I can't believe o2 can legally do this. It seems so unfair. I have exactly the same issue. Here's my story:
I have recently been declined credit for several small things. I am used to getting credit cards with £4,000 credit limits so this came as quite a suprise.
After getting sick and tired of getting refused credit, (the latest time on a £500 sofa!!!!) I finally got round to checking my credit report with all 3 Credit Reference Agencies.
On reviewing my report with equifax it came to my attention that I had one account which had beed assigned as default in May 2004. This was for an outstanding balance of £329 which I found out was o2. This was an O2 online account and I was fairly positive that I had cancelled this contract when I took my new contract up in 2002. They however say that I had never cancelled it and they've been billing me (to an o2 email account which I no longer checked as I no longer used o2) via email for 22 months until they put the account as default.
What I don't understand is why they didn't attempt to contact me using the traditional method of post as they can guarantee that I would actually receive it then as opposed to an email account which I no longer used and sending text messages to a phone which I believed to be cancelled and which I would have binned.
I contacted o2 customer services and they have said it was my responsibility to check the email account. How can they get away with this. Surely after 2 or 3 months of them not receiving payment from me they should have cancelled my line and contacted me. Not wait 2 years then put my account on default. They surely can see the phone wasn't used during that 2 year period if they had a proper billing system but they tell me they have very few records.
I also never received a default notice and am looking to get this cleared up ASAP so I can start enjoying credit again as I am trying to buy a house at the minute.
Please let this be a warning to steer clear from O2 and especially O2 online.