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Ofcom boosts phone contract refund transparency

by Sarah Griffiths on 25 October 2010, 16:21

Tags: Ofcom

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Switching sums

Ofcom has urged people who have switched phone providers to check they are not owned money by their old company after making changes to how consumers are refunded.

The watchdog believes around 2 million consumers have left their communications provider in the last 2 years without claiming about £10m owed to them.

They think the unclaimed money could have been paid for line rental in advance or for promotional credits that customers never claimed during their contract. It said that consumers often do not realize they are owed money by their landline, mobile, broadband or pay TV provider.

However, it has now encouraged major companies to make changes to their refund processes and automatically give any credit to their contract customers.

At first, it said only BT, Orange and the Post Office automatically refund outstanding credit to their customers, but now a bunch of other players have stepped up too.

T-Mobile has agreed to automatically refund all outstanding credit and Vodafone will do the same for all customers that have paid by direct debit.

Meanwhile Virgin Media and Virgin Mobile already automatically refund customers for amounts over £1 if they cancel their contracts before 28 days, but will extend the procedure to all its customers from December.

O2 said it will automatically credit amounts over £20, while customers of Sky, Talk Talk and Three will need to contact the company directly to arrange a refund.

While Ofcom has welcomed the increased transparency so customers can more easily see what they are owed, it believes industry best practice should mean "all providers refund customers the outstanding credit they are owed automatically, and without any further action needed by the consumer."

Ofcom has also published a guide to illustrate the credit refund process.

Ofcom's CEO, Ed Richards, said: "Consumers were telling us that they found it difficult to claim unused credit from their providers when they left their contracts. Taken together, people have been millions of pounds out of pocket as a result. We hope that automated refund processes, clearer signposting by providers and our new consumer guide should help consumers claim back money that is rightfully theirs."



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