Expectations on telcos are ramping up, including the expectation that they provide really clear and unambiguous information to individuals about the services they are purchasing and how much they will cost. BT has been reminded of this trend by a GBP2.8mn (USD3.6mn) fine handed out by Ofcom, the UK’s communications regulator. The fine has been issued because 1.1 million customers of BT’s mobile and ISP brands received inadequate explanations of contracts before signing up to deals. Some customers who subsequently terminated their contracts may have been charged an exit fee. Such fees should not have been levied because rules imposed since June 2022 mean a contract is not binding on a customer if the supplier has not met the requirements for communicating key aspects of a contract, including the exit fee that might be payable for early termination. Ofcom also made sure that BT suffered some reputational punishment, publicly chastising the telco for ‘failing’ customers.
This is how Ofcom summarized the conclusions of their official investigation.
In 2022, BT admitted that it had failed to provide the required documents to customers purchasing services through some of its EE and Plusnet sales channels. Our investigation has revealed that BT failed to give this information to some customers purchasing services through its EE digital website/app and retail stores, Plusnet website and contact centre and other consumer and business sales channels. The contraventions began on 17 June 2022, when the new rules came into force, and in most instances lasted up to five months, although in respect of certain sales the breaches are ongoing. As a result, BT has made over 1.3 million sales without giving customers the required information.
…The penalty reflects several factors, including our finding that BT knew that some EE and Plusnet sales channels would not be compliant when the rules came into force and chose to take the risk of late implementation.
Ofcom’s press release highlighted how BT had been dishonest and had tried to avoid costs that its competitors were willing to bear.
Ofcom engaged with providers during the period before the new rules came into force in June 2022, to ensure they were on track to meet the deadline. BT told us in February 2022 that it was confident the deadline would be met.
Evidence we have gathered shows that BT was aware from as early as January 2022 that some of its sales channels would not meet the deadline. In some cases, BT deliberately chose not to comply with the rules on time. Other providers dedicated the resource required to meet the implementation deadline for these new rules, and BT is likely to have saved costs by not doing so.
Despite the regulatory investigation, BT still has not updated all its onboarding processes to obey the rules.
…some sales channels are still non-compliant and BT is still not providing the required information at the right time to some customers.
In addition to imposing the fine, Ofcom has also ordered BT to:
- find and refund any affected customers who were charged for leaving before the end of their contract period;
- identify those BT customers who have still not received the relevant contract information so they can be given it and offered the right to cancel without penalty; and
- fix the broken processes that are still causing non-compliances with these rules!
This is a black eye for BT, a business that likes to portray itself as one of the most trusted companies in the United Kingdom. It is also a warning shot for other comms providers who may think they have wide discretion to hide nasty details in long contracts. Many telcos have tried to take advantage of customers by only telling them important facts using impenetrable legalese embedded within contracts that no normal person has time to read from end to end. Sensible regulators will bring this abuse to an end.
