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Disputed debts must not be collected

13 March 2013

Ombudsman Simon Cohen has reminded service providers that they must not collect charges disputed by consumers.

The advice comes after issuing a determination to a mobile phone provider that direct debited almost $1,800 from a consumer for excess usage charges. The consumer had made a complaint to the TIO three days before the amount was debited by the provider.

“It is a requirement of the Telecommunications Consumer Protections Code that providers do not charge consumers for amounts genuinely disputed and that are the subject of a complaint,” Mr Cohen said. “The evidence in this case showed disregard of a basic clause in the code, placing the consumer in a difficult position.”

The Ombudsman’s determination came after a complaint about excess usage charges remained unresolved despite extensive TIO investigation. The consumer had taken out a mobile phone contract for a monthly fee of $10, which entitled him to an included value of 500MB of data.

Although the consumer had only used 127MB of that value at the end of the month, the provider issued a bill for almost $1,800. The provider charged per “session” instead of actual usage, rounding it up to the nearest megabyte.

After reviewing the evidence of the complaint, it was the Ombudsman’s view that the system of charging was contradictory to the terms of the contract for the services. The Ombudsman determined that any charges above the monthly fee should be refunded.

The Ombudsman or Deputy Ombudsman can issue a determination if a complaint is not resolved through our processes of referral, conciliation or investigation. Our determinations are legally binding on service providers.

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