Getting around the Customer Credit Act 1995

TommyKnocker

@Forum Mods: I hope this question is phrased generally enough to not be considered seeking legal advise, but if not please accept my apologies and delete this post.

My question.

Given that section 138 subsection 1 of the Customer Credit Act of 1995 states

138.(1) A person shall not insert in any agreement or in any proposal form or application form used in connection with the agreement provisions which require the consumer to indicate positively that he does not wish to obtain credit, purchase or hire any goods or avail of any service in relation to the agreement

How do service providers get away with sending emails to customers advising that if they do not respond to say they no longer want to continue the service they will consider this as consent to enter a new contract and then make it hard for the customers to get out of these contracts?

This comes up from time to time on numerous online forums, liveline etc and yet the practice continues.

I find it had to believe that established companies blatantly ignore the above mentioned act, so just curious how this practice still goes on.

Is it that an email is not considered a "agreement, proposal form or application form"?

Under His Eye

I am curious if the financial services ombudsman has ruled on such a case?

nuac

Mod
Open for general discussion subject to forum rules

Samuel T. Cogley

Are the agreements you're talking about credit though, or are they contracts for services such as telecomms?

TommyKnocker

Samuel T. Cogley wrote: »

Are the agreements you're talking about credit though, or are they contracts for services such as telecomms?

The agreements are service agreements not credit. So does this mean that the Customer Credit Act 1995 does not apply to services, only Credit agreements?


While going by the name of the act this would make sense, the wording of section 138 sub section 1 does not.


Maybe I don't fully understand all types of credit agreements, to me this means loans, or buying something over a set period of time etc. And here once the loan is repaid or the last payment made for the item purchased, it not like to can be forced to take out another loan or buy another item if you do not reply to an email advising that you don't want to.


So if it only applies to credit agreements then I do not understand the requirement for section 138.1 or the wording of this section in this act.

Peregrinus

S. 138 talks about what can go into any "agreement" or any form used in connection with an "agreement". If you look at s. 2 you'll see that, in the Consumer Credit Act, "agreement" means "an agreement to which this Act applies", and if you look at s. 3 you'll see that the Act applies to credit agreement, hire-purchase agreements and consumer hire agreement. (And, even then, there's a long list of exceptions.)

So, under s. 138, a credit agreement, etc, can't contain a provision under which you have to opt out of receiving credit, hire, purchase or any other "service relating to the agreement". This stops them, e.g., using opt-out techniques to cross sell, say, maintenance agreements for the goods you buy under a hire-purchase agreement.

TommyKnocker

Peregrinus wrote: »

S. 138 talks about what can go into any "agreement" or any form used in connection with an "agreement". If you look at s. 2 you'll see that, in the Consumer Credit Act, "agreement" means "an agreement to which this Act applies", and if you look at s. 3 you'll see that the Act applies to credit agreement, hire-purchase agreements and consumer hire agreement. (And, even then, there's a long list of exceptions.)

So, under s. 138, a credit agreement, etc, can't contain a provision under which you have to opt out of receiving credit, hire, purchase or any other "service relating to the agreement". This stops them, e.g., using opt-out techniques to cross sell, say, maintenance agreements for the goods you buy under a hire-purchase agreement.

But the agreement I am questioning is not a "Credit Agreement" it is an agreement for a service, be that with a mobile phone company, a gym, an alarm monitoring company etc. etc.

It is these types of service agreements that most frequently appear to use the email requiring a customer to opt out of that service and if the customer does not do this they automatically get signed up for an new contract.

I am questioning if the Customer Credit Act 1995 applies to this type of service contract ?

If yes, then does section 138.1 not prohibit the sending of this type of email.

If not, well then I have the answer I am looking, but I do not understand the reasoning for section 138.1 in the Customer Credit Agreement 1995.

CIARAN_BOYLE

Peregrinus wrote: »

S. 138 talks about what can go into any "agreement" or any form used in connection with an "agreement". If you look at s. 2 you'll see that, in the Consumer Credit Act, "agreement" means "an agreement to which this Act applies", and if you look at s. 3 you'll see that the Act applies to credit agreement, hire-purchase agreements and consumer hire agreement. (And, even then, there's a long list of exceptions.)

So, under s. 138, a credit agreement, etc, can't contain a provision under which you have to opt out of receiving credit, hire, purchase or any other "service relating to the agreement". This stops them, e.g., using opt-out techniques to cross sell, say, maintenance agreements for the goods you buy under a hire-purchase agreement.

As peregrinus said you need to read the definitions section to find out what agreement menans. The act doesn't cover service agreements not related to a credit agreement.

sexmag

TommyKnocker wrote: »

But the agreement I am questioning is not a "Credit Agreement" it is an agreement for a service, be that with a mobile phone company, a gym, an alarm monitoring company etc. etc.

It is these types of service agreements that most frequently appear to use the email requiring a customer to opt out of that service and if the customer does not do this they automatically get signed up for an new contract.

I am questioning if the Customer Credit Act 1995 applies to this type of service contract ?

If yes, then does section 138.1 not prohibit the sending of this type of email.

If not, well then I have the answer I am looking, but I do not understand the reasoning for section 138.1 in the Customer Credit Agreement 1995.

Can you give an example?

From my own understand and as an example Eir provide customers with phone, broadband,tv etc for a fixed contract of say 24 m months. After the 24 months expires the contract is finished however they will not switch off service as you can imagine the uproar if someone was watching or using the service and they just cut it off, after this what hey have in their terms is that customers must then give 30 days notice to cease the service, this notice could have been given 30 days prior to the end of the 24 month contract. That's it, 30 days to ensure you want it cancelled and you don't lose service unexpected.

I am not aware of companies continuing service and placing people on new contracts, nor am I aware of credit lenders charging people after they have paid off their debt*

*Unless by some genuine error

Peregrinus

TommyKnocker wrote: »

But the agreement I am questioning is not a "Credit Agreement" it is an agreement for a service, be that with a mobile phone company, a gym, an alarm monitoring company etc. etc . . .

What you might think of as a service agreement with a mobile phone company might very well be a hire purchase agreement if, e.g., it involves them giving you a phone and you committing to a serious of monthly payments for a fixed term.

But, if it genuinely is not a credit agreement, hire purchase agreement, etc, then s. 138 does not apply to it, and so does not restrict what can go in it. For the reason already given, "agreement" in s. 138 does not mean "any agreement at all"; it means credit agreement, hire purchase agreement, etc.

TommyKnocker

Thank you all, now I understand.

It is just I have come across numerous instances where people complain about, for example, someone signs up with an alarm monitoring company on a fixed term contract. They may or may not have purchased the alarm equipment by monthly payments.

Throughout the term on the contract the monitoring company send out various emails which may be treated as SPAM and be deleted without being read. At the end of the fixed term inside one of these emails is a message that the monitoring term is about to expire and possibly the monthly charge will be increased. Customer is advised that if they no longer wish to avail of the monitoring service they need to respond via email. If they do not, for whatever reason, they are assumed to have given consent to entering a new contract for the same length as the previous one.

I have read on a number of forums and heard a discussion on Liveline about this where the Consumer Credit Act 1995, specifically section 138.1 was quoted as protecting the consumer. I also heard the term "inertia selling" used and it being advised that inertial selling was illegal in Ireland.

When I checked the meaning of inertial selling on the web it did not, to me at least, appear to cover the scenario above. I was unsure about the Consumer Credit Act 1995, which is what sparked my initial question as I could not believe that services companies were flouting Consumer laws.

Personally I cannot see the point of section 138.1 in the Consumer Credit Act 1995.

If I get a loan of €5000 from my bank to be paid off over 3 years, when the last payment is met the loan is paid off. It is not as if the bank is going to send me an email advising that if I don't refuse a further €5000 will be placed in my account as I will be adjudged to have entered a new loan agreement.

Likewise if I buy something on HP. When I make the last payment the HP contract is finished and I own the purchased item. The company who sold me the item does not send me an email advising that if I do not refuse I will be sent a second matching item and be adjudged to have entered a second HP contract.

So, as I cannot imagine a "credit contract" where if a consumer does not advise to the contrary, they will be adjudged to have entered a second or follow on contract. But I do see this happen and be complained about regarding service contracts and was curious about this and if it was allowed, which it appears it is.

So again, thanks all for the information, it is much appreciated.

sexmag

TommyKnocker wrote: »

Thank you all, now I understand.

It is just I have come across numerous instances where people complain about, for example, someone signs up with an alarm monitoring company on a fixed term contract. They may or may not have purchased the alarm equipment by monthly payments.

Throughout the term on the contract the monitoring company send out various emails which may be treated as SPAM and be deleted without being read. At the end of the fixed term inside one of these emails is a message that the monitoring term is about to expire and possibly the monthly charge will be increased. Customer is advised that if they no longer wish to avail of the monitoring service they need to respond via email. If they do not, for whatever reason, they are assumed to have given consent to entering a new contract for the same length as the previous one.

Why would someone ignore correspondance from their supplier? How else are the supposed to contact you? It so easy to opt out of spam/marketing communncation and only accept valid contact

TommyKnocker wrote: »

If I get a loan of €5000 from my bank to be paid off over 3 years, when the last payment is met the loan is paid off. It is not as if the bank is going to send me an email advising that if I don't refuse a further €5000 will be placed in my account as I will be adjudged to have entered a new loan agreement.

Likewise if I buy something on HP. When I make the last payment the HP contract is finished and I own the purchased item. The company who sold me the item does not send me an email advising that if I do not refuse I will be sent a second matching item and be adjudged to have entered a second HP contract.

So, as I cannot imagine a "credit contract" where if a consumer does not advise to the contrary, they will be adjudged to have entered a second or follow on contract. But I do see this happen and be complained about regarding service contracts and was curious about this and if it was allowed, which it appears it is..

The scenarios you reference are true and not something that would ever happen.

Can you provide an example of what you are referring too with a "credit contract" where someone is entered into another contract without thier approval through correspondance?

In another example companies are allowed increase the cost of their packages and sometimes this effects customers in contracts, however they notify customer through their chosen method of contact and give them usually 30 days to cancel the contract without penalty. If they do not contact them then it is deemed to have accepted the price increase and the original contract continues until its expiry date however with the new price increase.
This is acceptable as the company contacted the customer via their chosen contact method and they did not respond.

TommyKnocker

@sexmag: I have no issue with "credit contracts" and am not talking about this type of contract.

My initial post was to ascertain the scope of the Consumer Credit Act 1995 as I have come across a number of instances where this act, specifically section 138.1 is cited as protecting customers from being re-enrolled in service contracts (mobile phone, gym, alarm monitoring etc.) automatically and was curious as to whether this act covered service contracts or just "credit contracts" as the name suggests, which I have been advised above that it does not.

As stated above I have never heard of an instance where someone was automatically re-enrolled on a credit contract because they did not respond to an email, so I cannot understand the need for section 138.1 in the Consumer Credit Act 1995.

I remember listening to an episode of LiveLine dealing with a alarm monitoring company where section 138.1 of the act was given to listeners who had issues with the alarm company in question advising that this gave them protection from being re-enrolled in contracts due to not having responded to an email they received.