TalkTalk and Tiscali UK breached rules to protect consumers

Ofcom has today instructed TalkTalk and Tiscali UK to stop breaching telecoms rules or they could face further enforcement action, including a possible financial penalty.

After receiving over 1,000 complaints this year alone, Ofcom found that TalkTalk and Tiscali UK have breached telecoms regulations by issuing bills to consumers for services that have not been provided. Both companies issued bills for services consumers had cancelled.

Ofcom has issued TalkTalk and Tiscali UK – which are both part of TalkTalk Group – with a legally-binding Notification requiring them to comply with the rules, known as a ‘General Condition’, by 2 December 2010 or face further enforcement action. The maximum penalty is a fine of 10 per cent of relevant turnover.

The Notification also requires TalkTalk and Tiscali UK to take steps to remedy the harm they caused to consumers, which could include, but are not limited to:

• providing refunds to all consumers who were billed for cancelled services since 1 January 2010;
• stopping debt collection action, and withdrawing from any legal proceedings (if started), against consumers and paying their reasonable legal costs; and
• taking any necessary steps to repair credit ratings of affected consumers, such as notifying credit reference agencies where relevant.

Affected consumers

As part of its investigation, Ofcom considered complaints from affected consumers, as well as looking at Talk Talk’s and Tiscali UK’s customer records. Some examples of consumers affected include:

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• Consumer A complained to Ofcom that she had switched her landline from TalkTalk to another provider in January 2010 but continued to receive bills. She told Ofcom that she tried to resolve the issue with TalkTalk, spending over an hour on the phone, but received no confirmation that it would stop sending her bills for a service she had cancelled. TalkTalk’s customer records show that £109.77 was demanded from Consumer A for services she had cancelled.
• Consumer B informed Ofcom that she cancelled her account with Tiscali UK in February 2006, but had received a bill from debt collectors for the cancelled service. Tiscali UK’s customer records show that Consumer B made payments to Tiscali UK totalling £609.97 for services it had billed her for but not provided.
• In May 2010, Consumer C complained to Ofcom that he had cancelled his broadband account with Tiscali UK in 2008 and yet he continued to receive bills two years later. Consumer C was contacted by a debt collection company saying he owed £353.99 to Tiscali UK.

Ofcom’s Director of Consumer Affairs, Claudio Pollack said: “Ofcom is determined to stand up for consumers and take action against companies that break the rules. Our investigation into TalkTalk and Tiscali UK found that they had billed customers for cancelled services; this is unacceptable which is why we have ordered them to clean up their act or face the consequences.”

More details about the investigation.

Advice for consumers on how to complain about their communications provider .

ENDS

NOTES FOR EDITORS

1. TalkTalk Group has co-operated fully with Ofcom’s investigation.

2. Ofcom’s action is against TalkTalk Telecom Limited and Tiscali UK Limited. Ofcom first opened the investigation into those companies on 23 July 2010 (The opening bulletin). Ofcom investigated a sample of 100 of the complaints it received, and both companies admitted breaking the relevant rules in at least 72 of these. The Notification is binding on both companies.

3. Section 45(1) of the Communications Act 2003 gives Ofcom the power to set conditions, including General Conditions. One of those conditions is General Condition 11.1. It says communications providers must not send bills to customers unless every amount in those bills represents the true extent of any such service actually provided.

4. Under section 94 of the Communications Act 2003 Ofcom can issue a Notification where it has reasonable grounds for believing a person (or company) is contravening or has contravened a General Condition. That is what Ofcom has done in this case. TalkTalk and Tiscali UK now have a month to make representations, comply with the relevant condition and remedy the consequences of the contravention. If they do not take appropriate steps to comply with the condition and remedy its contravention, Ofcom can issue an Enforcement Notification and impose a financial penalty (up to 10 per cent of relevant turnover), under sections 95 and 96 of the 2003 Act.

5. The two companies are required to remedy the consequences of their breach of General Condition 11.1. This might include paying the reasonable legal costs of affected customers, like costs incurred in response to debt collection action taken by or on behalf of TalkTalk or Tiscali UK in relation to bills for services not provided.