The trend to use verbal contracts

In today’s column, I focused on what I think is an unethical tactic — binding customers to verbal contracts for telecom services.

Customers are often unaware of a contract because it’s verbal and disguised as a discount. They say yes to the deal without realizing they have to pay back the incentives if they switch to a rival before the term is up.

I don’t mind a verbal contract if the telephone conversation is recorded and the customer’s approval can be brought forward as evidence. I also believe that a verbal contract must be followed up with paperwork.

How hard is it to send a letter in the mail? Or why can’t companies put information in each monthly bill, including the date the contract starts and ends? Yet telecom companies don’t like to do that.

They’re in the communications business, but they’re either too cheap or too lazy to document their agreements. They seem to think a quick verbal assent to a lower rate is enough to show a customer’s approval of a multi-year commitment.

The new Commissioner for Complaints for Telecommunications Services thought it was a big enough issue that he devoted several pages in his latest annual report to these verbal contracts. (See pages 25 to 28.)

While he doesn’t think he has the power to stop this practice (being funded by the industry, after all), he did suggest that companies take pains to ensure the customer knows of the penalties involved in switching.

The issue of contracts agreed to by phone and not reinforced with paperwork also comes up with furnace and air conditioning service plans, lawn care plans and fixed-price energy plans. The original agreement may be documented, but the renewals are not.

I think we need new laws to protect customers from such abuses. I often hear that when customers ask for proof they agreed to something on the phone, they can’t get a recording that shows they did.

Author: Ellen Roseman

Consumer advocate and personal finance author and instructor.

12 thoughts on “The trend to use verbal contracts”

  1. If the telcos truly wanted to be transparent to their customers (rather than try to pull a fast one at every opportunity) they’d adopt a fair-dealing protocol similar to this:

    – advise customer verbally that a proposed “deal” binds them to a n-year contract

    – record the conversation

    – solicit customer’s verbal consent to the contract

    – provide a contract number when customer consents

    – mail copy of contract terms and conditions to customer

    – give customer 90 days right of rescission for telephone sales as under the Ontario Consumer Protection Act [I suspect the loophole the Rogers, Bell and Telus use to ignore OCP is that they’re federally regulated.]

    – display contract number on all invoices for duration of contract.

    Ellen, perhaps you can ask the telcos why they don’t adhere to such a fair-dealing protocol now. Also ask them to commit to adopting such a protocol within the next few months. Let them put their commitment to fair-dealing, customer service and transparency where their spin-doctors’ mouths are.

  2. I always thought you need signatures from all parties involved before a contract can be valid in court. Not so?

  3. All this resonates with our experience with Rogers. In 2006, when my daughter was in college, I signed up for her cell plan with Rogers and agreed to pay for it as long as she was studying. I had a bad experience with Rogers cell service, so in 2008 my daughter went to a Rogers story in Carling Ave. to tell the representative in person that she did not want to renew the plan. The sales rep offered to send her later a new phone as a bonus on signing a new contract, which she refused to take and insisted on not renewing the contract when the term was due. In the summer 2010, I called Rogers to tell them a month in advance that she was switching services, when I was informed that I owe them almost $400 for breaking a three-year contract. When I asked to let me see the contract that I supposedly agreed to, I was told that it was a verbal contract. When both my daughter and I insisted that she had told the agent the opposite and refused to accept a free phone that was offered as an incentive, Rogers representative insisted on the correctness of their notes.
    What is the recourse in such cases? Can any representative put a note behind your back against your expressed refusal to renew a multi-year contract and make you liable to a several hundred dollar fine?

  4. I’m another example of Rogers’ dirty billing tactics and absolutely horrible customer service.

    I have been a long time loyal Rogers customer and recently moved from Ottawa to Toronto. I decided to bring my Rogers services with me (my first mistake).

    I wanted to downgrade my cable and internet package to something more affordable, as I was only supposed to be at the new address for a short term.

    When I went to close off my account, I was advised by Rogers that I was on a new 12 month contract and there would be a large cancellation fee.

    This is absolutely ridiculous. I would have never agreed to a new 12 month contract knowing full well that I was moving in a matter of months.

    Their representative who signed me up on this supposed contract was obviously not honest or clear about what they were doing.

    There should have been paperwork sent to me or even emailed to me and a chance for me acknowledge the existence of a contract.

    I sought help with numerous customer representatives at Rogers, all of whom were very unhelpful. They were never able to produce any evidence of a contract they say I agreed to, and refused to let me close my account without paying their extra early termination fees.

    I demanded to speak with a manager about the issue. The manager I spoke with was very dismissive and even laughed at me.

    I feel trapped by Rogers and helpless about this situation.

  5. Hello Ellen,

    I just wanted to provide your blog with an update regarding my verbal contract issue with Rogers.

    After someone at Rogers read your blog and my post, I was contacted back fairly quickly. The gentleman I was speaking with at Rogers was refreshingly kind and understanding. He took the time to actually listen to my issue and acknowledge my situation (something their lower levels of customer service definitely lack).

    After reviewing my case and all the information, Rogers agreed to waive my cancellation fees and that the contract is void. I am happy with the outcome.

    I hope that in the future there are laws passed regarding verbal contracts that provide more protection and clarity for consumers like me.

  6. Hello Ellen,

    I have been a longstanding customer of Rogers and just got off the phone with Rosie Greco of the president’s office. I am also a victim of Rogers’ dirty tricks and abysmal customer service.

    I have Hi-Speed Internet Service with Rogers. When a new Internet service provider (E-Suite) was selling services in the building where I live, I called Rogers to see if they could match the price. E-Suite’s Hi-Speed Internet Service was between 30-40% less expensive than Rogers for the same type of service.

    A customer service rep (David) said Rogers would offer me a 30% discount for a year. In no way, shape or form was a 2nd Year mentioned.

    I called Rogers to inquire about the date that my contract was up and was advised that I had agreed to a verbal 2 year contract. This was not true.

    Rosie Greco said that if I insisted that my contract was only a 1 year contract and I would not agree to the 2nd year, Rogers would bill me for the 30% discount for the past 9 months. This would equal almost $200.

    She asked me to call back in July to see what promotions would be available then. If no promotions were available for a discount, I would be held responsible for the 2nd year at 20%, which I did not agree to.

    Ms. Greco said there was no record of my call, as the Rogers database cannot keep and hold such large amounts of data. Only voice recordings of between 30-45 days are kept by Rogers.

    She said Rogers does not provide 1 year contracts and it verbal contracts are multi-year.

    So as of May 12, 2011, I am kept \hanging\ waiting for July to roll around to call back Rosie Greco to see if a promotion exists for the 2nd year.

    If no promotion exists I am expected to pay back the 30% discount that I received from August 2010 to May 2011. What nonsense and dirty tricks are these?

    After many phone calls, totaling hours of my time, to try and resolve this matter, I must now wait until July just to see if there is a promotion that I qualify for.

    I hope I too may receive a call from Rogers with more than a promise to wait until July 2011 to see if there is a \Promotion\ available for the 2nd year.

    This is after many calls to Rogers and the President’s office, many hours of my time, indifferent and rude customer service personnel and full mailboxes of one of the agents I was directed to by the President’s office, not allowing me to leave a message.

  7. I ran into a very similar situation with Comcast. There were discounts agreed to over the phone to keep me from cancelling my service.

    These were supposed to stay in place for 6 months, but 2 months later the discount disappeared. Needless to say I was quite frustrated and immediately cancelled.

    There should be laws put in place to protect these types of things from happening, and even though this post is from 2009, it STILL happens today!

  8. My story with Rogers could give someone a stroke just listening to it or reading about it.

    Suffice to say it took Rogers 2 years and 8 “engineers” to find out why I was not receiving cable in high definition in my home near York university.

    I never had an axe to grind with Rogers, in fact many years ago, I managed a Rogers plus store.

    Now, I consider it to be everything that is wrong with a corporation.

    It is a horrid outfit.

    So bad that if you type Rogers complaints into Google, the Rogers official website provides a flow chart on how to properly escalate your complaint?!?!!

    Instead of fixing things, they choose to exhaust you and if you expend enough energy, they ultimately do what they were supposed to co from day one.

    I never thought my life would be cut short by disease just trying to pay a company for entertainment.

    The irony!

    Now I am physically healthy, still I am so emotionally sick from the stress of dealing with Rogers, I feel the need to vomit.

    I have cable with Rogers with my family for decades.
    Today, I have in my name, cell phone, Internet, and cable with Rogers.

    I pay $3600 a year for consumer use of all 3 services.

    For 2 years and all the technicians trying to figure out why my cable and Internet was not working, they provided me a 30 percent credit in 2011.

    Imagine this, I received 30 percent off while receiving 0 percent of the cable service?!?!

    But they rationalized it by saying I was receiving 30 percent off my phone and internet as well.

    It took 3 months to explain to the technical department I could not receive high speed Internet if I had a weak cable signal.

    They couldn’t grasp that.

    So I cancelled a year ago my Internet with Rogers.

    I went with fibe 12 bell Internet.

    Another award winning company of mass confusion.

    But that’s another story.

    Basically neither company cares about the churn rate on Internet service because there are no other alternatives.

    Fast forward to the presidents office sending another engineer 11 months ago after I complained I didn’t want anymore marketing sent to my house advertising Rogers products.

    So instead of stopping their spam mail in my mailbox, the presidents office called to say they would send yet another engineer.

    But I have Bell Internet I said with a one year contract. I don’t want Rogers Internet.

    The presidents office, a glorified call centre, insisted they wanted to fix my problem.

    The engineer came with two other engineers. They found nothing.

    They left.

    Then my analog cable stopped working yet I was still paying.

    I called, they sent a technician. It took him 15 seconds, a polite 20 year old technician to see that my house built in 1960 had a patch of cable coming into the house that was too old to carry an HD signal. It took him 5 minutes to fix everything.

    Don’t believe me?

    It’s all documented.

    So one problem, the cable that goes from the basement to the upstairs fished through was also outdated. Hence no signal. How did a total of 15 engineers miss this? He asked.

    Guess what?

    Rogers doesn’t do fishing of a cable, but as a favor the presidents office would run a cable from outside.

    I said no I would just get fibe bell TV

    They insisted and said 50 percent off my Internet for a year.

    But then I had to cancel my bell Internet costing me 100 dollars.

    When I called Bell for other problems of their Internet failing, it took them 4 months to fix the issue as they had to lay down new fibre optic lines on our street.

    So Bell kindly gave me the 4 months free.

    After the 4 months I was sent 100 dollar cancellation fee from bell. I didn’t cancel. They made an error. They admitted it. I was told pay your bill to protect my personal credit and then they would credit my bill. They made that billing error 3 months in a row!

    It has been credited back.

    Now stoners installs their internet but it’s still not working.

    So I have both Rogers and Bell high speed modems and zero Internet connection!

    I am told then that they have to (Rogers) making an exception! Like I am an inconvenience to the company! That they would drill a new line through my nice brick wall upstairs. I didn’t want that but I couldn’t get them to fish the cable indoors. One technician was honest and stated Rogers can do it but it’s a 9 hour job. Rogers would not do it because they want their technicians to do 9 one hour calls instead.

    So finally I cave and get the rudest Rogers technician ever. A top technician engineer sent from the presidents office. He was so just angry. Drilled a terrible hole in my Brock wall and smothered it with cocking to cover it up. Mud all over my home as he tracked it in from outside.

    He then leaves.

    He doesn’t set up my cable upstairs nor Internet. I had to now wait another week for another technician to install and activate everything.

    Finally it gets activated.

    Did I mention anything about bundling?

    No because I didn’t.

    But in February Rogers provided me 30 percent on all 3 services phone, Internet and cable. I never asked for it. I calked Rogers and stated in February this for new customers, Internet is 50 percent off for 3 months. So they told me, we are so sorry for everything. We will provide the 50 percent off your Internet for a year. They did that to make up for me having to cancel my Internet with Bell.

    But bell wouldn’t t cancel. They provided another offer of 30 percent off after the 3 months free.

    Today I have 2 Internet services. I don’t want the Rogers one because they did not keep their promise. After the 3 months my discount on the Internet went back to 30 percent and without me even speaking to ANYONE at Rogers they bundled my services as one consolidated bill.

    I called to cancel the Rogers Internet to find out today that in February when the customer relations escalated management office said sorry here is your discount , the out me on a 3 year term for my Internet cable and phone. I have to keep ALL 3 services until 2014 of February or pay a total of almost 1000 dollars to break all the contracts I never made?!?! It was verbally made apparently when they put in the notes they gave me a customer service discount for bad customer and technical service?!?!!!

    Happy thanks giving to me.

    One Rogers rep told me today I am a bothersome customer and that I have a very lucrative discount! I am annoying them by paying them for services that didn’t work for 2 years, Internet I did not want back but was cornered into needing it because the Bell service stopped working.

    Now I am told I am responsible to pay back the discounts if I cancel early?!?! What contract. ? And the services didn’t work for 2 years so why do I have to pay them anything period in the first place??!!!

    By the way, I am sorry for all the typos. I am on my iPad using bell 3G sim card and a data plan. Why?
    Both Internet services from Bell and Rogers are not working for the past few days.

    So I can’t cancel contracts I didn’t make. I have two modems not working againI drilled an ugly hole into my nice brick home and my cable is freezing and I had to use my credit card to buy data on my iPad 3G to get online tonight!!!

    Can someone please make this into a horror film? It’s a great plot.

    Can any lawyer, politician, government agency, journalist, someone help!

  9. Hi Ellen, after reading the articles above, I am convinced that Rogers is going wrong.

    In a country like Canada, which is proud of its honesty and transparency, I am shocked at the tactics of such a huge company.

    I moved into a new house recently and was told by a local representative that Rogers has a special promotion on for free trial. I said yes without thinking and researching. I live in a small city and we don’t hear of such things as screwing someone over like that.

    Now that I look back, I was like a fly in a spider’s web. I apparently agreed to a 2 year contract “verbally” and to pay full price for the bundle.

    When I called in, they said you can either pay full price for all that you have used or pay $400 for cancellation.

    How did I get into a contract I never signed or never heard of? How do I know I didn’t get into a contract for the rest of my life “verbally”?

    It’s a trap…How can a business exist with such a policy? I don’t understand. I am only worried about my credit rating. Otherwise, I would have refused to pay and taken them to court without hesitating.

    I feel helpless and it led me to your blog. I am an ordinary guy with a regular job who doesn’t have the money or time to take such arrogance from a company that is making millions.

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