Customer Billed 11 Years after Canceling Contract?

People often say to me that telcos know they will always underbill more than they overbill, because they can rely on customers to complain when they are overbilled. I say that is not true – some customers will complain in some overbilling cases, but there are plenty of customers who simply do not check their bills. That much was made obvious when one customer of British mobile operator O2 complained about being charged GBP4,000 (USD5,200) a full 11 years after he said he canceled his contract. Per ChronicleLive:

Peter, of Blyth, said: “Around June 2005 I purchased a phone on an 02 line. In October the same year I acquired another phone with what was – and still is – my normal number. The June phone was on a year’s rental contract with 02 which I did not renew.”

More than a decade later Peter had to check his direct debits and realised that 02 were still taking monthly payments of almost £50.

He said: “I was horrified at this and told 02 that I had cancelled that phone and it had never been used since June 2006.”

To summarize the situation per the customer and his telco:

  • Payment of GBP50 (USD65) was taken from his bank account every month for 11 years.
  • The telco kept sending paper bills to the address they had for the customer until they switched to paperless billing.
  • The telco then emailed bills to the email address they had for the customer.

But somehow, over the course of 11 years, this person never noticed they were being charged for something they literally never used, and thought they had already stopped paying for.

O2 agreed to refund half of the money paid by the customer. However, O2 said there was no record of the contract being cancelled, and they refused to refund the entire cost of an active service that the customer could have used.

When it comes to the accuracy of charging, telcos can never afford to relax. They can sit back and tell themselves that customers will always get in touch when they are being overbilled, but Peter from Blyth demonstrates that not every customer is keeping a watchful eye on their affairs, even if money keeps draining from their bank account. O2 chose to forego half of the revenues they thought they earned from Peter over the last 11 years, possibly because telcos are always being hammered in the press for overcharging customers. Life would be easier if telcos could rely on customers to spot overcharging mistakes, but customers are even more prone to errors and oversights than telcos are. Assurance staff are employed because life is never as easy as we would like to be, and that means the professionals must check for errors which go either way.

Eric Priezkalns
Eric Priezkalns
Eric is a recognized expert on communications risk and assurance. He was Director of Risk Management for Qatar Telecom and has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and others.   Eric was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He was a founding member of Qatar's National Committee for Internet Safety and the first leader of the TM Forum's Enterprise Risk Management team. Eric currently sits on the committee of the Risk & Assurance Group, and is an editorial advisor to Black Swan. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.   Commsrisk is edited by Eric. Look here for more about Eric's history as editor.
  • akrittok

    I don’t know very well how things are done in the UK but some bits here don’t make sense.
    “The June phone was on a year’s rental contract with 02 which I did not renew.”

    – option 1: the rental contract had a hard stop after 1 year requiring action from the customer to be renewed. I doubt that’s the case. If it was set up this way then the service should have been stopped automatically. That’s easy enough to check and O2 would have paid up in full.
    – option 2: The contract was (more likely) on auto-renewal and the customer did not know/care in which case O2 should not have paid anything back.

    So not sure how this qualifies as over-billing and what O2 could have done differently. Check for all these lines on auto-renewal and see if there’s any traffic on them? And call customers to confirm they still want the service? Maybe, but a bit overkill.

    • I think you are right that O2 has not done anything wrong in this instance. However, note that they still decided to reimburse the customer, and I think that is the right decision. The reason why telcos have to reimburse customers – even when the customer is entirely in the wrong – is because they have a track record of overcharging customers. It would be much easier to justify a strict application of prices if telcos had not already set themselves up for criticism.

      Given my personal experience of UK mobile comms, I can comment that this customer likely bought a highly discounted one-year deal where he was sold both the handset and the contract at the same time. The sales focus would have been on the ‘all in one’ price, not on the recurring nature of the contract. So whilst customers should know better – they should always apply the principle of caveat emptor – it is understandable that some customers may have bought the product and focused on the physical device, without having properly considered that they signed a contract which they would later need to cancel.

      It is interesting that the customer said he never made any calls. From an analytical perspective, perhaps telcos should occasionally check if they have accounts where no calls are made, and none are received. The reason has nothing to do with protecting customers, but with enhancing profits – somebody who does not use their phone is not going to make them as much profit as somebody who does.

      In defense of customers, they can know/care about renewal of annual contracts, and still be screwed over by telcos who are less careful than they are. My first mobile phone was purchased through a similar one-year ‘all in one’ deal. In advance of the annual renewal date I opted to pay another deeply-discounted advance charge for a second year of connection to the network. But on the 13th month the telco still applied a monthly charge as if they had not heard from me, nor received my advanced payment. And then things got much worse when I tried to get them to reverse their mistake. However, telling the full story of that billing fiasco would require a very long post… of a type I became known for several years after buying that phone ;)

      • akrittok

        It always puzzled me why operators chose to go for these over-complicated business models. The only advantage I can see is that customers end up so confused that it’s impossible for them to properly compare operators’ offers. But on the other hand these become almost impossible to manage properly