We’ve reported on ACMA’s formal warning to mobile service provider Live Connected for breaches of the TCP Code. But we’re not at all sure that the Authority’s stated opinion on an important aspect of the law is correct.
The Code clause in issue
Clause 5.7.1(c) of the TCP Code says:
Except where otherwise agreed between the Supplier and the Customer, must allow the Customer, or former Customer, not less than 10 Working Days to check the Bill or if no Bill is required, all applicable Charges, before the associated Direct Debit transaction occurs.
In other words, after a telco bills, it must wait at least ten working days before extracting a direct debit, unless it and the customer have agreed otherwise.
Live Connected’s Terms and Conditions
The telco’s standard terms provided that:
When available, you authorise us to debit amounts (including any direct debit fees that may be payable) directly from your nominated bank or credit card account on the 7th or 8th of every month where you have chosen that method of payment, after receiving your bill on the 3rd or 4th of every month.
What Live Connected did
ACMA found, for instance, that:
Customer B had a mobile service with Live Connected in January 2013. On 4 February 2013, Customer B received a bill from Live Connected totalling $1433.05 for charges incurred in January 2013. This amount included excess data usage charges of $1422.06. This bill stated that $1433.05 would be debited on 7 February 2013.
On 8 February 2013, Customer B’s bank account was direct debited by Live Connected for $1433.05.
That process was strictly in accordance with the telco’s Terms and Conditions. Live Connected no doubt considered that it had an agreement with the customer that it could extract direct debit as and when it did.
So why did ACMA issue a warning?
ACMA’s warning is based on the following legal opinion, stated in its Warning Report:
It is the ACMA’s view that the inclusion of a term in a supplier’s standard terms and conditions does not constitute an agreement under clause 5.7.1(c) of the TCP Code. In our view, the “agreement” that must be obtained in respect of clause 5.7.1(c) is an agreement to depart from the “10 working day” requirement that would ordinarily apply. That is, the customer must explicitly agree to vary the condition in clause 5.7.1(c). The ACMA’s view is that this cannot be accomplished by way of standard terms and conditions, unless those terms and conditions explicitly refer to the relevant term as a variation of the usual 10 working day rule. The ACMA’s view is that clause 9.6 is not an agreement of the kind referred to in clause 5.7.1(c) of the TCP Code, meaning that the 10 working day rule still applied.
We’ve added the colours for ease of reference.
The red and green sentences
The red sentence plainly and directly contradicts the green sentence. They cannot both be correct.
The blue and brown sentences
Taken alone, the blue sentence is an accurate and self-evident restatement of what the Code says. But the brown sentence seeks to add something extra to the explicit wording of the Code. According to it, the exception requires more than that the telco and customer agree to something. They must agree to it in a very specific way.
The view that certain consumer consents must be obtained in particular forms, or at particular times, to be valid is not new. Some laws are very explicit about it. For instance, a telco that seeks a CSG waiver must supply very specific information about what rights will be waived, and comply with other express rules, for the waiver to be effective.
But there is certainly no general rule that consumer agreements must be obtained in a particular way. And there is nothing in the TCP Code that mandates particular wording on this point. The brown sentence runs a real risk of being what the regulator wishes the law said, rather than what it in fact says. With respect, ACMA needed to articulate a considerably more detailed chain of reasoning before it could arrive at the conclusion in the brown sentence.
If Live Connected’s customer contract wasn’t sufficient to satisfy the TCP Code, there’s a clash between form and substance. It cannot be disputed that the substance of the terms complied with the TCP Code. ACMA’s position is that their form was defective. There are times when the law does require both correct form and correct substance, but there needs to be a clear basis for asserting that is how a particular legal requirement is to be understood.
The green sentence, again
ACMA’s legal interpretation has a bet each way. Having asserted (in the red sentence) that standard terms can never constitute an agreement for the purposes of clause 5.7.1(c) of the TCP Code, and adding to that the doubtful proposition that a particular form of wording is required for such an agreement, the green sentence reaches the surprising conclusion that standard terms can be effective, as long as they use the supposedly ‘right’ wording.
If the first three sentences in the paragraph are correct, the one place they cannot lead to is the fourth (green) sentence.
It is very unfortunate that the Warning is internally inconsistent and inadequately reasoned out on this point. The Authority should issue a clarification, resolving the ambiguity.
Of course, it is for the courts, and not ACMA (or TCPCode.com.au) to determine what the law really means. But the public pronouncements of a regulator should have, and do have, a major effect on businesses. Where they are internally contradictory and controversial, they should at least be made clear and consistent.
What should telcos do in response?
The most conservative response is to always allow at least ten working days between delivery of bill and Direct Debit extraction.
If you want to extract sooner, you can feel very safe if you obtain a separate customer agreement, outside your T&Cs, explicitly varying the ten working day rule, as ACMA suggests is essential.
If you consider that ACMA’s real position is expressed by the green words rather than the red words, you could vary the ten working day rule via your standard terms, as long as you do so using the kind of wording that ACMA is looking for.
If you’re looking for a fight with the regulator (and who in their right mind looks for a fight?) then use your standard terms as a way to vary the ten working day rule, using wording of your choice. We wouldn’t be at all surprised if a court backed you up. But there are no guarantees, so we think this is a poor option.