Suss out these sneaky small print scams

Make sure you don't get caught out by hidden terms and conditions that cunning companies sneak into the small print of contracts!

Would you sell your soul for the price of a video game?

I doubt it! But that’s exactly what 7,500 people inadvertently did when they ignored the terms and conditions on a video game website that included the sentence:

'Should we wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamestation.co.uk or one of its duly authorised minions.'

Fortunately it was an April Fool’s joke – but this does still prove how little attention many of us pay to the small print.

And if a new report from the Office of Fair Trading (OFT) is to be believed, this carelessness is costing us big...

Nation of skim readers!

The OFT research estimates that only 20% of us will read small print in any detail before signing a contract. The regulator also said that a few billion pounds were lost to consumers every year as a result of unclear contracts and that 70% of its day-to-day work related to written agreements.

One in five of us have had a problem with a misleading or unclear contract in the last year, but who’s to blame for this is still unclear. The OFT said that some sectors could do more to make contracts clearer and that the sales environment in which a contract is presented majorly affects your ability to make sense of the agreement.

So who are the main culprits for unclear and dodgy contracts?

Worst offenders

While the report doesn’t name and shame any specific companies, it does identify the areas that experience the most common contractual problems. Top of the list is telecoms and internet access, closely followed by home entertainment, home deliveries and home improvement.

There are also some specific contracts clauses that the OFT has already dealt with that you should watch out for:

• Contracts with unexpected restrictions such as football season tickets that didn’t guarantee seats and extended warranties with limited cover.
• Hidden terms that expose you to unexpected risks such as unsecure tenancies offered within a sale and rentback deal.
• Extra, complex small print charges such as redundant fees included on contracts by letting agents.
• Clauses that prevent you switching providers such as the hefty cancellation fees often issued by gyms (find out how to avoid expensive gym charges all together by reading Ditch the gym and get fit for free).

The OFT also said that problems were more common for telephone sales than for face-to-face or online contracts. But many of the people I spoke to when I headed out to get your take on small print identified the internet ‘tick this box’ agreements as a major worry. One cunning online small print scam I also reported on recently was the automatic renewal clauses used by anti-virus companies – read The sneaky anti-virus software trick to find out more.

But with so many of us focussing on headline prices and failing to go through the small print – are we really just asking to be ripped off?

Whose responsibility?

When it comes to contract-related disputes, there’s a fine line between laziness on our part and illegality on the part of the company. I’ve written before about how companies often seem intent on circumventing any new legislation with small print of ever-increasing complexity – this makes any attempt to draw up policy on the matter extremely difficult.

But small print can still get companies into legal problems. Just last month, Halifax had to shell out £500m in compensation due to confusion over the wording of a popular mortgage deal. You can read the full story by heading to Halifax to pay £500m to overcharged customers.

A similar case involving the credit card company MBNA went through the courts earlier this week and resulted in the lender having to write off over £20,000 of debt for one borrower. The judge said that MBNA had failed to give the customer the full terms and conditions for the card when he took it out.

Currently, many small print disputes seem to be dealt with on a case-by-case basis, but the OFT has still outlined the issues that it, and you, should consider when assessing whether a contract is harmful. Here are five of them:

• Does the small print contain significant surprises that undermine the upfront, headline deal?
• Does the contract contain false headlines that trick you into entering into a deal which is then changed by the small print?
• Can you avoid the small print terms by taking out a different product or business model?
• Do the overall benefits of the deal outweigh the negatives brought on through the small print?
• Does the small print harm fairness or impede competition for other companies and the customer?

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Avoidance

The obvious way to avoid any nasty small print surprises is to read every contract in detail before you sign it, keeping in mind the above points so as you can identify any dodgy terms and conditions. You should take extra care when reading contracts from the sectors I’ve listed above that have particularly sketchy small print credentials.

It’s also a good idea to keep an eye open for any vague-sounding terms that could be interpreted in a harmful way. For example, insurance providers will often include clauses that will prevent a payout if the claim has been filed due to a ‘lack of reasonable care’ on your part – but what ‘reasonable care’ means is anyone’s guess!

If you believe a company is trying to scam you using an unfair small print clause you can notify the OFT by heading to its website. And for a full guide to complaining, including advice on using the Financial Ombudsman Service and court system, check out our how to guide: How to complain and get your way. 

Any bad experiences?

Do companies use too much small print nowadays? Have you ever found yourself in a small print-related mess? What are your tips on avoiding nasty small print surprises?

Let us know by posting in the comment boxes below.

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