IMPDA: Clawback

We thought cash back was a hot issue, well it is for the consumer, but we were taken by surprise by the reaction to an interview with Jez Harris of Futurenet communications.  Anger was an understatement, it was the word “furious” that hit the mark on the subject of clawback.
Dealers up and down the country are up in arms about it, and  feel like they have been mugged by the networks.

A person enters your shop, you collect all personal information incl credit card and bank details from them and pass to the network, in addition you take copies of proofs from the customer, and follow the networks requirements to the letter. Why? Because dealers have not got the facility to check on the persons financial situation they rely on the networks.  The networks using their vast checking systems, will make a decision if they will accept the risk on their network, and will report this back to the dealer either by declining the application or accepting them, so lets then be clear about this, the network has accepted the risk not the dealer.

Lets say the dealer gets £285 in commission from that he also gives the customer perhaps a Bluetooth headset, phone case etc costing £50 and of course the handset is free to the customer, but remember the dealer has to pay for it out of commission, so say it cost  £135 that leaves the dealer with £100 net profit at that time.

All is well until some 103 days later the dealer gets a notice from the network claiming suspect fraud and claws back ALL the commission, which leaves the dealer £185 out of pocket on top of losing the £285 commission.  The question is WHY?  It’s the networks that are making the risk decision, yet they are shifting that risk onto the dealer whilst they the networks risk nothing, because if they are owed a bill you can be sure the debt collection agencies will be knocking on the door of the customer within days.

But and here is the crux of the matter when is a sale a fraudulent sale?. If a sale was PROVED to be fraud then dealers would not complain, but the networks use the word ”Suspect” but are not prepared to prove it.  Anyone can use the word “Suspect” but that does not prove it is fraud.  As an example I had a letter just the other day from my distributor which said “ We write to inform you that you have received a claw back which Orange have regarded as being suspected fraudulent connections”  

Now we know that if the proofs are sent then if they pass audit Orange will return commissions. (well as of recently only 50%)  but in the case of many others T-Mobile for example it wont make any difference because their attitude is once we have claimed it back forget it you wont get it back.

So I challenged this, and asked my distributor to ask Orange to now prove this was fraud, and what answer did I get back from the distributor “ XXXXXXX [The distributor] would not be able to provide you with evidence of the claw back from orange due to the sensitive information that is contained in the email we receive from them detailing the claw backs. Orange have the right as its states in their T’s and C’s, as do we, to claw back commission for connections they believe to suspected fraudulent. They cannot provide detail in to why the claw back has arisen due to Data Protection as the contract is between Orange and the customer and therefore any information regarding payments etc on the customers account is confidential”

So now you know! The network can call any sale suspect fraud and will not prove it on any sale you make, the customer might be late paying a bill or may have even arranged with the network to pay off outstanding amounts over a period, but they will call it suspected fraud.
By definition fraud is a criminal act and should involve police.  We believe that this is a Tort (a civil fraud) A civil fraud typically involves the act of intentionally making a false representation of a material fact, with the intent to deceive, which is reasonably relied upon by another person to that person’s detriment.

A "false representation" can take many forms, such as:

  • A false statement of fact, known to be false at the time it was made;
  • A statement of fact with no reasonable basis to make that statement;
  • A promise of future performance made with an intent, at the time the promise was made, not to perform as promised;
  • A statement of opinion based on a false statement of fact;
  • A statement of opinion that the maker knows to be false; or
  • An expression of opinion that is false, made by one claiming or implying to have special knowledge of the subject matter of the opinion. "Special knowledge" in this case means knowledge or information superior to that possessed by the other party, and to which the other party did not have equal access.
But if this is because of a non payment of a bill after the customer has already being paying their bills prior, then this cannot be fraud and in anycase it’s the network which took the risk so they should absorb the cost not clawback from the dealer.  Some other examples if the networks themselves make a decision to downgrade a customers tariff (clawback).  

There are hundred of examples where the dealer gets clawed back yet the network retains the customer, lets face it the commission is for getting the customer onto the network and the amount depends on the tariff plan chosen, therefore if the network retains the customer the networks should not be clawing back dealers.  With just about every dealer in the UK affected by this, the IMPDA will be taking up this issue both with the networks in the coming weeks, as this has and still does have a serious impact on business.

If you are a dealer and would like to become a member of the IMPDA or just to get in touch to get advice, pass us information or stories, then we would be pleased to hear from you.  We are always happy to hear your  views or problems so we can take these up.  We are asking dealers to come and join the IMPDA and don’t forget membership at this time is free.  Send an email to or you can sign up at

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