Virgin Media, one of the country’s biggest TV, internet and phone service providers, financially incentivises its agents to successfully “save” customers from switching to other providers, the High Court has found.
Mr Justice Denis McDonald made the comment when he ruled that Virgin was in breach of its EU Universal Service Regulation obligations in how its phone agents dealt with customers seeking to switch.
“Not only are agents instructed through the manuals to take that approach but they are encouraged and incentivised to do so by the availability of financial commissions which are only payable where the agent succeeds in saving the customer,” he said.
While Virgin had argued the incentive is paid in return for an agent resolving a customer’s issue, it was “clear that the event which triggers payment of the incentive is the retention of the customer”, the judge said.
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He was giving judgment in an action by the telecoms regulator, ComReg, against Virgin Media Ireland Ltd in which it sought a declaration that Virgin failed to comply with the Universal Service Regulations.
ComReg also alleged Virgin has unlawfully imposed a 30-day notice requirement on customers who wish to change providers outside the minimum contractual period.
Virgin disputed the claims. It argued it was for ComReg to prove the breach and there was nothing in the regulations which conferred any special status on the opinion formed by ComReg. The assessment of whether a breach of a statutory obligation had occurred was “quintessentially” a judicial function, it said.
Virgin also opposed Comreg’s claim that customers, who phone up Virgin to cancel, should be dealt with through a “two step approach” whereby they are first explicitly offered a choice to consent to listen to the agent’s “save (the customer from switching) activity” or go directly to cancellation without having to listen to it.
Virgin said this was excessively and disproportionately restrictive and it would introduce a stilted and highly unsatisfactory customer experience.
Under Article 25(6)(b) of Universal Service Regulations, a provider is required, without prejudice to any minimum contractual period which may apply, to ensure that conditions and procedures for contract termination do not act as a disincentive to a consumer changing service provider.
Mr Justice McDonald said that, notwithstanding a statistical issue raised in the case by Virgin, he found ComReg has established, on the balance of probabilities, that Virgin’s procedures for contract termination act as a disincentive to its customers who wish to change.
He said he would make a declaration that it had not complied with its obligations under Regulation 25(6)(b) insofar as the activity of “saving the customer from switching” is concerned.
However, he refused to make an order in relation to the “two step approach” sought by ComReg.
Instead, he said he would order Virgin to amend its training manuals and provide appropriate training to its agents whereby they would cease “save activity” once customers make it clear that they are intent on cancelling.
He also refused ComReg’s application for relief in relation to the notice period for cancellation requirement as this aspect of its case had not been proven.
The case, which was heard in 2022, involved the judge being supplied with a number of transcripts of conversations between Virgin customers and agents.
The judge was satisfied that, for the purpose of the regulation, there had been some level of systematic operation or course of action on the part of the service provider in relation to disincentivising switching including the training material provided to agents.
The court heard Virgin has about 400,000 fixed customers on its cable network and some 140,000 mobile customers in Ireland.
The court also heard there were a total of 194,784 calls by customers of whom 76 per cent did not cancel while the remaining 24 per cent (46,714) did cancel, either on the initial call or subsequently.
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