]

Stand up T-Mobile, and take a bow. Their new contracts have a new definition for the annoying 'Non DD payment' charge. Here are the terms;

 

A £3 separate payment handling charge applies for processing payments by methods other than direct debit or BACS payments made via online or telephone banking.

 

As you can see, the stranglehold has been broken and a MUCH fairer system in place. If you know of any other firms that are offering a similar waiver, do let us know!

 

 

I work for T-Mobile but I've never been quite sure about the legality of the £3 handling charge, and wondered if someone could clear this up for me. So is it only a penalty if it's extortionately high, or if it is for every other method of payment except direct debit? Does this mean that it is okay for T-Mobile to impose this charge, because they do allow you to pay by another method (BACS) rather than direct debit and still avoid the charge?

[un1boy]

I work for T-Mobile but I've never been quite sure about the legality of the £3 handling charge, and wondered if someone could clear this up for me. So is it only a penalty if it's extortionately high, or if it is for every other method of payment except direct debit? Does this mean that it is okay for T-Mobile to impose this charge, because they do allow you to pay by another method (BACS) rather than direct debit and still avoid the charge?

 

Personally, I think all charges like this should be illegal if they aren't already - I mean, they make enough profit already and what's next? Shops charging us a pound for every minute we are in there to contribute towards energy bills?

 

It just shows how greedy these companies are - it's not like they don't make enough.

[lovely10]

Hell can yoo please give me a phone number for the cheif exicutive Hakim alazaibi?

 

please reply asap

[Human Writes]

I work for T-Mobile but I've never been quite sure about the legality of the £3 handling charge, and wondered if someone could clear this up for me. So is it only a penalty if it's extortionately high, or if it is for every other method of payment except direct debit? Does this mean that it is okay for T-Mobile to impose this charge, because they do allow you to pay by another method (BACS) rather than direct debit and still avoid the charge?

 

It is lawful.

 

From some earlier posts in this thread which hopefully explain things:

 

I sent off the template letter to Orange as they'd been charging me £3 a month for not paying by direct debit.

 

I've just had this letter back:

 

Dear X

 

Thank you for your recent correspondence, regarding our charges when bills are not paid by Direct Debit.

 

We introduced the charge for payment by means other than Direct Debit in 2005. This charge genuinely reflects the costs incurred in processing payments and is no way a penalty charge. In a recent statement the Trading Standards Institute confirmed that these charges are lawful.

 

Payment by Direct Debit is simple and easy to set up and gives you the added benefit of the Direct Debit Guarantee.

 

We trust this addresses your concerns.

 

Yours sincerely

 

Hakim Alazaibi

Executive Assistant

 

-----

 

So how do we find out if the Trading Standards Institute have indeed pronounced on this and what they said exactly?

 

Also, never been entirely sure of what benefit I gain from the Direct Debit Guarantee?

 

Any thoughts?

 

Yes they have, I asked Orange about it and they referred me to a statement the Trading Standards Institute made to Watchdog when they ran their story about these charges:

 

BBC - Consumer - TV and radio - Penalty charges

 

The Trading Standards Institute offered a statement regarding this story. It said:

 

"Trading Standards officers have received a number of complaints regarding the extra charge levied by some companies on consumers who pay other than by direct debit.

"These charges are lawful. The Price Indications (Method of Payment) Regulations 1991 allow differential pricing provided the indication of the higher price is expressed clearly, unambiguously, and that it's easily identifiable by a consumer as applying to the goods, services, accommodation or facilities concerned, and given prominently and legibly.

 

Basically the charge is lawful as long as it is made clear to the customer, there are several people elsewhere in the thread suggesting petitions/letters to MP's to amend the existing legislation and make it illegal which you may wish to help with if you feel strongly enough about it.

[GuidoT]

I refused to pay direct debit fee and BT have now placed a restriction on my line so I cannot make outgoing calls.

 

Thank you BT, it is not like I have any choice and can switch.

[elliesnan]

l read somewhere that the regulater is looking at these penalty charges and is going to rule shortly

l have now paid my third bill without the £4.50 but we are moving provider on wednesday so it will not matter to me after that. why can't you move guido?

 

 

 

 

Basically the charge is lawful as long as it is made clear to the customer, there are several people elsewhere in the thread suggesting petitions/letters to MP's to amend the existing legislation and make it illegal which you may wish to help with if you feel strongly enough about it.

[GuidoT]

I am fairly sure BT are the only providers in the area.

[Michael Browne]

Millions could reclaim in BT bill backlash:

 

Millions could reclaim in BT bill backlash | This is Money

[davefirewalker]

Hi guys

 

havent fully read this thread......but found this on a legal webbsite that may be of interest

 

------------------

I think I have them banged to rights here (having finished the contract part of my degree)

 

Yes they are perfectly within their rights to change their terms of service if they so wish at any time and charge more for say line rental or any other services they provide to me. Subject to my agrement and consent of course. However this charge is not a service provided by them but by a third party to the contract to whom I have no obligations. Evidenced by the fact they they do not charge VAT on the £4.50 and they are obliged to charge VAT on all the services they provide.

 

So I think I will just pay the bill less the £4.50 and I will not be in breach of contract because I will have paid only for the services they provide. I will put a note in with the bill to forward my representations to their legal department as to what grounds they attempt to justify the charge.

 

Should be an interesting one I'll keep you posted.

 

cheers

-------------------------

 

 

rgds

 

Dave

[goodwill]

I've read the excuse BT give for levying this payment (£1.50/m) 'processing' charge. It does not reflect the true cost that BT incurs for non direct debit forms of payment.

We have introduced these changes because it costs more to accept non-Direct Debit payments from customers. This is not just because of the cost of taking the payments, but because on average customers are more likely to forget to pay or not pay, and this leaves us with bad debt of around £100 million a year.

 

Yours sincerely

pp

Gillian Lewis

Head of Complaint Management, Customer Services

The fee BT charge to cover the cost of a particular form of bill payment must by law reflect the true cost that BT incur for processing the bill.

The costs BT incur for chasing late payment is already covered by their late payment penalty (£7.50).

The £100m bad debt argument is a red herring. Ofcom already allows BT to factor in 'bad debt' into their retail prices to offset any bad debt.

All the regulated utilities use this method.

 

It's clear the £1.50/m rolling penalty for non direct debit payment bares no relationship to the actual cost to BT of 'processing' the payment.

It appears to be being used by BT to force customers onto direct debit.

 

note:

Last year Ofcom promised on their web site to publish their initial findings into this charge sometime in Jan 2008 (now). That date has recently been removed from their statement.

 

[meagain]

The costs BT incur for chasing late payment is already covered by their late payment penalty (£7.50).

 

This charge probably in fact exceeds their costs. Of course, if you challenge this, it is for BT to prove that it does approximately cover their costs.

 

The £100m bad debt argument is a red herring. Ofcom already allows BT to factor in 'bad debt' into their retail prices to offset any bad debt.

All the regulated utilities use this method.

 

Can you provide a source for this? Would be useful to enter into evidence in support of claims that are proceeding.

[goodwill]

The £100m bad debt argument is a red herring. Ofcom already allows BT to factor in 'bad debt' into their retail prices to offset any bad debt.

All the regulated utilities use this method.

Can you provide a source for this? Would be useful to enter into evidence in support of claims that are proceeding.

not really on basic Geographic calls (but as I understand it the bad debt associted with that is minimal)

but

on NTS and PRS call billing

http://www.ofcom.org.uk/consult/condocs/NTSfin/ccp/ntsruprs.pdf

4 April 2005

Charges between Communications Providers: Number Translation Services Retail Uplift charge control and Premium Rate Services bad debt surcharge

 

PRS Bad Debt Surcharge.

 

5.1 PRS services are one type of NTS service. PRS services include calls to recorded information (e.g. a recorded weather information service), voting lines, competition lines and live conversation (e.g. Chatlines). PRS calls generally have higher retail prices than other NTS calls in order to provide additional revenue to Service Providers, to cover, inter alia, additional costs of providing the service and associated content.

 

5.2 Some costs of retailing are more closely linked to the retail price of the call rather than the volume of call minutes made. Examples of such costs are the costs of bad debt and the costs of financing working capital. As the retail prices of PRS calls are higher than the retail prices of other NTS calls, PRS calls will all other things being the same incur relatively higher costs of bad debt and working capital expressed on a per minute basis. In addition, PRS calls, as compared with NTS ‘local rate’ or ‘national rate’ calls, may experience a different level of bad debts expressed as a percentage of relevant turnover due to the fact that the customers who make these calls are more (or less) likely to default on payment – the 'incidence factor’.

 

5.3 It is also appropriate to allow for the recovery of additional working capital costs associated with PRS calls. These arise because on average, BT receives call revenues from retail customers after it makes the payment to the TCPs. This leaves a period in which BT must finance its debtors after it has paid its creditors. This implies that BT is incurring an opportunity cost due to this timing factor. The generally higher prices and terminating payments for PRS calls implies that this cost is higher than for other NTS calls.

 

5.4 For these reasons, in addition to the NTS Retail Uplift, BT also retains a further charge to cover the extra bad debt costs and financing of working capital associated with PRS calls compared to other NTS calls. This additional retention is otherwise known as the PRS bad debt surcharge.

[Bob_and_Wendy]

I wonder if anyone can help I have contacted Orange to request a refund of the charges they have been applying to my account as I pay by standing order or bank transfer instead of direct debit. Orange have come back stating that they will not refund these charges I am not confused as I had understood that they were not able to make these charges?

Please can someone advise me as to what I should do next?

 

many thanks

[Son of Shoestring]

Some really very interesting info in this thread.

 

I consider Ofcom to be about as useful as a pair of bollocks on a mushroom. I absolutely do not consider them to be balanced or fair but rather believe them to favour business not the customer.

 

I have long held a similar opinion about OFT but am beginning to reconsider in the light of the bank charges case plus the ThisIsMoney article above. But only time will tell if they are truly behind the customer or simply a lightening rod to earth anger when it irrupts.

 

Most interesting post by davefirewalker that BT do not charge VAT on the £4.50 penalty fee (yes, I insist it is a penalty fee and not a processing charge), which, if true, would completely crumble their case. Also, don't they have to show that their cost of processing payments is actually the amount they charge and that not a penny of profit is included - for it to be lawful and not a penalty fee, which IS unlawful?

 

The above referenced article about the OFT view is also instructive from a contract law case. It is my understanding that for any changes in the contract to be lawful, I must accept them? (legal seagulls please jump in here...). I further understand that my agreement is assumed unless I disagree in writing -- which I have done many times since this penalty fee was introduced. Ergo the "new" contractual terms cannot be binding because I have and continue to dispute them --- there is no contract in force. Assuming this is correct, this has led me to consider that since BT has continued to provide a service, despite my written disagreement and repeated refusal to pay, they by virtue of contract law must be considered to have accepted my amendment to the offered terms?

 

I am probably being hopeful on this angle, but thoughts anyone?

[maybelline]

this is interesting, since I have been arguing with my provider over the non DD fee of £5 for paying over the phone instead of DD, they say it is written on the bill so I checked it

 

'Payment handling and late payments' (notice how they are lumped together)

all you repayments are made to Virgin Media Payments Ltd, which is responsible for the collection of costomer payments on behalf of Virgin Media Ltd. Please refer to our terms and conditions for further details of your relationship with Virgin Media Ltd and Virgin Media Payments Ltd'.

 

'Please note if you do not pay by Direc6t Debit, Virgin Media Payments Ltd will charge you a payment handling fee of £5 per month. Please pay your bill on time, if not we may charge you a £10 late payment fee. Also, if any cheque or Direct Debit of yours is cancelled or is not cleared by your bank, we may charge you a £10 fee.'

 

IMO it seems odd that they have set up a different company to take the payments??

 

and VirginMedia have been late payment marking the Credit Ref Agency files of those who pay non DD EVEN IF NOT LATE PAYING!

[Son of Shoestring]

this is interesting, since I have been arguing with my provider over the non DD fee of £5 for paying over the phone instead of DD, they say it is written on the bill so I checked it

 

'Payment handling and late payments' (notice how they are lumped together)

all you repayments are made to Virgin Media Payments Ltd, which is responsible for the collection of costomer payments on behalf of Virgin Media Ltd. Please refer to our terms and conditions for further details of your relationship with Virgin Media Ltd and Virgin Media Payments Ltd'.

 

'Please note if you do not pay by Direc6t Debit, Virgin Media Payments Ltd will charge you a payment handling fee of £5 per month. Please pay your bill on time, if not we may charge you a £10 late payment fee. Also, if any cheque or Direct Debit of yours is cancelled or is not cleared by your bank, we may charge you a £10 fee.'

 

IMO it seems odd that they have set up a different company to take the payments??

 

and VirginMedia have been late payment marking the Credit Ref Agency files of those who pay non DD EVEN IF NOT LATE PAYING!

 

Those of suspicious minds (guilty, I'm afraid) might conclude the reason for setting up a separate entity for collection might be because if that entity has little or no assets in the case it was ever sued, and could also be wound up quickly and then replaced with another collection entity.

 

Of course there might be other innocent reasons.

[maybelline]

sounds like the old, its a service gag! it might be to VM but not to me!

[Mark_Blackpool]

Hi guys

 

havent fully read this thread......but found this on a legal webbsite that may be of interest

 

------------------

I think I have them banged to rights here (having finished the contract part of my degree)

 

Yes they are perfectly within their rights to change their terms of service if they so wish at any time and charge more for say line rental or any other services they provide to me. Subject to my agrement and consent of course. However this charge is not a service provided by them but by a third party to the contract to whom I have no obligations. Evidenced by the fact they they do not charge VAT on the £4.50 and they are obliged to charge VAT on all the services they provide.

 

So I think I will just pay the bill less the £4.50 and I will not be in breach of contract because I will have paid only for the services they provide. I will put a note in with the bill to forward my representations to their legal department as to what grounds they attempt to justify the charge.

 

Should be an interesting one I'll keep you posted.

 

cheers

-------------------------

 

 

rgds

 

Dave

 

I hadn't noticed this before, but since the charge is levied by a third party then I don't see how it is enforcable since the customer has no contract with or obligation to that third party. I wonder how what one turned out.

 

Since the so-called payment processing charge doesn't actually pertain to the processing of a payment (as otherwise it would cost less to pay quarterly rather than monthly, 4 payments per year rather than 12) then I did think of getting the best value by paying, say, 15p per day using a debit card or BACS, for 30 days, which still wouldn't cost anywhere near £4.50 to process, but would certainly be better, er, "value for money".

[buzby]

Having now paid Virgin Media £50 in non-DD charges, I set about contacting their acting CEO (Neil Berkett) to resolve the issue. My complaint was passed to their Executive Office staff to deal with and after a phone call, was advised politely, that the charges stand and that it was their company policy to uphold them.

 

Now, didn't somebody say they got a refund....?

[Mark_Blackpool]

We have had a letter today from BT which I have scanned, but I can't see how to upload onto this forum.

 

Specifically, with regard to the payment processing fee, the following stand out:

 

"BT now requires you to enter into an agreement with BT Payment Services Limited who will collect and process your payment"

 

"You have a statutory right to cancel your contract with BTPS, but if you do cancel it, you will be in breach of your contract with BT for telephony or broadband service... and BT will have the right to terminate that service as a result"

 

"... when you pay your next bill, you are agreeing to enter into a separate contract with BTPS"

 

Any legal experts here...

 

So, if we don't want to enter into this separate contract then we can't pay our next bill. At all. Is this a simple case of an unfair term we can reject since it's contrary to our basic contract with BT to pay for services?

 

Even if we do pay it, does that then legally mean we have entered into that separate contract with the third party?

 

If we don't want a separate contract with BTPS, in what way does this place us in breach of our contract with BT? For instance, if they terminate our service under this Term, does this not place them in breach of contract (to provide those services as agreed) and not us?

[buzby]

It's your definition of 'unfair' - a judge could construe if it doesn't cost you any more to pay via this company (and BT has been very careful to make no distinction other than this is the 'payment processing' arm) then there IS no unfairness to the customer. That said, it could be argued this is no different for 'factoring' where a firm supplies the service and the billing is outsourced, they eventually receive 95% of the fees paid, the remaining 5% is the factoring companies cut.

 

The interesting part in all this, is that by splitting the service and the payment mechanisms, they've a better chance of landing the billing costs on the customer as an additional expense - an expense that wouldn't be there if the firm had continued to fully control and keep in-house their various departments.

[Son of Shoestring]

This is an interesting move by BT and is doubtless to do with the forthcoming announcement by the OFT about the £4.50 per quarter penalty fee for processing non DD payments. It smells unpleasant and I do think it requires the input of a lawyer to assess. First move may be to contact OFT and Otelo to ask them about the enforceability of this change.

 

For it to be considered factoring I would've thought (but am by no means certain) it would require the new arm - BTPS - to be independently owned as the whole purpose of factoring is, as Buzby says, to outsource collection. I would think that a judge would simply regard this move as a circumvention of existing laws.

[Mark_Blackpool]

If I interpret this correctly, this means that:

 

We have a contract with BT to supply services, at an agreed price.

 

This change to the Terms means we have to enter into a contract with a third party to process our payments.

 

Paying our next bill "deems" us to have entered into that contract.

 

If we do not pay our next bill because we do not agree to enter into that contract with a third party, we would then be in breach of our original contract with BT.

 

Therefore I do not see that this has any legal basis and is an "Unfair" and unenforcable Term.

 

I assume that what we should do is to write to BT explaining that while we will indeed pay our next bill (minus £4.50), it should not be construed as any acceptance of this Term, indeed we refute and reject it.

 

Should BT then decide to terminate supply, it it is they who are in breach of contract not us.