/ Money, Technology

Orange puts its prices up – so why can’t you cancel?

Orange is hiking its pay monthly price plans by 4.34%. And not just for new customers – existing customers will get hit too. It doesn’t stop there – Orange won’t let you cancel your contract. Is that fair – or legal?

This morning we were alerted to Orange’s price rise announcement by an email from Aaron. He had been sent a brief text from the mobile phone network, but couldn’t quite believe it was allowed to put prices up for existing customers:

‘I do not believe that it is fair of a corporation to change the price of a contract that I signed up to, as my phone bill was essentially “fixed” every month.’

Why can’t you cancel your contract?

Orange blames the rise on inflation hitting a 20-year high, adding that this is ‘having a significant impact on business and households alike’. But Orange won’t have to suffer, instead it will simply pass the cost onto its customers:

‘Unfortunately, we’ve had to re-evaluate our prices for the first time and are sorry to say that there will be a 4.34% increase in our monthly plan prices from 8 January 2012. This is lower than the Retail Price Index (RPI) measure of inflation, which currently stands at 5.4%.’

So if you’re on a monthly price plan with Orange (and signed up to your current contract before 1 September) watch your bills go up by more than 4% next year.

The real kick comes from Orange saying you won’t be able to cancel, as Kimberly Harwood (@kimberlyharwood) told us on Twitter:

‘Can’t cancel my contract as the rise is ‘within their terms and conditions’ disgraceful! Won’t be renewing.’

Ultimately, you’re locked in. In section 4.3 of the contract, Orange states that although you’re able to terminate if it makes certain changes to the terms of your contract, you’ll be unable to do so if it puts prices up at a rate lower than the RPI measure of inflation.

Is Orange playing by the letter of the law?

I’m getting deja-vu from the T-Mobile saga, where that mobile network slashed the data allowance for its existing customers. How can it be right that a company can change the payment terms of your contract when you’re already signed up?

Is Orange behaving legally? It seems that it probably is. Our lawyer Peter McCarthy told us that Orange’s T&Cs would stand unless it could be successfully challenged as ‘unfair’.

The Unfair Terms in Consumer Contracts Regulations 1999 says a clause is likely to be unfair if it allows ‘a seller […] to increase their price without […] giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded’.

Ultimately, the success of any such challenge against Orange would depend on whether the increase was considered to be significant or not.

Ofcom cites material detriment

We also got in touch with the regulator Ofcom, to see whether you should have the right to terminate your contract with Orange. It told us that customers will only be able to cancel if the changes are likely to be of ‘material detriment’ (as per Section 9.6 of the Communications Act 2003) which in this particular case, Ofcom was unable to verify.

However, you do have the right ‘to challenge the matter through the provider’s complaint process and, failing that, via Alternative Dispute Resolution.’

Nevertheless, even if Orange is playing by the book, is it being fair to its existing customers? Should companies be able to change prices mid-way through your contract, even if it has allowed itself to do so in the small print? And finally, will you stick with Orange when your contract comes up for renewal? Somehow I doubt it.

Comments
Member

This issue is not for Orange to decide via their contracts.
If there is a significant change to a contract between two parties, then notice must be given (I’m presuming 28 days notice in writing?) during which time, the other party has the right to cancel the original contract or accept the changes.
As a price was quoted and agreed at the point of sale, any change in price, I would argue, is a significant change to the contract. As the price is being increased, then personally, I would cancel.

OFCOM need to act fast on this, their role as regulator is to protect people, what are they planning to do about this?
Once again, I fear it will be customers who are left out of pocket and time, trying to sort their own individual contracts out with Orange.
Any word from Orange on how many customers will be affected by this and how much more revenue they stand to generate from it?

I would also watch for Orange trying to enforce “penalties” for cancellation. Remember, if it is not “actual loss” then it is unenforceable under common law in England and Wales.
It is up to Orange to provide proof that it is actual loss they are charging customers and not a “penalty”

Member

This is actually ridiculous. As an Orange customer I have suffered for over a year and a half and will be glad when my two year long iPhone contract comes to an end.

The amount I pay for my contract is perfectly affordable and the tariff I am would be great….if the service I received was ever acceptable. After having a great few months at the start I have been forced to live with an awful congested network which cannot even hold a call (with full signal) at peak times. In addition to this their network sharing with T-Mobile was poorly implemented and actually causes more hassle than it’s worth.

Paying more for this continued poor service actually makes me angry.

Member
Karen Reid says:
13 December 2011

I am six months into my contract and have wanted to cancel since…well…most of it…due to the lack of network I receive. As a supply teacher relying on phonecalls I know that I have missed calls leading to work but Orange simply say I have entered into the contract so I have to see it out…Well not strictly true- they say I have two options; 1. Take a six month break in the hope that the network coverage increases in that six months then take on the contract again where I left off or 2. Sell the contract on…and now they want me to pay even more money for it!? This can’t be right! Whether I can or cannot get out of this contract I will NEVER be returnign to Orange.

Member
James says:
28 November 2011

The short answer is OfCom need complaints to act. I have spoken with them and Orange Executive Office at length today. Any rise is ‘materially detrimental’, however much it is: Orange say their T&Cs allow this, but they are against the law. Scroll to |Section 9.6 on this link and see for yourself:

http://stakeholders.ofcom.org.uk/binaries/telecoms/ga/general-conditions.pdf

Complain – call OfCom on 0300 123 3333 or 020 7981 3040. It’s easy.

Member

It’s a good point, and Paul Lewis from BBC Money Box has just said that ‘Ofcom disagrees with Orange’s interpretation of its rules but needs complaints before it can investigate’.

So you can complain to Ofcom via this number 0300 123 3333 and/or make your comments here and we’ll pass them on to Ofcom.

Though if you want redress now, I suggest you complain to Orange by contacting customer services by calling 150 from your mobile, emailing customer.services@orange.co.uk or writing to them at Orange Customer Services, PO Box 10, Patchway, Bristol, BS32 4BQ.

If you get no luck with Orange, then you can turn to the Ofcom-approved CISAS, though you need to have given Orange enough time to respond to your original complaint.

Member
Jessica says:
28 November 2011

hey, I went and read section 9.6. Part c says

“at the same time as giving the notice in condition 9.6 (a) above, shall inform the Subscriber of its ability to terminate the contract without penalty if the proposed modification is not acceptable to the Subscriber.”

Looks like orange have done the exact opposite on their site by telling everyone that they CANNOT cancel.

Member

Hi Jessica, the rest of that section goes on to reference ‘material detriment’, as I wrote about in the Convo. If you’re able to argue that this rise is of material detriment to you, then we may have some luck.

Member
James says:
28 November 2011

Thanks Patrick, for spreading the word.

Member

I thought people only went to Orange for the free cinema tickets.

Member

In section 4.3 of the contract Orange states that although you’re able to
terminate if Orange makes certain changes the terms of your contract, you’ll
be unable to do so if it puts prices up at a rate lower than the RPI measure
of inflation.

On the facts pertaining to the Contract freely entered into, I do not see how
applicable exclusion or exemption clause can be successfully challenged in
Court.

It would seem Orange has a ‘cast iron’ case but would definitely not say
Claimant is going to be laughed out of Court with costs.

Member

Just some things I would use to defend a cancellation;

* misrepresentation at the point of sale – did the salesperson point out clearly, any detrimental points of the contract (ie, it was subject to a future price increases) when the said contract was sold?
* significant change to terms of contract – the main point of the contract is the price agreed upon, for this to be increased mid contract, is, I would argue, a significant change to the terms.
* notice of change of contract terms – have orange provided written notice of the change. As I understand it, a text/sms message would not constitute written notice. Electronic mail/postal letter would be acceptable.
If notice is served in writing, does their notice period cover 28 days? (Which I believe is standard?)

Could it not be argued also, that it is common practice/industry standard for the price quoted at the point of sale to remain constant throughout the period of a contract?
As raising the price mid contract is irregular practice? this would back up my position that the detrimental condition of the contract should have been stipulated at the point of sale?

Member

Again it’s down to whether the increase is significant, and whether it could be argued as of material detriment. Moreover, even if Orange is legally water tight – it’s about ethics and customer service. The backlash of complaints may just force them to back down, or Ofcom to take action.

Member

after receiving my text and feeling very angry when i was unable to get in contact with orange due to excessive calls, probably like myself trying to complain. as i have two contracts due to expire march 2012 when my 2 years finish. i have printed this page containing 9.6 from general conditions as at 13th september 2011 for my information, wondering if i can quote this to terminate my contracts without penalty?

Member
James says:
28 November 2011

In which case Orange’s terms contravene the Law

Member

where in the orange contract does it state that they can alter an existing agreement price. without the existing subscribers agreement?

Member
Stephen says:
28 November 2011

I wasnt very happy about the increases either. I have been in contact with orange twice today, my tariff is £40 a month, so id be paying an extra £1.71 a month, i know its not much – but thats not the principal. I have 6 months left on my contract, on the second time of calling orange up and moaning for around 10 minutes the lady offered me £10 off my next bill, itll cover the extra charges i suppose!

Member

i think that orange are a joke. i called them earlier and had the call ended by them when i wanted to speak to someone else. the service has gotten worse since joining with t mobile. But been told by a text message that thecall plan will increase is a joke. the contract you signed for £40 a month doesn’t matter they just want your money. i was told it will effect 30% of customers so thats a lot of money there going to make. I didnt get a 4.34% payrise in line with inflation. They were not interested in what ofcom had stated when my contract is up, its going to end and ill go to another company.

Member

“….if it is not “actual loss” then it is unenforceable under common law in England and
Wales. It is up to Orange to provide proof that it is actual loss they are charging
customers and not a “penalty” (frugal ways)

On the question of charging…

I thought the Supreme Court in a landmark decision in 2009 relating to bank charges
has clarified the law somewhat….and that ‘punitive’ charges could indeed be lawfully
levied AND need not relate to costs incurred, whether actual, reasonable or otherwise
.

Don’t think reasonableness comes into it at all, the banks could charge as MUCH as
they LIKE in respect of unconsented overdrafts incurred.

Member

In which case, I would reference cases dating back over the past 100 years of where legal precedent has resulted in charges being enforced as part of a contract – which were not “actual loss” – as “a penalty”

In the case of the supreme court’s 2009 ruling, it was stated that they were contested on the wrong point of law, the charges were still open to challenge but on a differing point?

Member

See you take more than a passing interest in matters pertaining to English
contractual law…have you got the names of the decided cases the subject
of your alluding to?

Member

Not ideal, but a good point of reference to support a case in small claims:
* Wilson v Love [1896]
* Dunlop Pneumatic Tyre Co. Ltd. v New Garage and Motor Co. Ltd. [1915]
* Bridge v Campbell Discount Co. Ltd. [1962]
* Murray v Leisureplay (2004)

In 2006, the OFT whilst investigating credit card charges and giving them a general cap of £12, stating at the same time that £12 was not necessarily a fair charge, said this, “Whether or not an individual charge constituted a penalty fee would be based on the established legal precedent that the only cost recoverable would be actual costs incurred”

It is a sad state of affairs IMO, that any corrections by businesses today are down to the endeavour of the individual customer to recover, rather than the regulators and laws. People just want to be able to shop, safe in the knowledge that what they are being charged, as regards any contracts, is legal.
I shouldn’t have to know any references of law to protect my family from unscrupilous business practices.

Member

It is getting more difficult I feel, with regulation and laws being changed and coming from everywhere.
The OFT, parliament, supreme court and from europe, all have their say on consumer law, much of which is duplicated, but on occasion contradictary, whereby a party takes small claims action and it can be argued that the law they state, is not applicable, and they are referred to another law in the same field.

Parliament could stop these charges, banks, contracts, etc, but choose not to.

Member

The cheeky gits didn’t even have the balls to put pen to paper to advise me of this increase
I had a text from them,so yeah I rang them and vented my dislike

They advised me why the increase was taking place, so I just down graded my tariff from 25 per month to 17 pounds per month with my loyalty discount

Then I told them when contract ends in 6 months,I will take my whole family off Orange

Now I know it is only a pound odd,but this is not the point,,I had a contract and took it because of the price.cheers for reading

Member

Nah…not a problem for me… people have been known to have been
fired OR abandoned (deserted) on notification by text…. it’s the
message more than the form that matters in this digital age.

Member

OFCOM is not very stronger power. That’s why Orange is misbehaving with customers. They can change terms and condition without informing OFCOM.
If any companies want to change terms and condition ,they must get approval from OFCOM.
We will see more company will follow Orange and will make more unhappy customers.
It is time to show red card to them ! Stop this company to chew our money in this bad economic condition.

Member

Many years ago I bought mobiles on the One 2 One network for me and my mother and bought quite a lot of credit because of the deal available at the time. Soon after this, T-Mobile took over One 2 One and the call charges shot up immediately, by a great deal more than 4%. That was PAYG rather than a contract, but I felt cheated and switched to Vodafone.

Member
Billy Craig says:
29 November 2011

Am absolutely disgusted with orange. Over the years I’ve always defended them but no longer. My iPhone has been playing up and their solution was for me to upgrade my Mac software!!

Now this, its safe to say my contract can’t end quick enough now. I don’t begrudge a little extra but am not happy with the sneaky way its been done. I have a learning disability and purposely asked the sales person to talk me through the contract as I’m also a student and money is tight. I was assured I would not have to pay anymore at anytime.

Member

Well done for standing up to Orange (and to Stephen above) – at least they are listening to your complaints and doing something about it.

Member
The Fool says:
29 November 2011

I can only assume that things have got pretty dam tough for Orange for them to resort to this. I would also expect to very quickly see adverts from 3 in particular taking advantage. If you wanted a lesson in how to lose customers this is it, given the economic climate this is not the time to be raising prices, a short walk down the high street will tell you that.
I think it’s disgusting that they have done this when we have signed up for 18 or 24 month contracts no matter what the small print says. When my contract expires there is no way I will be renewing and I plan to reduce my tariff for the remainder of the time that I am locked in.
Legally they may be fine, but at the very least they need to educate customers who sign up to a tariff that this can happen, it’s very hard to pick out from all the small print the pieces that matter.

Member
James says:
29 November 2011

Despite politely arguing my case and agreeing to disagree, Orange offered me nothing. I am surprised they didn’t as it will surely be vastly cheaper to pay off disgruntled customers on a case by case basis, rather than risk losing the argument with OfCom and having to not make the rise. This is worth many millions to them each month and I am not surprised they are defending it with a tough stance. In my case, my contract ends in March, so it’s not a huge amount: however, I am materially affected. Which is why, upon receipt of the written reply which Orange must give, I shall be referring their reply (assuming it is the same as I was told verbally) to CISAS, for them to adjudicate. Paul Lewis (BBC) suggests the Orange defence rests on the tariff rise not being a modification of contract, as it is in the terms. However, I would argue that the terms ‘permit’ a change, which is by definition, a modification to the contract.

If nothing else, this is a morally weak act by Orange, to exploit what they see as a grey area in the Law.

Orange price rise: My view is that if your income has risen by less than the 4.34% rise then it is clearly of material detriment to you

Member
James says:
29 November 2011

Sorry – a note on my previous post – the last para is a quote from Paul Lewis of Moneybox, BBC R4.

Member
Sophie Warren says:
29 November 2011

Unbelievable! Just got the text – they didn’t even have the decency to call or write! No apology, just “We’re increasing the price of your monthly plan”. This is a JOKE. I have been a loyal Orange customer for years but this is enough. If they don’t let me reduce my monthly plan then I will move to another service provider when my contract is up. Shocking!