TIO Annual Report 2006/07

Case study - Mobile phone over- commitment

The complaint

On starting a mobile phone contract, the complainant was asked if she wanted global roaming activated.

She agreed, but said subsequently that the function itself, and its potential to incur significant charges, was not explained to her at the point of sale nor at any other time. Her average monthly bill was about $30. Some time later she took her SIM card with her overseas. She said this was to access the information on it if necessary but she had not used the card at all while away.

She told the TIO that her SIM card had been stolen while she was overseas, but that she did not become aware of this until after her return to Australia 10 days later. She claimed to have disputed these charges with her provider when she became aware of them and contacted the TIO the following year when she realised that a default had been applied to her credit history. By this time charges to the value of $18,000 had been billed to her account.

TIO response

The TIO referred the complainant to a senior level of complaint at the company concerned, which at that time was claiming that the card had been used fraudulently. It offered to halve the debt to $9,000 and remove the default listing. The TIO then decided to formally investigate the issue on the basis of financial over-commitment – that is, that the provider had effectively extended excessive credit to the customer. The TIO approached the member and asked it to supply evidence with regard to:

• the information that was provided to the complainant about charges for global roaming
• any processes it may have in place to monitor over-commitment, and how this is calculated in relation to a customer’s average spend
• the amount it claimed to have paid to its global roaming partners, and
• why another $3,000 was allowed to accrue after the member became aware of the high usage.

The complainant provided documents confirming that she was not in the country from which the calls had been made at the relevant time.

The service provider advised the TIO that, when it first became aware of the significant usage, $15,000 had already been billed to the customer’s account.

The outcome

The TIO generally considers that customers are responsible for ensuring the security of their telephone, unless there are extenuating circumstances. In most cases the account holder is liable for the bills that accrue from their telephone’s use even if they did not give permission to other parties to make calls. Service providers are expected to have measures in place to limit excessive usage. However, international roaming charges can cause difficulties in this context as the provider does not always have immediate access to a customer’s billing information, which is sent from other carriers.

In this case, the provider told the TIO that it had an agreement in place with all overseas carriers such that high usage (which is defined as being more than $100 in 24 hours) needs to be reported within 36 hours. Because no action was taken at that time, the provider agreed to waive all of the charges that had accrued after that 36-hour period, which reduced the amount considered owing to $4,500. The TIO and the complainant accepted this offer as being fair and reasonable in the circumstances, and a payment arrangement was concluded for the outstanding amount.

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