Michael Bailey Deputy editor

Michael has been a business journalist for 12 years. He has extensive experience editing magazines covering funds management, commercial property and the travel industry. In 2011 he won a Citi Excellence in Financial Journalism award for a BRW cover story on economic indicators.

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Beware the double dip: Why Vodafone class action could drop out

Published 27 February 2013 10:14, Updated 26 November 2013 18:35

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Beware the double dip: Why Vodafone class action could drop out

Law firm Piper Alderman says it needs at least 23,000 claimants for its class action against Vodafone to be viable, while sources close to the telco say it has already compensated most aggrieved customers and the action will attract nothing like that number.

Piper Alderman partner leading the class action, Sasha Ivantsoff, says 23,000 people have registered interest in joining the class action, which will be funded by the LCM Litigation Fund on a no-win, no-fee basis, and be filed in three months if enough people join. Most of those registered had done so by the end of April 2011, by which time Vodafone had apologised to customers three times for network problems and complaints handling bungles that had been building throughout 2010.

However, those 23,000, and anyone else who feels they paid for a service Vodafone failed to deliver, now have to fill in new forms to establish that they were a Vodafone customer in the period covered by the proposed action – 2010 to 2011 – and that they had not already received compensation from Vodafone at least equal to the value of the service shortfall they believe they suffered.

Double-dipping

Sources close to Vodafone believe it is on this point that the proposed class action will fall down, as people who have already taken compensation can not “double-dip”.

“The company has heavily compensated, directly and through the Telecommunications Industry Ombudsman, the people who had issues. The longest contract is two years, so those who are customers today have either been compensated and chosen to stay, or they’ve walked,” one source says.

But the managing director of LCM Litigation Fund, Patrick Coope, says in the two-year process of deciding whether to fund the action, he gleaned that “vast slabs” of people had received no compensation. Coope says LCM expects a settlement in the “tens of millions”.

Piper Alderman partner Ivantsoff says even those who had received some gesture from Vodafone may still be eligible to make a claim.

“If someone was offered a free month and they stayed on the inducement that the service was going to get better, and it didn’t, then they should be entitled to something,” he says.

“It will be up to the court to determine what Vodafone’s service was worth versus how much they charged for it.”

Those signing up for the class action will have to agree to Piper Alderman’s retainer terms, and LCM’s funding terms. LCM will take 15 per cent of any out-of-court settlement before May, and 33 per cent of any settlement if the issue proceeds to court (it is most likely to be the Federal Court, Ivantsoff says).

Network guarantee

It’s a licence for them to damage Vodafone’s brand for three months, alerting people to an issue from two years ago.

There were 7 million SIM cards on issue with Vodafone in 2010, and there are now about 700,000 less, with many of those freed from contracts early. Since its 2011 crisis, Vodafone has introduced a network guarantee which releases customers at no extra cost if they are unhappy.

The source close to Vodafone says the proposed class action is an attempt to profit from a problem where there no longer is one.

“It’s a licence for them to damage Vodafone’s brand for three months, alerting people to an issue from two years ago that half the population aren’t even aware of. What will the consumers get out of this?”

Ivantsoff says consumers will get the return of some of what they paid Vodafone, although the class action will also include claims for “consequential losses” from people who say their livelihood was affected by dropped calls, slow internet and – in at least one case study released by the litigants yesterday – overzealous reporting to credit agencies when a customer disputed her bill.

If the court decides Vodafone is liable for consequential losses, Ivantsoff says claimants will then need to go through a separate process to prove those losses, although that would be handled within the framework of the class action.

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