updated on 29 July 2014
QuestionWhat impact does the implementation of the Consumer Contracts Regulation 2013 have on the ability of traders to utilise revenue sharing telephone numbers?
Currently, only guidance is available on what would be considered acceptable in terms of a contact number offered to consumers by a trader or service provider for the purpose of contacting them in relation to contracts that the consumer has entered into with them. The key issue seems to be a lack of clarity in the term ‘basic rate’, and a decision on this from the courts is needed.
The legislative regime surrounding consumer rights was harmonised throughout the European Union by the EU Consumer Rights Directive 2011, which was implemented in the United Kingdom in June 2014 by the Consumer Contracts Regulations 2013.
The directive requires member states to ensure that, where a trader/service provider (trader) provides a telephone number for consumer-contact post contract conclusion, the consumer is “not bound” to pay more than a “basic rate” charge.
In consideration of this article, Regulation 41 of the regulations requires a trader to ensure that a consumer is “not bound” to pay more than a “basic rate” when contacting the Trader in relation to contracts “entered into” with a consumer (the relevant context).
The term ‘basic rate’ remains undefined within the directive and the regulations, and therein lies the crux of the problem. The government has refrained from defining ‘basic rate’, citing the need to maintain flexibility within the definition and thereby ensuring that Regulation 41 remains applicable within the rapidly evolving telecoms market. As such, a trader is left with varying guidance on the issue.
Initial governmental press releases suggested that ‘basic rate’ could be taken to mean a number that charges a standard ‘geographic rate’ (eg, a rate equivalent to phoning an ‘01’, ‘02’or ‘03’ number). Application of Ofcom’s definition of “geographic rate” suggested that a number which charged callers up to nine pence per minute from a standard UK landline would be compliant with Regulation 41.
Subsequent guidance from the Department for Business, Innovation and Skills implementing guide (the BIS guidance) has attempted to add meaning and context to ‘basic rate’. While only guidance, the BIS guidance sets out the government's rationale behind Regulation 41 and needs consideration.
The key points within the BIS guidance stipulate that within the relevant context, calls should cost no more than the simple cost of connection and should not provide the trader with a contribution to their costs. As such, it is likely that premium rate numbers such as those beginning with the prefix ‘09’ and charging up to £1.69 per minute from a BT landline (the premium rate numbers) would always be viewed as being non-compliant with Regulation 41. Furthermore, ‘084’ and ‘087’ numbers, which can charge up to 13 pence per minute for calls from BT landlines and where a portion of the charge is utilised to provide a service or make a payment to the trader (the revenue sharing numbers), are likely to be viewed as non-compliant if offered as the only means of a customer contacting the trader in the relevant context.
However, the BIS guidance does not specify that the provision of a revenue sharing number should be avoided in its entirety. Indeed, the BIS guidance refers expressly to there being potential scenarios where a desire by consumers to call a non-basic rate number can exist. Developing this point, the BIS guidance highlights the acceptability of providing consumers with a choice of calling either a ‘basic rate’ number with the prefixes ‘01’, ‘02’ or ‘03’, or a revenue sharing number. However, with no clear definition of what is meant by “basic rate”, assumptions as to what the likely interpretation would be need to be made.
The caveat to a trader providing both a ‘basic rate’ number and a revenue sharing number is that the trader gives both numbers equal prominence in any forms of advertising. The need for this 'equal prominence advertising' highlights the government’s views that consumers often fail to understand how they can avoid paying higher charges when phoning traders in relation to contracts entered into with them. It follows logically that traders offering both a ‘basic rate’ number and a revenue sharing number should consider indicating the expected cost of calling each number so that consumers may make an informed choice as to which number to use.
The position has been further complicated by the publication of Ofcom’s final statement on simplifying non-geographic numbers. The statement identifies a move towards creating a consistent treatment of revenue sharing by the introduction of an ‘unbundling’ scheme for the prices charged by revenue sharing numbers (the Reform).
The Reform comes into force in June 2015 and introduces the need for a trader offering a revenue sharing number to clearly display the amount a consumer will pay to the phone company that originates the call (the access charge) and the charges which may be shared with the trader (the service charge). This design aims to ensure that the charges applicable in calling revenue sharing numbers are made transparent to consumers, further informing their choice as to which number they wish to call.
Furthermore, the Reform will include the need for:
The regulation, BIS guidance and Reform make it difficult for traders to fully comprehend how to position themselves to align with the law. Currently there is only guidance on what is and is not acceptable and a decision from the courts that settles the law in this area is awaited.
However, notwithstanding the above, the current practical implications of the statute and guidance suggests that traders should take a cautious approach, with the following practicalities being worthwhile considerations:
Charith Weerasinghe is a trainee solicitor in the commercial department at Addleshaw Goddard.