Telecoms Regulator Clamps Down on Cash Back Mobile Deals

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It seems that in relation to a post back in December on The Shelf titled ‘Using Mobile Phone Contracts To Your Advantage’, telecoms regulator Ofcom are due to take increased action on mobile phone retailers offering cash back deals, after increased numbers of complaints have proved a voluntary code of practice that was put in place has failed to work.

Ofcom stated that complaints have risen from 460 to 700 complaints a month since the voluntary code of practice was put in place in the summer of 2007. In moves aimed at protecting consumers, Ofcom have now stated that tough action will be taken against mobile phone operators who fail to pay cash back that was offered when the contract was first taken out.

A general condition has now been proposed that will mean it is the network operator’s duty to “to ensure that the terms and conditions of cash back deals offered by their retailers are fair.” If operators fail to do this it could result in firms being fined as much as 10% of there turnover, a move that surprisingly some mobile operators have welcomed.

“We think Ofcom should be tough on offenders but not burdensome on those that are trading responsibly,” – O2 spokeswoman Emma Hart.

Operators are also responsible for carrying out due diligence and a number of checks in respect of their retailers.

In the voluntary code of practice that has seemed to have failed, there was a list of banned sales and marketing tactics, which were later agreed to by Britain’s biggest mobile phone companies. One technique that was featured on the list was the provision of inaccurate information to shoppers when purchasing mobile phone contracts.

“Strong competition is no excuse for marketing malpractice,” – Ofcom chief executive Ed Richards.


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