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UK ISP Scotnet Sues Customer in Effort to Recover ADR Complaint Fees

Monday, November 11th, 2013 (1:27 am) by Mark Jackson (Score 2,094)

Scotnet, which is one of the few ISPs dedicated towards providing broadband services to Internet users in Scotland, has taken the somewhat controversial step of launching legal action against one of their customers in order to recover around £350 worth of CISAS’s Alternative Dispute Resolution (ADR) complaint handler fees.

At present Ofcom requires all ISPs to be members of an approved ADR scheme like CISAS, which is designed to supplement (not replace) the providers own internal complaints procedures and are only used after a dispute has gone unresolved for 8 weeks (the “Deadlock Letter” stage). The process is free for consumers to use but ISPs, win or lose, often still have to pay up to around £350 +vat in fees to the ADR provider (note: the customer receives none of this).

Furthermore Ofcom states that the right of customers to seek ADR (free of charge) has been enshrined in statute by Parliament and that their own General Condition 15 requires that “the complaints handling and dispute resolution procedures are ‘easy to use, transparent and effective’“. Some extra details can also be found under our ISP Complaints and Advice section.

A Spokesperson for Ofcom told ISPreview.co.uk:

The Communications Act requires that ADR is free for the consumer to use (regardless of whether the case is won or lost). In addition, to protect communications providers, the ADR schemes are able to refuse to accept cases if they judge them to be malicious or frivolous complaints. ADR fees do not apply if the case is not accepted by an ADR scheme.”

The latest situation began in September last year after one of Scotnet’s Broadband Enabling Technology (BET) customers claimed to have experienced several service failures within the first four months or so of using the connection, which allegedly included some outages that lasted for between 5-9 days (it’s claimed this also disabled their phone service).

As a aside note BET, which is not widely supported by ISPs, is an extremely niche and expensive (in this case costing over £1,300 to install) solution that’s used to make speeds of 1-2Mbps available over extremely long copper lines in remote rural areas where normal ADSL broadband might struggle to function. It should be noted that in this case 75% of the install cost was covered by public funding but the customer still had to pay the last 25%.

Sadly the uncertain cause of the problem, which was eventually solved by BTOpenreach, ended up becoming a significant bone of contention between the customer and Scotnet. Eventually the ISP released the customer from their contract and allowed their migration elsewhere, which was problematic given the distinct lack of other BET supporting ISPs. Needless to say that the migration to BT failed (they don’t support BET either) and this was followed by a lengthy spat over an unexpected line cease and cancellation among other concerns.

Fast forward almost a year of worsening relations and the customer, much to the ISPs bitter disapproval (including a legal warning), finally takes their complaint over Scotnet’s handling of the situation to CISAS after failing to agree a settlement (under £200). CISAS accepted the complaint but ultimately ruled in Scotnet’s favour on all points except for the fact that they had failed to issue the required deadlock letter.

At this point the customer, whom is now working to open a second ADR complaint, felt as if the case had been mishandled by CISAS. Meanwhile Scotnet, which are keen to stress that this is the first time that their ISP has been taken through the ADR process, considered the complaint to be baseless and vexatious.

Stuart Glendinning, Scotnet’s Director, told ISPreview.co.uk:

Our feeling is that ADR is a completely unfair process which provides an opportunity for customers’ to essentially extort money from their ISP. If a customer is unhappy with their service, they can raise a complaint and go through the standard 8 week complaint journey. After 8 weeks, it is fair to say that if the complaint is still outstanding, clearly the ISP doesn’t agree with the customer.

The customer then has the opportunity to use the ADR process ‘at no cost to themselves’. This immediately attempts to force the ISP to concede to the customers demands. The ISP has two options – 1) Give in and pay the customer what they’re asking for or 2) defend the case and ask the arbitrator to decide. If the ISP gives in, they still have to pay around £160 to their ADR provider just for accepting the case. If they defend it, win or lose they have to pay around £360. So, any customer asking for less than £200, the ISP would be cheaper to just concede without going to arbitration even if they don’t agree (which clearly they don’t as they’ve not conceded in the previous 8 weeks of the complaint).

Although the two ADR providers should reject cases which they consider “vexatious”, they have no requirement to reject cases which, even at face-value have no merit. The outcome of this is that the majority of ADR cases are actually won by the company, proving that they had no merit and yet in 100% of cases, it’s the ISP that has foot the huge bill. It is also in the interests of the ADR providers to accept as many cases as possible as it’s what keeps them all in a job.

We challenge anybody to argue that the ADR process is fair to the ISP when all costs go to them and the customer can raise a baseless case, waste huge amount of the ISP’s time and money and walk away without it costing them a penny.

In any other ‘court of law’ if a party raises a case against another and loses, they have to pay all costs. Why should ADR be any different? We don’t agree to ADR nor do we support it’s use. It is forced upon us by OFCOM who in turn blame Government legislation. We suspect that no ISP would support such a hugely unfair process and whilst we fully agree that consumers need some sort of recourse against poor service from their provider, the statistics show low customer success rates and low acceptance of decisions, clearly demonstrating that the current scheme is a complete failure.”

Sadly the concerns over ADR charges are nothing new and have already caused some providers, such as AAISP, to threaten court action in certain situations (here). Elsewhere Entanet has proposed that consumers should be prepared to pay the costs of the process if their complaint fails (here), while others believe that Ofcom itself should take charge of individual complaints (here).

Scotnet similarly suggests that it might be better if ISPs weren’t charged for such complaints until they racked up a certain number of ADRs. The charges are of course especially problematic for smaller ISPs that can sometimes struggle to stomach them. However others view such charges as simply being a cost of doing business or encouragement to ensure a good level of service.

Until now nobody has gone so far as to attempt to recover the ADR fees by pursuing a customer directly through the courts (note: anybody can use a court if they want and the ADR does not prevent that), which isn’t likely to help public relations and appears to be a questionable approach given that the ADR itself remains the only recipient of such fees.

Clearly in this case Scotnet feels as if the law will rule on its side but that is very much open to debate and the courts final decision. In either case the eventual outcome could potentially set a new precedent and one that might force Ofcom to make a few changes beyond the flimsy guidelines that were introduced last year (here).

But there are always two sides to every story and we shouldn’t forget that ADRs exist because some ISPs simply don’t play fair with their customers. On the whole they are a good thing but that’s not to say that the system doesn’t need some improvement. No ISP likes being taken down the ADR path but then most consumers would never wish to be in that position either. Attempting to tackle long-winded complaints can be extremely stressful for consumers and tempers often run high.

In theory an ISP that keeps their customers happy should never have anything to worry about. However the telecoms network is also a complicated beast of national infrastructure where things, often on BT’s end rather than the providers, can frequently go wrong. We hope to cover this situation in more detail once the case has concluded.

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2 Responses
  1. dragoneast

    The cost is borne by all customers ultimately. Probably not unreasonable, looking at domestic broadband in isolation. Although it might seem sensible that Ofcom’s scheme should be amended so that the costs and compensation could be awarded against the third party supplier (OpenReach or Wholesale or LLU provider) where they are at fault or the problem is on their network and out of the control of the ISP. So the scheme seems unfair in that regard. But “compensation” schemes are now so two-a-penny that they can come to be looked upon as a form of welfare, a sort of income supplement, or as a punishment for the annoyed to use. If you haven’t had endowment or PPI compensation then you must be a fool. (I haven’t had either by the way).

  2. NetGuy

    Can quite understand an ISP deciding, as a last resort, to take an ex-customer to court if they feel they have been caused significant cost (and the more so, if the cause was outside their control, or the customer was genuinely being “unreasonable” in their demands). Will be interesting to see the final outcome.

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