Edificio Original

In consumer purchase decisions the most important factors are, the prices of the product or services, the quality of the products or services and the terms and conditions of the trade. The consumer’s limited capacity to access, correctly assess and promptly act on the information concerning these three factors determine largely the level of harm the consumer may incur. The likelihood of harm increases significantly when suppliers provide misleading information or employ high-pressure sales tactics, which negatively affects the outcome of the information accessing and processing effort. Network and services providers may exploit the ordinary consumer by indulging in unfair trade practices. These challenges are often compounded by

127 consumers’ sparse knowledge level and behavioural constrains (Cseres, 2008; OFCOM, 2010).

There is abundant evidence from research that these difficulties acting separately or in combination result in consumer stress and frustration, confusion, anxiety, and poor decisions, and detriment (OFCOM, 2009; Xavier, 2008; Cseres, 2008). North, 1993 asserts that consumers’ decisions are often not rational, but are forced on them by necessity and other constrains. Consequently, consumers are not only unable to derive the full benefit of the liberalised telecoms market; they are also exposed to financial and emotional harm due to their limited capacity to access and assess information and the asymmetric relationship between the ordinary consumer and services provides which competition alone is unable to address.

a. Mis-selling

One of the main sources of harm for consumers in the mobile telecoms market is the issue of mis-selling. Mis-selling is one of the ways service providers exploit the state of information asymmetry that exists in the mobile market. Mis-selling is a generic term that includes a range of unfair and dishonest marketing and selling activities that harm the consumer and undermine both competition and consumers’ confidence in the industry.

Slamming is a very dubious form of mis-selling where a new contract for a service is imposed on a consumer without their consent or knowledge. For example, a consumer may be assigned a caller tune, without her/his consent and the charges included in his/her bill or deducted whenever his/her account is recharged. A caller tune is a special ringing tone, to be heard by the called party (e.g. music, greetings); that identifies a caller. Caller tunes are very popular among the youths. Illegal charging of consumers for value added services (VAS) like health tips and news clips, without their consent or authorisation is also prevalent in Nigeria as was reported in the commission’s Monitoring and Enforcement Activities 2013/2014 (refer Chapter 6). This situation has prompted the Commission to engage VAS providers/stakeholders to develop a framework for VAS operation. Another form of slamming is the automatic renewal of contract/subscription when the provider has set the opt-in option as the default option. In such a situation, if the consumers fail to opt-out – for whatever reason – their contract is renewed without their explicit consent or knowledge. This type of slamming involving automatic renewal of ‘caller ring tones’, ‘information tips’ are also prevalent in Nigeria.

128 b. Misleading advertising and promotions

Consumers are also challenged by the various ways information is presented to them.

Advertising and promotions are major sources of misleading/inaccurate information to consumers. Nigerian Telecommunications services providers often employ the use of vague and misleading terms (such as absolutely free, best deal ever, unlimited, no hidden charges, no exclusion) to lure consumers into unfair transactions. In addition, these attractive claims are often shrouded with the slogan “terms and conditions apply” even when these are not immediately visible to the consumers.

Data download speed and duration of bonus airtime are some examples of inaccurate and misleading claim. Apart from the fact that data download speed is incomprehensible to many consumers, stating a theoretical/average speed, which is dependent on several factors beyond the control of consumer, is mischievous. For instance, the mobile service providers (MTN, AIRTEL and GLO) have been sanctioned for breach of Advertising and Promotion Guidelines as reported in the Commission’s 2013/2014 monitoring and enforcement activities (refer Chapter 6).

c. Pricing and Billing: The iceberg strategy

The mobile phone has become an essential tool not only for voice communication but also for a host of internet-enabled activities, thus making mobile telecommunications a significant expense factor. This partly explains why pricing and billing complaints account for over 30%

of telecoms complaints (ITU, 2009). Due to the adoption of complex pricing and billing strategies by the providers, consumers have trouble assessing the total cost of the services, understanding their bills or comparing different pricing and billing plans. Network providers exploit this weakness by obfuscating their prices (Xavier, 2008). Various pricing strategies, which work against consumers, include cap plans, excess charges, discrimination (differing) rates, bundling and packages. In addition, certain price promotions and misleading price-framing strategies distract consumers and induce faulty decision-making. One of the commonly applied strategies by the Nigerian mobile service providers is the ‘Time-limited offers’ which usually involves special prices and are available for a limited time period usually one week or

129 at midnight of same day. The promotion runs continuously for the period without stating the start or end time. Consumers who may be conscious of this fact are put under tremendous pressure to use up their credits in a hurry as they are not sure when the time limit of the deal runs out.

d. Unfair billing practices.

In 2012, the ITU-D Study Group 1, survey among its 193 member states, on consumer protection policies, showed that one of the most commonly cited type of complaints, which all the respondents reported, was about pricing and billing. Consumer pricing and billing complaints include: inaccurate charges complaints arising from overcharging consumers for instance where a service operator has programmed one minute to be equivalent to 40 seconds instead of 60 seconds; service charges complaints arise due to amount/type of charges levied on consumers for services; billing complaints arise when no charging information or insufficient charging information are revealed to the consumer and when consumers are billed for services they have not subscribed to, this is also known as cramming. Other examples include, consumers are surcharged monthly rental fees, even when the telecoms infrastructure serving the consumer has been out of service for the billing period and every so often, consumers are billed for silent call - when there was no both way conversation (ITU, 2013).

The ordinary consumer complaints appear to cut across these unfair billing practices.