Determinations

TDR Case Note T013176 (2013)

Issue

Service issues and early termination of the contract

Background

The customer (a small family business) transferred to the Scheme Member Provider (Provider) because of promised Customer service, and reduced costs for broadband and mobile services.

In fact, the Customer's monthly service cost increased from $120 charged by his previous provider, to $210. The customer complained that he had never been told that the figure quoted by the Provider was exclusive of GST. In addition, the Customer complained that the wireless modem did not work and that there was a disconnection of the phone line for two days just prior to Christmas, despite being promised a seamless transfer. The Customer also complained that he did not receive a free Samsung Galaxy phone as agreed under the contract. The Customer wrote to the Provider on 13 June 2013 demanding to be released from the contract without incurring any penalty charges.

The Provider responded that it had advised the Customer by written correspondence about the charges and the GST component. The Provider explained that the reason for the delay in receiving the free mobile phone was that the courier company had lost it, and that two phones were delivered on 11 January 2013. The Provider considered that it had done all it could to accommodate the Customer and believed that the Customer was liable for any contract fees and debits of free offers provided if he decided to move away from the Provider within his contract period.

Adjudicator's decision

The Adjudicator found that the Provider's agent promised to provide 'better/faster' broadband services to the Customer's rural property with 'less cost than they were paying', which induced the Customer to transfer services to the Provider. The Provider also promised the Customer a new and fully functioning broadband modem but neither of the two modems sent worked when delivered. The Customer ultimately reverted to using his old modem. The Adjudicator therefore considered that the Provider failed to meet its promise of a cheaper monthly price, and that this arguably constituted a fundamental breach of contract by the Provider. The failure to achieve satisfactory fast broadband speeds and other failures contributed to the high levels of stress experienced by the Customer, which led to a complete breakdown of trust and the relationship between the parties.

The Adjudicator considered that the contract between the parties was terminated by the Customer's letter on 13 June 2013 and the effective end date of the contract should have been 13 September 2013. The Customer was liable to pay a reduced rate (50% of cost) to the Provider for the two mobile handsets supplied to him under the contract, but that no other sums were due under the contract by either party.

Final outcome

The Adjudicator upheld the Customer's complaint and his request for termination of the contract, and concluded that: (1) the Provider failed to meet its promises and also failed to address concerns brought to its attention about price, broadband speed, the malfunctioning modems; (2) the Customer was liable to pay a reduced rate (50% of cost) to the Provider for the two mobile handsets supplied to him under the contract, and no other sums were due under the contract by either party.