Warning Over Cash-Back Deals on Mobile Phones

Birmingham, UK Trading Standards are warning the public to beware of "cash-back" deals when signing mobile phone contracts after receiving hundreds of complaints from disgruntled customers.

Within the last two months alone the council has been told of at least five retail businesses in the city who have ceased trading owing customers hundreds of pounds, after persuading them to commit to long-term contracts with the promise of generous cash back deals.

Often the deals involve promises that the initial monthly fee is only a temporary expense which retailers will part refund, via cash back, on an ongoing basis once a minimum term has elapsed. But if a retailer goes out of business customers are not only left with no means of reclaiming their promised cash each month, but also find themselves tied in to long-term contracts with their mobile phone operator.

Councillor Neil Eustace, Chair of the Public Protection Committee said: "We have severe reservations about the growing trend for cash back deals in the mobile phone industry. These deals often look great on paper but can be fraught with problems over time."

"This situation is made worse by the fact that, even though they subsidise the deals struck by independent retailers, the big network providers refuse to accept any responsibility for the actions of third party dealers."

Posted to the site on 8th February 2007