Ofcom has launched an investigation into the contractual wranglings of the Three network, after an investigation claimed that it overcharges its one and two-year contracts users by up to £230 each year should they choose to exit deals early.
According to This is Money's rip-off claims, the cash is being reaped from those who cancel their contracts before they're up, triggering termination charges for the luxury of swanning off to another network mid-deal.
It's to do with the way VAT on the refunds is handled. When paying off a contract, most networks refund the 20 per cent VAT element of the cost, as it applies to services rendered -- and there's no service any more when a future contract is cancelled. Three, however, doesn't pass this on, so is pocketing quite the bonus lump sum when you work out how much 20 per cent of a £37-a-month contract works out at over a remaining few months or year or so.
The discovery is the work of Michael Green from CaseHub who said: "It is disgusting that Three is overcharging customers to cancel their contracts as the rules are quite clear that the VAT discount should be passed on to the customer. Three is the only network doing this, which sends a clear message that it should change its policy." [This is Money]