Andreas Whittam Smith: Make businesses pay for defrauding customers

Big business is mistreating its customersthese days. I start with one of the less obnoxious examples. BT Group has begun to charge its customers an extra £4.50 if they pay their bills other than by direct debit. What has riled them is being told that it costs this much to process payments except those by direct debit. Given that the charge applies to people who pay online or by telephone, where the processes are highly automated, this is disingenuous. Customers are being treated as idiots.

Then there are the so-called "green" schemes operated by Britain's electricity companies. Customers are offered a "green tariff" at a higher price. In return the power suppliers pledge to match the customer's consumption with the equivalent amount of electricity from renewable sources such as wind, landfill gas and small-scale hydro.

What people are not told is that suppliers are already compelled by law to acquire a rising percentage of electricity from such sources. The level of what is known as the Renewable Obligation is rising annually from nearly 7p er cent this year to 15 per cent in 2015/16. Yet only 1 per cent of customers are on green tariffs. So green customers, despite the premium they pay, are not forcing the creation of a single light bulb's worth of extra green energy.

The situation may differ from supplier to supplier, but where green customers are not stimulating the acquisition of additional sources of renewable energy, the "green" tariff is essentially fraudulent. That is a serious charge if proven. I don't think a rap on the knuckles from the industry regulator Ofgem would be sufficient punishment. Repayment of the "green" premium would be more appropriate.

The high street banks stand accused of making unlawful bank charges. Literally millions of customers, alerted by this newspaper among others and assisted by specialist websites, have demanded repayment, and have generally succeeded. The banks have been charging customers £30 to £35 each time they go beyond their overdraft limit. But the law says that if there is a breach of contract, any charge should not exceed the cost of the breach. And the cost to the bank in the first instance is likely to comprise nothing more onerous than sending a computer-generated automatic letter with a franked stamp. That is not £35 worth of work; the actual cost is probably one-tenth of that sum. While the banks are settling claims, they nonetheless maintain that they have acted legally. But they have not gone to the courts for confirmation.

For sheer abuse of customers, however, the major television companies take the biscuit. They have, knowingly or unknowingly, been running fraudulent phone-in shows where participants pay a premium telephone rate to take part.

The BBC has Saturday Kitchen on its conscience, Channel 4 Richard & Judy and Channel Five, Brainteaser. In the case of Saturday Kitchen, viewers were encouraged to phone in to put questions to celebrity chefs "live", even though the programme had been recorded the previous week. Brainteaser went even further. Viewers could participate by means of a premium-rate phone service. However, when the audience failed to get the right answer, members of the production team would go on air posing as "winning contestants". These are all frauds on the public. Somebody should go to jail.

The economic context is part of the explanation for such abominable treatment of customers. For one common feature of the companies involved is that they cannot stabilise the prices of their main product lines. Telephone companies, energy suppliers, banks and TV companies, through the prices they can charge for advertising, are having to cope with relentless competition that continually cuts the ground from under their feet. This drives them to search for ways in which they can increase prices by stealth. That is what BT's £4.50 really is, that is what the bogus "green" tariff is for, that explains outrageous bank charges and that is the motive for fraudulent phone-in schemes.

Another shared characteristic is a low opinion of customers. In the case of BT and the electricity suppliers, these groups still retain the mindsets of the monopolies they once were. The banks feel instinctively that they have a tight hold over their customers through their role as guardians of their saving and as lenders when extra resources are needed.

And TV executives, with their power to make and break celebrities, see themselves as masters of the universe. Viewers and listeners are dismissively referred to as punters. For all these reasons, the punishment for treating customers badly should be so severe that it serves as a deterrent for a very long time.