Mobile phone roaming charges cut within EU

UK consumers using their mobile phones in Europe will see reductions in their bills from Saturday.

Further caps are coming into effect on roaming - or connection - charges within all 28 countries of the European Union (EU).

From June next year, roaming charges in the EU will be abolished completely.

The government said that those making calls, downloading data or texting would save millions of pounds in charges following the latest changes.

"Roughly a million Brits stay the night in Europe every day, and they spend around £350m a year on roaming charges," said Ed Vaizey, the minister for the digital economy.

"So by realising these changes, we're going to save British consumers millions of pounds a year."

Costs

Consumers pay roaming charges whenever they connect to an operator based abroad. The charges are in addition to the cost of the call itself, and for short calls they can make up a large proportion of the overall fee.

The biggest reductions will be for people downloading data - such as emails, pictures or social media - where the roaming charge will be cut by about 75%.

Charges for outgoing phone calls will be cut by a similar amount. The charge for texting will be reduced by about 66%.

So whereas those making a phone call in Europe would previously have paid roughly 16.5p to get connected, they will now pay just 4p.

Data downloads, which previously cost a maximum of 17.4p, will also now cost 4p.

When the call charges themselves are taken into consideration, the government says the average total cost of a phone call should fall by more than half.

Not all customers will see a reduction, however, as some operators include roaming charges within special packages.

O2 said most of its customers would see immediate reductions, while EE said the majority of its customers would not be affected. Three already provides free roaming for most of its customers in a limited number of countries.

EU referendum

Mr Vaizey questioned what would happen to the roaming charge caps should the UK vote to leave the EU.

"I don't know what would happen if we leave the EU, and that's the problem," he told the BBC.

"They might stay, or they might not stay."

The controls on charges are being introduced under an EU regulation - not a directive - which means they have not been specifically incorporated into UK law.

So if the UK voted to leave the EU, it could decide whether it wanted to keep them or not.

The Vote Leave campaign said the UK would be able to retain the price caps if it wanted to.

"These charges are being abolished across Europe and abroad. There is no evidence to suggest that they will go up if we vote leave," said Matthew Elliott, chief executive of Vote Leave.

How Much Money Are You Losing By Not Disputing Chargebacks?

When online retailers receive a chargeback dispute, one of two things can happen. Either the chargeback is assessed to determine if it should be fought or a business decision is made that the dispute be filed away and ignored. The latter generally happens at online merchants without a team dedicated to fighting chargebacks because the effort to respond is deemed more expensive then the result of the process.

Although contesting chargebacks can seem daunting, online retailers may be losing out by not fighting them. The key to determine if your online business needs a strategy for contesting chargebacks is to calculate how much money your business is losing as a result of chargebacks.

Calculating annual average chargeback loss

The first step to calculating the amount lost is by figuring out the average order value (AOV) of fraudulent transactions and customer-service disputes. The chargebacks that were filed away will be important to helping you get a clear number. The AOV for chargebacks is not the same as the AOV for your overall business. The chargeback AOV will typically be higher because chargeback disputes are usually made up of mostly fraudulent transactions. Coupled with the fact that fraudsters want to get the largest payout they can from the companies they target, these order totals will be substantially larger than regular customers.

It’s also important to calculate the AOV over a long period of time. Most companies tend to review historical data from the past three months, which does not provide a broad enough view of fraud and chargebacks committed on their websites. Be sure to include both peak and non-peak shopping seasons to accurately assess the AOV.

Once you obtain the AOV, tally the number of chargebacks filed with your company from previous months. It’s important to consider the seasonality of fraud and customer service activity; don’t forget to include numbers from months with increased chargeback activity. Multiply the average monthly AOV for chargebacks by the number of chargebacks filed per year to calculate the annual chargeback loss.

Bike shop example

To emphasize the importance of contesting chargebacks, consider as an example a bike shop. Let’s say that, on average, the retail price of a bike sold is $90 with a $10 shipping fee. That brings the total for an average order to $100. Over the course of a year, the shop receives 100 fraudulent orders. Using the formula listed above, you can expect to lose $10,000 in sales to chargebacks alone. If you have detailed order information, you can get a more accurate estimate of your chargeback losses. Segment the chargebacks into fraud and customer service disputes, then solve for the average of both.  This will not only allow you to understand your total losses, but also determine whether fraud or customer service disputes are a bigger concern.

This is just a rough estimate of potential losses. To refine your estimate of losses by not contesting chargebacks, you may also need to consider shipping costs. Most fraudsters request orders to be shipped quickly so the package is delivered before the legitimate cardholder notices the fraudulent transaction. Often one sign of a possible fraudulent transaction may be a new customer placing a large order with expedited shipping. Another red flag is when a customer chooses to have a package shipped to a location that’s different from their billing address. It’s also important to note that merchants have the opportunity to recover the amount of shipping fees charged if it was presented in the original order. However, if you gave away free shipping for promotional reasons for example, then you would still be out the cost of shipping even if you fight the chargeback.

Although the numbers provided in the bike shop example are hypothetical, consider the following industry statistics: In 2014, merchants on average lost 0.68% of revenue each year to fraud according toLexisNexis’s 2014 True Cost of Fraud report. This report also states that online stores processing more than $50 million in annual sales, experienced a loss of about 0.85% of revenue to fraud over the past year. So processing more sales doesn’t necessarily mean you’re offsetting the costs of chargebacks; in fact, you may be losing a larger dollar amount to fraud.

Sunk costs

Although it’s tempting to include the inventory and shipping costs associated with the fraudulent order, it should not be factored into the calculation. This cost is different from the shipping fees we discussed earlier. Shipping costs are what merchants pay to the shipping provider. Conversely, shipping fees refer to the amount merchants charge customers for the shipping.

With these types of costs, regardless of whether the bike shop wins or loses the chargeback, the bike shop will not get the bike back nor will it be reimbursed for the shipping amount. However, these sunk costs are important to keep in mind and should be considered when implementing strategies for responding to chargebacks.

By contesting and winning chargeback disputes, the bike shop could potentially recover $10,000 in revenue. Part of this amount could be used to repurchase new inventory or offset the shipping costs. Then again, if steps are not taken to contest chargebacks, the recoveries of funds lost and the flexibility it might provide would not exist.

Non-Monetary losses to consider

The last set of factors to consider is non-monetary losses. Not contesting chargebacks can make your website a more susceptible target for friendly and hostile fraud, increasing the number of chargebacks received through the website. Another factor to consider is whether your chargebacks are growing each year. If the number increases each year, your business could incur continued losses in the future. If left unmonitored, your company could develop a reputation for not contesting chargebacks and become a prime target for fraudsters.

The increased number of chargebacks can also tarnish your reputation with your bank and cause lasting damage to your brand.

Choosing to contest chargebacks

The first step to proactively contesting chargebacks is getting a clear overview of the amount of money you’re currently losing. Within your company, you can retrieve and review past order documentation and compile your data. Externally, you can also request past account information from your payment processor or review detailed bank statements. If you do not have data stored, begin taking steps to implement a process that tracks this information. Be sure the data is reviewed periodically to monitor chargeback trends.

Once you get a clear estimate of the money lost, start weighing the cost of contesting the chargebacks against the amount lost. In some cases, you may find that the monetary benefits may not be substantial. However, don’t let this deter you from pursuing fraudsters targeting your website. By contesting chargebacks, your business may deter new fraudsters from taking advantage of your online business.

It’s also important to note that once you start contesting chargebacks, the marginal cost for contesting each additional dispute may decrease. It will become easier to identify which cases have the highest winning probability, and your team contesting chargebacks will gain both experience and expertise in how to do so successfully.

EU Levels Antitrust Charges Against Abusive Android

The European Commission on Wednesday charged that Google breached EU antitrust rules by seeking to maintain and expand the dominance of its Android operating system.

"A competitive mobile Internet sector is increasingly important for consumers and businesses in Europe," said the EC's antitrust chief, Margrethe Vestager.

"Based on our investigation thus far," she continued, "we believe that Google's behavior denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players, in breach of EU antitrust rules."

Throttling Competition

In its statement of objections, the commission alleged Google violated EU antitrust rules in the following ways:

• Requiring manufacturers to preinstall Google Search and Google's Chrome browser and requiring them to set Google Search as default search service on their devices, as a condition to license certain Google proprietary apps;
• Preventing manufacturers from selling smart mobile devices running on competing operating systems based on Android open source code; and
• Giving financial incentives to manufacturers and mobile network operators on condition that they exclusively preinstall Google Search on their devices.

Google's business practices may lead to a further consolidation of the company's dominant position in general Internet search services, the commission noted.

Those practices may affect the ability of other mobile browsers to compete with Google Chrome. They hinder the development of operating systems based on Android open source code and the opportunities they would offer for the development of new apps and services, the commission said.

Internet Explorer Redux

The commission's action is a response to complaints it has received from Google's competitors in Europe. In 2013, FairSearch Europe, a group that includes Oracle and Nokia, filed a complaint with the EC about Android. In 2014, Aptoide also filed a complaint.

Consumer Watchdog is another group supporting an investigation into Google's Android dominance.

"This is the same kind of thing that Microsoft did when it bundled its browser in with its operating system," said John M. Simpson, director of Consumer Watchdog's Privacy Project.

"While Google makes Android freely available, it's got strings that come with it that unfairly favor Google's apps if you're going to use the Android software," he told the E-Commerce Times.

"Consumers can go and find other apps and install them," Simpson added, "but that gives Google a leg up on Android devices."

Unfortunate Action

Google is not stifling the Android marketplace, according to Daniel Castro, a senior analyst with the Information Technology & Innovation Foundation.

"This is an unfortunate action because it does not seem like there has been any consumer harm from the allegations and there is strong competition in the mobile OS environment," he told the E-Commerce Times.

"It is hard to see how Google can lock out any competitors since the switching costs of installing a new app are so minimal -- 30 seconds to download and install a rival app," Castro said.

One reason Android enjoys widespread popularity is its openness, he explained, which allows for experimentation while also providing standardized features across platforms for users.

"It would be unfortunate if the EU punishes Google for actions it takes that create better consumer experiences because it believes these actions are anticompetitive," Castro said.

"This would create a risk," he continued, "that tech companies would design products to meet arcane competition regulations rather than consumer needs."

U.S. Probe

Since the Europeans announced their initial probe into Google's Android monopoly last year, there have been murmurs of a similar investigation by the U.S. Federal Trade Commission.

In September, for example, Bloomberg reported that the FTC had reached an agreement with the U.S. Justice Department to investigate whether or not Google was stifling access to Android by its competitors.

That wouldn't be the first time the FTC probed Google. It looked into Google's search dominance in 2011 and 2012. That investigation ended in 2013 with Google changing some of its business practices.

However, last year The Wall Street Journal reported that the commissionignored the advice of key staffers to sue Google because they believed it was doing harm to consumers and innovation.

"The FTC completely blew its investigation on the search monopoly," Consumer Watch's Simpson said. "They completely failed to do their job there."

In 2014, Google spent US$16.8 million on lobbying in Washington, he added. "You don't spend money like drunken sailors on lobbying unless you see results."