Wednesday, 14 March 2012

The farce

Thanks to a very helpful solicitor specialising in arbitration, we have some legal advice on this. She agrees that this is completely unacceptable, and questions whether the contract we have with the ADR provider is at all valid. Technically we can appeal, via the Arbitration Act and going to court.

However, she says that the contract allows them to pretty much do what they like, decide their own jurisdiction, and make any award they like. She says that it would be bankruptingly expensive to challenge it.

Sadly, she advises that we should pay up and change ADR. She offered to look at the contract with the other ADR provider as well.

So, just to clarify, if you are a consumer or small business dealing with any telco, it appears that :-
  1. Even if they have not broken the contract, you can take them to ADR and get large "good will" awards.
  2. Even if you agree to service and prices, you can take them to ADR and get those charges refunded.
  3. Even if you make up new disputes that you have not raised with the telco first, you can include them in the ADR complaint and they will be considered, but the ADR will not show the telco what you said.
Whilst we have been told by the ADR that we can publish the decision, the legal advice is not to, sorry.

Just to be clear here, they agree we are not in breach of contract, but required us to pay £500 as good will.

They claim the customer asked to cease service on 31st May, but we have emails in June where we say that they can cease the services on the on-line order page and the reply with [sic] "We want to continue the service". We emailed in June asking if they agreed the prices and services and the reply was [sic] "Yes. Agreed". Yet, we are ordered to credit the charges for June and beyond.

I knew the law was an arse, but this is special. I am not sure how this has been allowed. I am not sure how we can get this changed.

The result is that we have to change the way we work with customers, and none of it will be good. The customer complaints code is already a lot more bureaucratic. The terms are already more onerous (not that contract terms actually matter, it seems). We cannot afford to ever go out of our way to do anything special for a customer because if it goes wrong we can be taken to ADR. I am at a loss. I am going to go home and cry.

P.S. If we get more ADR cases, prices go up to cover the extra costs and so our customers all lose out - well done championing the consumer cause there!

P.P.S. I would like to thank everyone for their support and encouragement on this issue. I do appreciate it.

16 comments:

  1. The ADR system/provider (as you've described it) appears to be a joke. I hope that there is a more reasonable provider out there that you can switch to. As a side-thought: what does it take to set up an ADR provider?

    Please, please, please don't change your excellent customer service because of this. I'm sure there are many customers who are with you because of that excellent service; if it went away, so might your customers. Yes, this is a silly state of affairs, but the relatively small amount you're being forced to pay could be insignificant if there were an exodus of customers. If 1% of your customers left over the next year because they felt that the customer service was getting worse, I suspect it'd cost you more than this ADR "good will" fee.

    Could you, for example, tell customers what the basic level of service is that they should expect? That way, you can clearly say that anything you do over and above that is going beyond what's expected. That way, you get to keep doing what you do best, customers appreciate that you're going the extra mile, and if it all goes wrong (but you've met that initial basic expectation) then you can clearly show that you set expectations all the way along.

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    1. I don't know - every answer I can think of comes down to changing the "agreement" we have, i.e. the contract, or making that contract clearer. But we now know that contracts don't actually matter!

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    2. What needs changed is not your contract with your customers - it is the contract with the ADR scheme. Of course, that will never happen.

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  2. Can you not just comply with the judgement and pay out, then take the ADR provider to the small claims court for breach of contract to get the money back - given as you say they shouldn't have accepted the case etc etc, or is the contract they have such that this wouldn't work (i.e. the judge would declare they are not in breach of contract, and unlike the ADR provider not randomly order them to pay out)?

    If the latter, then I suggest at the very least take it up in the technical press and with your MP, as perhaps that might lead to changes for the better in the future, even if it doesn't help in this particular case?

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    1. The legal advice is that it won't work trying to take them to small claims. I suspect I need to find a way to raise this - with MPs, or whatever. I am not sure I can repeat what she said about the contract terms - she really was horrified.

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  3. Is it worth talking to ISPA - I wonder if any other members would be interested in contributing to a legal fund in order to puruse it (thus reducing the risk of this being bankruptingly expensive), given these sort of crazy decisions could affect them in future?

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    1. That has been suggested, but they support the other ADR, so we need to get that contract, get it looked at and then talk to ISPA I expect.

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  4. would be useful to know what the initial contract value was as £500 on £5000 is different from £500 on £50. in terms of how much small ISP's are at risk from.

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    1. The customer paid £1630 in total, owed £700 more which we have had to write off, and has now had a credit for £500 "good will". Needless to say that means we have made a huge loss. It means, basically, we should have said "no" when they came to us in the first place - we would have been hundreds of pounds better off.

      Next time someone comes to us with a challenging request - what do you think I will say?

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    2. Are you planning to sue the customer for the £700 - or is that a case of (even more) good money after bad?

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    3. Legal advice is not to.

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  5. Can you use ADR on Our Favourite Telco when they don't fix things (quickly) ?

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  6. > and questions whether the contract we have with the ADR provider is at all valid.

    The contract with OS is for judgments, isn't it? If you don't follow its instructions, only the client loses and the worst OS can do is stop providing you with service.

    > decide their own jurisdiction,

    Since your use of one of two ADR providers is a public regulatory requirement, surely judicial review is automatically an option? It might still be "bankruptingly expensive" done alone, of course. Was there any advice on the question of failure to follow procedure (rather than merely failure to find facts in your favour)?

    > However, she says that the contract allows them to pretty much do what they like [...] and make any award they like.

    There is no language setting absolute limits on what award they can make in specific situations, but there is language indicating the basis on which they can make an award. It's quite similar to for FOS (DISP 3.6.1R, DISP 3.6.4R), and the banks are moderately happy with it. So a reasonable award for inconvenience will always be a possibility, but £10,000 because I agreed to go halves with a corrupt decision-maker should not be.

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    1. Well, not sure we can do much at this stage.

      The idea of an award for "inconvenience" is crazy anyway - if we are not in breach of contract there should be no award. We don't contractually offer "convenience" to people. If "convenience" is somehow implied we have a huge claim the other way for a lot of customers, and a huge claim against our favourite telco :-)

      The idea of an award that is more than an agreed limit of liability is also crazy.

      They do have a limit of £5000 on an award, but we cannot see how complying with that limit is any more a requirement than complying with any of their other terms of reference, which they simply did not do, in my opinion.

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  7. "The result is that we have to change the way we work with customers, and none of it will be good."

    Exactly. You can see that it won't be good. I will echo tgb's comments to please not change. The part of the uniqueness of A&A is down to the excellent way you deal with customers and support them. Please don't let one prat spoil it, for ourselves and you.

    Look at how many customers you have and the percentage of customers that have taken you to ADR.
    Look at the way people perceive you.

    And remember that...

    Also, thinking about this as a company strategy, I'm tempted to draw parallels with game theory and the Prisoners Dilemma (not that I know much about it other than reading a single Richard Dawkins book :) ).
    I think in this case, a better strategy than "Tit for tat" (a customer defected instead of cooperated, you lost and so you retaliate in kind) is "Tit for two tats" or "Tit for tat with forgiveness".
    Let this one go, avoid a death spiral of defections and see what happens next.

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