Pulling the plug on features: Understand your risks

Optus and Crazy John’s have delivered unwelcome Christmas news to many customers.  Features are being withdrawn from plans, at the same time as Optus’ web site proclaims it is ‘delivering more this season’.

Almost every internet and phone contract says the provider can withdraw or limit customer entitlements.  Many even comply with the Telecommunications Consumer Protection Code and allow affected customers to cancel contracts if that happens.

But allowing cancellation rights may not be the end of the matter.

The Crazy John case

On 27 December 2008, Whirlpool user SusanM posted:

I signed up for their $49 cap plan for 2 years in early September 2008 based only on the fact (after much research I might add) that they had NO CALL EXCLUSIONS…now after only 4 months, me and many friends who also took out Contracts for the same reasons, receive a letter telling us ‘Great news…’ they are changing the Cap Plan from March 2009 to give us not only the current $310 for the $49 cap BUT an extra $290 credit to call our mates also on Crazy John’s! woohoo! Now, not $310 as we signed up for….but $600!!!! WOW!

Yes you’d think great news…until you read the fine print….no more premium calls, overseas calls etc etc etc…in other words…what you signed you’re Contract for will no longer be covered! What the…?????

The Optus case

On the very same day, the Sydney Morning Herald reported:

Optus makes it harder to call home

ANGRY customers have accused Optus of greedy behaviour after it cut off their access to cheap international mobile telephone calls on Christmas Eve.

The company texted customers this week telling them they would no longer pay local mobile-to-mobile rates for services that use the internet to make overseas phone calls.

And here’s an interesting quote the SMH attributes to Optus:

An Optus spokeswoman said she could not comment on whether the service was costing Optus more than the cost of a national mobile-to-mobile call.

But she said the pricing change was in line with the terms and conditions of its timeless and cap plans, which exclude international calls.

This could be important.  Optus hasn’t claimed any change in circumstances.  There’s no suggestion of increased charges from overseas networks.  It just ‘brings it into line’.

But surely it was out of line from the first day Optus offered the pricing ?

So what’s the (legal) problem ?

Well there could be a few.

• If either company offered the plans expecting to withdraw features a little later on, it is likely to be in breach of section 52 of the Trade Practices Act 1974. That would be misleading and deceptive conduct.
• It could be the same if they represented that the features would be available until the end of a term. We don’t know about Optus, but SusanM posts about Crazy John:

(trust me…I mean it, I called CJ’s call centre 3 times to confirm with their staff and then in the shop was verbally guaranteed they WOULD NOT change call restriction once I signed on the dotted line!) and explained very clearly that all I wanted was a phone to enter comps…ie: premium calls!! They even had the nerve to tell me I was not alone…they had signed up heaps of other users for the same reasons! Damn this makes me mad!

So SusanM has a case

It doesn’t matter that Crazy John’s contract strictly allows it to change plan features.  Putting it in layperson’s terms, section 52 of the Trade Practices Act overrules contracts.

And it gets even better (for SusanM)

SusanM may worry that the sales promises made to her were just ‘verbal’.  But thanks to the TIO’s recently adopted sales records policy, Crazy John may be in difficulty if it can’t produce proper records of what SusanM was told.

We have criticised the sales records policy as being ‘overboard’ and we stand by that view.  But that doesn’t make it go away.  CSPs that withdraw features have to live with it.

So what about Optus ?

As we noted above, the SMH quote attributed to Optus is interesting and concerning.  It is at least consistent with a suspicion that Optus had it in back of mind to withdraw the feature from the start.

If it was selling contracts on that basis, it has serious questions to answer.

In a nutshell

A CSP that offers a feature for a plan term must really intend to offer it for the term, and have reasonable grounds for creating the impression it will do so.  Otherwise – contract rights or no contract rights – it may be liable for a breach of the Trade Practices Act and corresponding State laws.