Our very own forum Gurus and IMPDA founders have forced Ofcom to make a statement to the BBC with it looking likely they’ll ban cashback deals
Today saw the BBC cover a story where Ofcom suggest they’ll intervene and force networks to ban cashback deals if they do not act quickly to self regulate and ensure resellers pay 100% of consumer cashback on time, every time.
This, only weeks after our very own forum guru Chris Caudle started a near one man campaign to stamp out cashback writing an open letter to distributors, networks and Ofcom –
IMPDA PROPOSED LETTER TO DISTRIBUTORS & NETWORKS
Dear IMPDA member, and fellow mobile phone dealers. It’s fair to say there’s been a mixed reaction to our call for a total ban on cash-backs. Whilst many dealers have been supportive, a few have been vocal in their criticism. We understand their concerns, and appreciate that this is an issue where there are differences of opinion. However, we do feel that we need to do something about this issue, and more importantly, be seen to be pro-active as far as cash-backs are concerned. That’s why we’ve come up with the following suggestions…
For those dealers who support a total ban on consumer cash-back (we don’t want this to apply to B2B dealers), we have drafted a letter, pledging that our businesses will not offer consumer cash-back deals. We are inviting you to put your name, and company logo to this letter, to show that you support this position, and that you will not offer consumer cash-back deals in your businesses. Please feed-back any recommended changes to the wording.
For those businesses who do not support a total ban, but want to see cash-back better regulated, we are happy to draft a similar letter, pledging minimum standards that you commit your businesses to adhere to. Please respond, to let us know how many of you would like to put your names to such a letter. The IMPDA will support whichever of these letters the majority of our members deem to be the most appropriate.
Please email us at email@example.com
THE DRAFT LETTER IS SHOWN BELOW
“We love CASH-BACK deals – we’ve got a call centre in Bangalore, and a small office in Guilford – our pay-out rate is 11% and dropping every quarter, and that really gives us the freedom to advertise whatever we like!
FREE Phone & FREE Line rental for the whole contract? Why not?! As long as most people can’t claim, it doesn’t really matter!”
This was a quote from an (Un-named dealer attending a 3 dealer conference at the Holiday Inn Brent Cross in June 2005)
The young dealer speaking above was lauded as a success story by 3, back in June 2005. This was exactly the kind of business every network was looking for, right up to the end of last year. Promise the earth, give them Guilford! It got the networks lots of customers and made a fortune for those dealers who got the “redemption rates” just right. But as we’re discovering, there’s only so much you can piss all over your customers.
Some have learnt harsh lessons. Others are determined to plough on. Many people have different opinions on what should be done about cash-back deals, especially following recent high profile cases such as Dial-a-Mobile, and the issues faced by Click Mobile and Chatterbox. When they are legitimate, and customers are getting the money, it’s great and is a useful tool for Business-focussed dealers. But by and large, in the consumer sphere, there’s too much of the “con” factor. For every dealer offering honest cash-back deals, there are plenty more banking on redemption rates, and toughened up terms and conditions.
We’d love a total ban on consumer cash-back. At the worst, we’d like some tough regulation, to protect consumers. But we’re not going to hold our breath for something to be done before more consumers get let down. In the mean-time, we’ve decided that we don’t want to associate our businesses with what has come to be regarded as a deceitful practice.
We, the under-signed mobile phone dealers, pledge not to offer consumer money cash-back deals, either through our stores, or on our websites, or from our call-centres. We won’t allow our businesses to be associated with such a practice which is damaging our industry. We can’t force other businesses to join us, but we hope the rest of the mobile phone industry sees the light, and joins our principles stand.
Chris Caudle (FreeMobiles2u)
Faisal Sheikh (Fone Doctors)
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