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By | Bill Ray 18th March 2008 16:36

Ofcom to hold operators responsible for dodgy dealers

Voluntary code of practice not working

Ofcom wants to make mobile network operators responsible for their resellers, reporting that a voluntary code of practice for the industry has failed to reduce complaints.

The voluntary code was introduced in July last year but enforcement was up to the network operators, who have been inconsistent in their approach. Ofcom won't name names, but reports that some have retrained staff and now make compliance a condition for resellers, while others have taken a more relaxed attitude and left resellers to manage their own conformance.

More importantly, the volume of complaints about mis-sold mobile phone contracts has remained consistent since the voluntary system was introduced.

Ofcom is particularly concerned about cashback schemes, which give the punter a cash payment in exchange for signing up, or using the service for a set period. Resellers get a sum from the operator for every customer they recruit, but in some cases the cashback on offer was greater than that, indicating something dodgy was afoot.

Only about 95 per cent of cashback is ever claimed, and resellers base their business models on the premise, but some also make it very hard for punters to get their dough. Techniques include demanding the original receipt, and in one case asking a non-computer-owning customer to submit all the details via email to get their entitlement.

Ofcom reckons that 79 per cent of cashback customers get their money but the rest lose out, and if a voluntary agreement isn't going to work then Ofcom will make the network operators responsible for their resellers.

Ofcom has no power over the resellers themselves, as the regulator can only threaten providers of Electronic Communications Services or Electronic Communications Networks; but if operators can be held accountable, then they're going to have to keep a close eye on the companies they do business with.

The operators won't want the responsibility, and are preparing responses to Ofcom's proposal which will no doubt emphasise the expense of making them police the industry. But Ofcom has no one else they can hold to account, so as long as the public is being sold dodgy contracts they'll be looking for someone to take responsibility. ®

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