Payment methods

The Telecommunications Industry Ombudsman (TIO) receives complaints from consumers about the payment methods for telephone bills.

Consumers sometimes complain that their service provider:

• only accepts payments by credit card or direct debit, or
• charges a fee if they use an alternative payment method, e.g. at the post office, by non-automatic transfer from their financial institution, or by posting a cheque or money order.
  
  

  Direct Debit A direct debit is a regularly scheduled automatic payment from a customer’s financial institution account or credit card.

Generally service providers base their entitlement to specify a payment method on:

• the service terms and conditions in a contract or Standard Form of Agreement, and
• verbal or written authorisation from the customer to pay by credit card or direct debit.

Section 6.1.1 (b) (ii) of the Telecommunications Consumer Protections (TCP Code stipulates that a ‘Supplier must ensure that Customers can readily access information relating to the Supplier’s terms and conditions associated with payment.’

For this reason, when we investigate a complaint we seek answers to the following questions:

• At point of sale, was the customer informed about available payment methods and related information including costs? If so, how were they informed?
• What if any information about available payment methods was in the service provider’s terms and conditions, e.g. in contract documentation or in the provider’s Standard Form of Agreement?
• Was any information about payment methods added to the provider’s terms and conditions after the customer agreed to purchase the service? If so, the considerations in the TIO’s Position Statement, Variations to Contracts, may apply.

In general, we would not investigate further if available information indicates that a provider made information about the terms and conditions associated with payments readily available to its customer.

Can a provider specify a payment method?

Service providers are not prevented from specifying payment methods, unless the service in question is a standard telephone service.

If the service is a standard telephone service, payment by mail must be one of the available payment options, unless the Customer agrees otherwise (TCP Code, Clause 6.6.1). According to the definition in the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Part 6), a standard telephone service may be a fixed (landline), VoIP or mobile telephone service.

The TIO investigates complaints about payment by mail not being an available option by first establishing whether the related service is a standard telephone service. If the service is a standard telephone service, we will seek answers to the following questions:

• Is payment by mail one of the provider’s available payment methods?
• Did the service provider form an agreement with the customer that payment would be by another method? If so,
  • when and how was the agreement presented to the customer?
  • what if any information did the provider present to the customer before they entered into any agreement?

Can a provider charge a fee to process a payment?

When we consider a complaint about a fee to process a payment, we seek answers to the following questions:

• How much is the fee?
• Did the provider advise the customer how much the fee was and when it was payable before the customer agreed to purchase the service? If so, when and how did the provider advise this to the customer?
• Was the fee introduced after the consumer agreed to purchase the service? If so, the considerations in the TIO’s Position Statement, Variations to Contracts may apply.
• Do the terms and conditions of the service include the requirement to pay the fee, and the circumstances in which it is payable?

The fee is likely to be payable if available information indicates that the provider adequately advised the existence and the purpose of the fee to the customer and it is included in the service terms and conditions.

However, we would generally expect the provider to withdraw any fees charged if available information indicates that:

• the provider did not adequately advise the customer about the fee and when it was payable, before the customer agreed to purchase the service, or
• the terms and conditions of the service do not include the requirement to pay the fee, and the circumstances in which it is payable.

This position statement has taken the place of our position statement on Internet Service Providers accepting payment by credit card only.

Created: 24 January 2008
Last updated: 12 May 2008

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