The report from Ofcom, which acknowledges the changes made by 3
in response to the complaint, sheds light on the watchdog's high
expectations for consumer contracts. Ofcom challenges the
assumptions that many companies and their lawyers might have made
about acceptable wording for terms and conditions.
Binding consumers to changes
Perhaps the most obviously unfair condition in 3's Cellular
Service Standard Agreement was a clause which required consumers to
agree to all terms in all documents produced by 3, including those
that 3 might publish in future.
Throughout Ofcom's case report, reference is made to provisions
of the Unfair Terms in Consumer Contracts Regulations of 1999. The
Regulations include an indicative list of terms that may be
regarded as unfair. Pointing to this list, Ofcom felt 3's condition
was "potentially unfair" because the terms could irrevocably bind
consumers to agreements with which they had no real opportunity of
becoming acquainted. It also saw potential unfairness because the
clause could allow 3 to bind the consumer to any changes they chose
to make to the terms.
3 agreed to amend the term, removing the duty to abide by all
future documents.
"Potentially unfair"
References to "potentially unfair" appear throughout the Ofcom
report. This is an acknowledgement by Ofcom that only a court can
determine whether a term is unfair under the Regulations.
But Ofcom's view could be influential in the event of court
proceedings.
Acceptable use policy
3's terms and conditions stated that 3 might publish an
acceptable use policy providing more detail about the rules for use
of certain 3 Services, that, if 3 did publish such a policy, it
might amend it from time to time, and that consumers could
view it on 3's website or request a copy from 3 Customer Services.
Ofcom was unimpressed.
This term was again regarded as potentially unfair under the
Regulations: consumers had no chance to see the policy at the time
of signing the contract and there was no duty to inform customers
of changes to it if and when it is introduced.
3 agreed to amend the term to:
“We may publish an acceptable use policy
which provides more detail about the rules for use of certain 3
Services in order to ensure that use of 3 Services is not
excessive, to combat fraud and where new 3 Services we may
introduce require certain rules to ensure they can be enjoyed by
our customers. If we publish a policy, we will let you know – such
a policy may be amended from time to time – for instance, if we
discover that the 3 Services are being used fraudulently or for
fraudulent purposes, or the excessive use of certain 3 Services is
causing problems for 3, its systems, or for other users or if we
introduce new services which may require certain rules to ensure
that such new services can be enjoyed by our customers, again, we
will let you know if this happens”.
Reasons for censorship
Another term in 3's conditions referred to its Messaging
Services and Storage Services for customers. It gave 3 the right to
remove or refuse to send or store content if 3 became aware of any
"issues" with customers' use of these services.
Ofcom thought this potentially unfair because it did not clarify
the types of issues referred to. So 3 added a reference to a list
of prohibited uses.
Do not cite legislation
One clause stated that, after connection to 3's service,
consumers could not end the agreement using means such as the
Consumer Protection (Distance Selling) Regulations 2000. The
rationale of this clause is valid; but Ofcom feared that consumers
would not understand the legislative reference. The 1999
Regulations require that "any written term of a contract is
expressed in plain, intelligible language" – and Ofcom disliked the
legalese.
Accordingly, 3 agreed to amend the clause to:
“Once you are Connected to 3, you can only
end this agreement in the ways set out in this Section 10. However,
if you are a consumer, any statutory rights which you may have,
which cannot be excluded or limited, will not be affected by this
section. For more information on your statutory rights, contact
your local authority Trading Standards Department or Citizens
Advice Bureau.”
"Your statutory rights are not affected"
This appears to have become a small print cliché. 3's contract
included a clause which stated that nothing in the agreement
limited or removed 3's liability for fraud, death or personal
injury caused by their negligence or for any liability which cannot
be limited or excluded by applicable law, and that the consumer's
statutory rights were not affected.
Ofcom regarded the phrase “your statutory rights are not
affected” as potentially unfair, for not being in plain,
intelligible language.
3 has agreed to amend the term to:
"Nothing in this agreement removes or limits
our liability for fraud, for death or personal injury caused by our
negligence or for any liability which can't be limited or excluded
by applicable law. If you are a consumer, the terms of this
agreement will not affect any of your statutory rights which you
have, which cannot be excluded by this agreement. For more
information on your statutory rights, contact your local authority
Trading Standards Department or Citizens Advice Bureau."
We've sent it, so you've got it
The original conditions said 3 would consider that information
updates published on 3's website or sent directly to the consumer
by phone, text message, electronic messaging or email had been
received by the consumer. But Ofcom said this was equivalent to the
inclusion of hidden terms in the agreement and was therefore
potentially unfair.
3 has agreed to amend the term to:
"Our website is a great source of
information that you may find useful when using our services – it
is the most up to date source of information about 3 and its
services. You may find it useful to refer to when using our
services."
3 has also added this further clause to the terms and
conditions:
"If we need to send any notices under this
agreement to you, we will do this by communicating them to you via
phone, text message, electronic messaging, email or mail using your
most recent contact details given to us (if any)."
Whose law applies
Like many other consumer contracts, 3's terms and conditions
stated that the agreement was governed by English law, and that the
two parties agreed to only bring legal action about the agreement
in a UK court.
But Ofcom said consumers should be entitled to have their legal
rights considered by a local court and subject to local law,
regardless of where they live in the UK. The clause therefore
represented a potential breach of the 1999 Regulations which state
that terms excluding or hindering the consumer's right to take
legal action are potentially unfair.
3 has agreed to amend the term to:
"This agreement is governed by English law
unless you live in Scotland in which case, it will be governed by
Scots law. Each of us agrees to only bring legal actions about this
agreement in a UK court."
Font size
Other issues are addressed in the seven-page bulletin. But the
final point was on font size for the terms and conditions. Ofcom
said it was noticeably smaller than that used in the rest of the
documents in the information bundle given to new customers. And
Ofcom considered that this could be potentially unfair – for not
putting the contract in plain, intellegible language.
But in the absence of a specific complaint or evidence of
consumer detriment, Ofcom opted to reserve its position on the size
of the font. "Ofcom will revisit this issue in the event that any
evidence arises of potential or actual unfairness to the detriment
of consumers and, if necessary, take formal enforcement action
under the Unfair Terms in Consumer Contract Reguations 1999," it
said.
Ofcom has now closed its investigation.
