Internet and cable company HOT to compensate customers for millions of shekels

A class-action lawsuit filed against Israeli company HOT about eight years ago has come to an end.

A man counts New Israeli Shekels. (photo credit: REUTERS)
A man counts New Israeli Shekels.
(photo credit: REUTERS)

Israel's HOT telecommunication company announced they will offer compensation to customers in the amount of NIS 70 million, which may reach a value of NIS 153 million. This comes as part of a compromise reached following a class action lawsuit filed against the company, which provides cable and internet services across Israel, in 2014.

Why is there a lawsuit against HOT?

Eight years ago, a request for a class action was submitted to the Central District Court by Attorney Or Karabaki against the company, claiming that the wait to receive service from the telephone operator takes tens of minutes, contrary to the Consumer Protection Law and HOT's license.

The lawsuit was filed after Attorney Karbaki joined HOT's campaign at a price of NIS 350 per month, but after about two months HOT raised the price unilaterally to NIS 520. Following this, Karabaki tried to contact HOT about the matter and had to wait on the line repeatedly for dozens of minutes to cancel the incorrect charges, but received no response from HOT representatives.

In the test carried out by Karabaki, the average waiting time measured until a HOT representative answered was 25 minutes and 39 seconds, 5,130% more than allowed according to the company's license.

Exceeding the waiting times allowed by law allowed HOT to employ fewer service representatives than required and saved the company tens of millions of shekels every year.

According to the regulations, HOT must also provide information to the customer regarding his position in the queue and the estimated waiting time, but it violated these obligations as well. HOT also violated the obligation to operate a customer service center for 12 hours a day, and operated it for about two hours less than that.

 An IDF soldier is seen on their computer. (credit: IDF SPOKESPERSON'S UNIT) An IDF soldier is seen on their computer. (credit: IDF SPOKESPERSON'S UNIT)

In 2017, the Central District Court approved the class action, and following its approval, attorney Karabaki and HOT conducted a lengthy negotiation with the assistance of mediator Amos Gabrieli and CPA Ehud Ratsavi, which ended today (Tuesday) in a compromise.

According to the settlement agreement, each customer will be able to choose between a cash credit and receiving benefits with a monetary value higher than the value of the credit, including a free upgrade of recorder converters, advanced modems, streamers, range extenders.

Additionally, all HOT customers will receive a number of additional benefits, including use of the NEXT TV application for two months without payment or billing, free viewing of HOT's KIDS VOD and the "Third Ear" content library, as well as the option to upgrade their Internet browsing speed at no additional cost. The value of the benefits for HOT customers will amount to approximately NIS 153 million, and this is the largest compensation awarded in a class action against a telecommunications company in Israel. Financially, the value depends on each customer's choice of the nature of the compensation, so it ranges from 70 shekels to several hundred shekels.

"I call on all of HOT's clientele to follow the publications and exercise their right to the compensation we obtained."

Attorney Karabaki

Attorney Karabaki who filed the lawsuit welcomed the decision and stated that: "I am happy that we were able to obtain significant and unprecedented compensation for HOT customers who were affected by the long waiting times. Through the lawsuit, we proved that breaking the law at the expense of the customers is not profitable and I hope that the big companies will realize that it is not worth underestimating the public of consumers who know how to stand up for their rights. I call on all of HOT's clientele to follow the publications and exercise their right to the compensation we obtained."

Karabaki will be represented by attorneys Michael Bach, Ron Lederman, Raanan Bashan and Avi Rokah.

The HOT company stated: "HOT welcomes the settlement agreement reached through a mediation process on the recommendation of the court, under which the customers will be able to enjoy a basket of benefits. The agreement is still subject to court approval and we will inform the customers ahead of time about receiving the benefits. This is a lawsuit that was filed in 2014 and which is relevant to the events that took place Since 2008. Since then HOT has substantially improved the service and continues to do so, including launching digital service channels, upgrading systems, recruiting and training representatives and more."

How will the compensation be distributed?

The customers will be compensated with 70 million shekels, of which 55 million will be distributed in an outline that will allow them to choose between financial compensation and upgrading equipment, which puts the value of the total benefit at a multiplier of 2.5 times on average. If everyone chooses the cash option, the compensation will amount to NIS 55 million + NIS 15 million in additional benefits - a total of NIS 70 million.

However, if all customers choose to upgrade the equipment, according to the multiplier, the compensation will reach a value of approximately 138 million shekels, plus 15 million shekels of additional benefits. In the intermediate scenario, the total amount will be about NIS 126 million.