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Telecom companies to adjust debt collection practices after investigation by ACM

 

Following an investigation by the Netherlands Authority for Consumers and Markets (ACM), ten major telecom companies will adjust their debt collection practices. A previous investigation revealed that many debt collection procedures among consumers are related to mobile plans. Telecom companies Ben, hollandsnieuwe, Simpel, Simyo, Tele2, T-Mobile, Vodafone, and Youfone have adjusted their debt collection practices and their consumer information. KPN will have completed its adjustments this quarter, and Telfort will do so in the first quarter of 2018 at the latest. Bernadette van Buchem, Director of ACM’s Consumer Department, explains: “Vulnerable consumers will no longer pay excessive damages if their mobile plans are terminated due to non-payment. This is an important step, because telecom companies are major clients of debt collection agencies.” This is in line with ACM’s wider approach to problems in the debt collection sector.

What was the problem?

Consumers who were no longer able to pay their mobile plans were, in many cases, confronted with high costs for the months that their plans would continue to be valid. Telecom companies had widely different approaches to the collection of outstanding amounts. In some cases, the demanded damages ran up to 100 percent. In addition, the information that companies provided on their websites and in their general terms and conditions were often not in line with statutory regulations nor with their own procedures. As a result, consumers did not know where they stood.

What has changed?

Telecom companies have agreed with ACM that, in cases of non-payment, they will charge consumers a maximum of 50 percent of the monthly fees (excluding phone payment plans) for the outstanding amount. Only in exceptional circumstances will companies charge a higher percentage. In this way, consumers who are not able to pay their bills will be protected against excessive damages, while telecom companies have room to take action against fraudulent consumers.

In addition, telecom companies have brought the information they present (in the general terms and conditions, and on their website) and their implementation thereof in practice, in line with statutory standards. This means, for example, that telecom companies now inform correctly about the start and end of the so-called 14-day period. Companies will charge debt collection costs only after this period has lapsed. In addition, companies will state that, at the most, they can charge the statutory interest. Finally, correct debt collection costs will be charged, and these will also be specified as such on bills. This is an important outcome for consumers: debt collection information for consumers is now correct, clear, and easy-to-find.

Most companies have already implemented these changes by now. KPN and Telfort will have done so by this quarter and the first quarter of 2018, respectively, at the latest.

Tackling problems in the debt collection sector

Earlier, ACM has, together with the Netherlands Authority for the Financial Markets (AFM), established that debt collection agencies play a key role in the financial sector when it comes to collecting unpaid bills. It has also established that problems arise in the debt collection sector in the form of:

  • collecting unjust claims;
  • unclear bills;
  • exerting unacceptable pressure.

ACM wants the debt collection sector to adjust its behavior in a structural manner. To that end, ACM has chosen for a three-pronged approach:

  1. Taking enforcement actions against debt collection agencies that do not comply with the rules;
  2. Remind clients of debt collection agencies of their responsibility in delegating debt collections. The approach of the telecom companies dovetails with this;
  3. Establish guidelines for consumers to take action themselves against unjust or incorrect claims. In that context, the campaign ‘Debt collection? Only pay if the facts are correct’ was previously launched. ACM will soon present a ‘toolbox’ for debt counsellors with information, enabling them to help consumers with their debts better.