Ofcom recently announced a full investigation into the activities of Telecoms supplier Unicom in particular their sales practices and contracts. Unicom claims to have over 100,000 small business customers. Unfortunately there are many other companies who could also do with similar inspections.
Dave Millett of independent telecoms broker Equinox lifts the lid on some of the tricks of the trade used by less scrupulous suppliers to exploit small businesses.
1) Contract Length
Some tricks include having a minimum term box on the front page which the sales people are encouraged to leave blank as on the reverse in the small print it says if minimum is blank the contract is deemed to last five years.
In some instances all the conversations prior to signature have been about one year deals and when the paperwork arrives it has three years on it. Unfortunately people sign without reading.
A more subtle ploy is to split the duration for different services e.g. lines for five years and calls for two years but with the focus on the latter and with small print saying pricing only relates if you take two or more services.
Advice: sign one or two year deals unless there is a real significant advantage to do otherwise. Remember prices tend to go down.
2) A Free Phone System
This looks enticing but beware the old maxim there is ‘nothing free in this life’ applies. The usual practice is to imply there are savings on lines and calls without actually stating what the new prices are or quoting for fewer services than are currently in place. You can find yourself paying £15k for something worth less than £3k. To read about one scam perpetrated on a Charity see: http://www.equinoxcomms.co.uk/charities-being-ripped-off/.
3) Misleading Comparisons
A second favourite ploy is a price comparison which compares just one element, such as the line rental or UK calls. For example, one advertises 77% savings on landline rentals, but neglects to highlight that the price is for six months only in a two year contract.
Another provider has set-up charges for calls. This enables them to make a price promise on the actual call rates and yet they often end up more expensive than others.
And the final trick; the potential new supplier will make assumptions about your calls which are deliberately inaccurate.
Advice: To avoid being tricked ask suppliers to re-price an existing contract in full and not make broad-brush statements.
4) Our Terms and Conditions are on the Web
Many suppliers will say their full list of prices and terms and conditions are on the web – which most businesses don’t bother to read. It also means you have no idea if they get changed after you sign up.
Advice: Always ask for a full set to be mailed to you and that way if any changes are not notified to you they are not applicable.
5) Mobile Hardware Funds
On larger business mobile deals there will inevitably be a hardware fund with which to buy replacement handsets at the outset and during the contract. A favourite trick is to inflate the value of the hardware so that it looks more impressive. However, they also inflate the costs of the phones by a higher percentage.
Advice: Always ask the supplier for a price list of the phones as well and then compare to SIM free phones on the web. Alternatively ask for the cash equivalent – you will often find it is a lot lower (assuming they will even give it to you).
6) Nasty Penalty Clauses
Many suppliers charge outrageous penalties if you leave and some send out nasty threatening letters to prevent people leaving. However they need to be reminded they must comply with the Ofcom guidelines and as a result not make additional profits by not supplying the services.
Advice: Always request, in writing, details of the penalties in the event of early termination and how they will be calculated. Challenge them then if they seem unfair, particularly if they are 100% of the remaining rentals and calls you would have made.
Finally, before you sign make sure the company is signed up the Telecoms Ombudsman scheme, particularly in you employ less than 10 people, as you get binding arbitration in the event of a dispute.
In conclusion, if you are in any doubt what you are signing up to it is best to put into writing your interpretation of the contract and ask the company to confirm or deny. You should also state that the contents of the email supersedes the contract where there is a conflict. This should help to filter out some of the worst abuses, but also beware if a deal looks too good there is probably a catch.