Many consumers have lost in some cases quite significant sums of money where they have entered into mobile phone contracts with supposed cashback via agents of mobile networks, only to lose the supposed contractual cashback when the agent becomes insolvent. In many cases recently the insolvency of agents has been largely due to the mobile networks encouraging their agents to offer contracts with a high-risk business model on the basis that few consumers would actually remember to, or apply correctly to claim their cashback, so as to achieve many new network connections for them; this has proved recently not to be the case any longer as more consumers have properly applied for their contractual cashback.

Many dealers therefore began to default in paying the cashback entitlements and ultimately networks under pressure from Ofcom have "pulled the plug" on quite a few of their agents not reputedly paying out these cashbacks, which has then made the situation worse, since the previous agents then had no cashflow to continue paying out the cashback claims. As a direct result of this in many cases the previous agents then become insolvent. It is clear in this relationship that the networks enjoy and encourage this situation whilst they are getting many new connections, and have suggested and encouraged the high-risk business models. So really the networks have been essentially to blame for both aspects of these problems. They therefore probably it would seem have a vicarious liability both for the activities of their agents and for the total contractual position set up by their agents, particularly since in most cases a consumer never made contract directly with the network at all, and the only contract they entered into was via the agent of the network. The networks of course have so far denied any liability and have insisted that there were two totally separate contracts - one with them for the airtime contract and another with their agent for the cashback contract, but this may not actually be legally true?

Some consumers are therefore beginning to test the legality of this situation, where agents have become insolvent, and are joining together to pursue possible class actions against particular mobile networks for vicarious liability. This is being co-ordinated amongst others via an e-mail address cashback_victims at yahoo.co.uk.

What is the opinion of legal experts here on the feasibility of this?

Doug Giles writes:

The networks of course have so far denied any liability and have
insisted that there were two totally separate contracts - one with
them for the airtime contract and another with their agent for the
cashback contract, but this may not actually be legally true?

Surely the definition of an agent is that they act on behalf of their
principal rather than on their own behalf. Therefore if an 'agent'
offers a cashback deal, are they not offering it on behalf of the
network whose agent they are?

Graham Murray wrote:
Doug Giles writes:

The networks of course have so far denied any liability and have
insisted that there were two totally separate contracts - one with
them for the airtime contract and another with their agent for the
cashback contract, but this may not actually be legally true?

Surely the definition of an agent is that they act on behalf of their
principal rather than on their own behalf. Therefore if an 'agent'
offers a cashback deal, are they not offering it on behalf of the
network whose agent they are?

The networks would claim that they are only agents in respect of the airtime
contracts (which the networks honour) and not for the cashback contracts
(which they don't). Which raises the question of how the cashback was ever
going to be paid, if the networks weren't underwriting it.
--
John Briggs

In message , at 12:20:05 on
Mon, 10 Mar 2008, John Briggs remarked:
The networks would claim that they are only agents in respect of the airtime
contracts (which the networks honour) and not for the cashback contracts
(which they don't). Which raises the question of how the cashback was ever
going to be paid, if the networks weren't underwriting it.

Firstly, it's likely the agents weren't expecting a very high takeup of
the cashback offer. This can sometimes come unstuck - remember the
Hoover free flights offer (essentially the same business model)?

http://en.wikipedia.org/wiki/Hoover_...ghts_promotion

Secondly, the "agent" will be paid a bounty/commission by the network
when the new customer is signed up. (This is why the network insists on
a minimum contract term, because the network needs to keep the customer
making the monthly payments to cover the cost of that bounty). It's up
to the "agent" what he uses that bounty money for. A prudent one might
keep a portion in a safe place to pay the cashback, or if he feels like
taking more of a risk he might spend all the money now (on things like
rent and wages) and hope to sell more phones in the future to fund the
outflow of cashback claims.

In the past, similar issues have caused some PC vendors to get in a mess
when they sold people extra warranties, but pocketed the money; then got
more dead computers to fix than they could finance from the profits on
new sales.
--
Roland Perry

Doug Giles wrote:
Many consumers have lost in some cases quite significant sums of money
where they have entered into mobile phone contracts with supposed
cashback via agents of mobile networks, only to lose the supposed
contractual cashback when the agent becomes insolvent. In many cases
recently the insolvency of agents has been largely due to the mobile
networks encouraging their agents to offer contracts with a high-risk
business model on the basis that few consumers would actually remember
to, or apply correctly to claim their cashback, so as to achieve many
new network connections for them; this has proved recently not to be
the case any longer as more consumers have properly applied for their
contractual cashback.

Many dealers therefore began to default in paying the cashback
entitlements and ultimately networks under pressure from Ofcom have
"pulled the plug" on quite a few of their agents not reputedly paying
out these cashbacks, which has then made the situation worse, since the
previous agents then had no cashflow to continue paying out the cashback
claims. As a direct result of this in many cases the previous agents
then become insolvent. It is clear in this relationship that the
networks enjoy and encourage this situation whilst they are getting
many new connections, and have suggested and encouraged the high-risk
business models. So really the networks have been essentially to blame
for both aspects of these problems. They therefore probably it would
seem have a vicarious liability both for the activities of their agents
and for the total contractual position set up by their agents,
particularly since in most cases a consumer never made contract
directly with the network at all, and the only contract they entered
into was via the agent of the network. The networks of course have so
far denied any liability and have insisted that there were two totally
separate contracts - one with them for the airtime contract and another
with their agent for the cashback contract, but this may not actually be
legally true?

Some consumers are therefore beginning to test the legality of this
situation, where agents have become insolvent, and are joining together
to pursue possible class actions against particular mobile networks for
vicarious liability. This is being co-ordinated amongst others via an
e-mail address cashback_victims at yahoo.co.uk.

What is the opinion of legal experts here on the feasibility of this?





This is a subject that I have tried to raise before - but it gets very
complicated.

There is a generic problem when A pays B for goods received from C.

If the goods(eg cashback from C) fail, A has no claim on C as C cannot
refund money that he has not received.
And A cannot claim from B because B did not supply the goods.

If it were just cashbacks, it would be well worth arguing that the
responsibility lies with the Networks.

However, there are wider implications.

The same (similar) argument applies to Paypal, Google shop and even
Credit Cards.

If you buy from Ebay and pay the money to Paypal and the goods are not
received, both Paypal and the Credit card facility can argue that there
is no link between whom you pay and the seller.

I would love to see the whole system tested - but I am not optimistic

Flop

..