CASE STUDY:

Young people and contracts

The complaint

Cynthia contacted us disputing charges for her mobile contract, which she said had been due to expire in April 2008. She said that she no longer required the service, because her employer had given her a new phone in March. She had given her phone to her 15-year-old son, Nick, to use for emergencies during the month remaining on the contract. Cynthia told us that she had paid all of the bills for her service up to April, and told the provider to cancel the service. She did not receive any more bills until November 2008 when a debt collector demanded over $2 500.

It emerged that Nick had renewed the contract in June 2008, after the service had been temporarily disconnected for non-payment in May. Cynthia told us that her provider would not waive the $2 500, even though Nick had renewed the contract without her knowledge or consent, and since he was a minor he was too young to enter into a contract himself.

TIO response

We obtained a copy of the voice recording between Nick and the telephone company’s representative. Along with the recording, the company provided its assessment of the complaint, in which it acknowledged that the person on the recording had a young voice and that it should have been clear to its representative that it was not speaking with Cynthia. Although Nick had claimed to have been authorised by Cynthia to make changes to the mobile service, we asked the company what steps it had taken to verify that the person it was speaking to was authorised to renew the contract.

The outcome

The company resolved the complaint by waiving the termination fees and other charges on the new mobile contract. Cynthia was required to pay $230 for her May bill, as this bill was made up of usage on the old contract when Nick was using the service with Cynthia’s permission. Cynthia accepted that even though she had only given the service to Nick for emergency use, as the account holder, she was responsible for the charges her son accrued before her contract expired.

Lessons learnt

Service providers are obliged to make sure they are speaking to the account holder before they make any changes to an account. They must also ensure that the person entering into a contract with them has the legal capacity to do so.

Consumers should take care when allowing others to use their services, as they may be liable for the charges incurred by the person using the service, even if they did not give permission for all of the usage.

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