Andy Tow, Unique Distribution Chief Executive says ‘Airtime cash backs are an attractive proposition to customers as they offer high value contracts for low cost but often involve being tied into lengthy contracts which we have seen in recent weeks become difficult for customers to pay if their cash back agreement is not honoured. Often almost impossible redemption criteria make these offers a poor deal for the consumer’
The move by Unique Distribution came as a group of MP’s called for a total ban on cash backs and for networks to release those customers affected from their contracts due to the widely reported problems associated with cash backs.
Tow added ‘Cash backs create instability for all concerned with them and has forced closure on a number of dealers in recent weeks. In taking this decision we are to work closely with dealers to grow our partnerships and help create sustainable futures for their businesses by utilising new innovative sales and marketing strategies.’
Ofcom welcomed the new industry code of practice in July, for mobile phone providers that aim to stamp out misleading sales and marketing practices in the mobile market. Ofcom warned, however, that formal intervention would soon follow should the industry initiative fail.
The Ofcom code of practice states:
If any part of the offer to the consumer contains a sales incentive, the consumer must be provided with a clear written statement as to which legal entity (i.e. dealer or mobile operator) is making the offer and is undertaking to meet that obligation. The terms of the offer must be clearly and prominently stated in writing, be made in good faith and not be unduly restrictive.
For example, in relation to a cash back offer, the following terms should be regarded as unreasonable:
- a requirement that the customer submits their original statements – copies of statements should be acceptable proof;
- charge for processing a cash back claim;
- a requirement that cash back claims are submitted within an unreasonably short period (such as anything less than 60 days, for example);
- terms stating that a cash back payment will not be made if the customer has an outstanding balance on their account.
Ofcom have now accused the industry of a lack of due diligence, and due to a lack of evidence that customers are being protected, Ofcom are expected to step in.
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