Early termination fees
Summary of the issue
A common complaint brought to TDR relates to Scheme Members applying a fee for the cancellation or variation of a contract before the expiry of its agreed term.
Usual positions of the parties
Typically the customer will either dispute the validity of the charge, or provide reasons why the charge should be waived.
Conversely, the Scheme Member will typically stand by its ability to charge the fee in that particular case, and will usually direct TDR to the particular terms and conditions which allow the charges to be brought. The Scheme Member may also advise that early termination fees are mentioned at the point of sale.
TDR's view of the issue
TDR accepts it is a common and valid approach for a Scheme Member to charge fees when a contract is terminated or varied before the expiry of the agree term. TDR notes that a customer typically receives reduced rates for calls or data when they contract with a Scheme Member for a longer term.
TDR will typically uphold a Scheme Member's decision to charge early termination fees, providing there is sufficient evidence to show the customer was advised that those charges would apply when the agreement was originally entered into.