There has been a phone system scam going on for years that is only now getting some press coverage. Businesses are lured in with low upfront costs but are then stuck in long-term leasing and rental contracts. The result is that equipment and services that should cost a few thousand pounds, ends up costing a business tens of thousands of pounds. Is this you? You are not alone and the regulators have been powerless or unwilling to get involved for way too long. At last the BBC have started to report on this.
Here is a story about one scam costing a business £54,000 to rent 5 phones.
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How the phone system scam works
There are many businesses across the UK that feel they have been misled when it comes to their contracts for renting phone equipment, leading to them being stuck paying excessive amounts of money on lengthy finance deals.
What these businesses have in common is that they claim they were misled into signing these deals, as the sales pitches and written contracts did not align. It is the ‘extra charges’ that cause the biggest sting, rental of equipment costing money on top of the original agreed price.
Of course, what we always say is ‘read the small print’, but what if it is not as simple as that? Sales representatives have been known to put pressure on their clients to sign there and then, not allowing the customer to read through the contract as thoroughly as they perhaps should. Some reports tell of sales people staying for hours on end until something is signed. The unfortunate downside of this is that businesses are then locked into contracts of upwards of seven years, with no cooling-off period or seemingly obvious way of getting out. Yes 7 years!
What to be aware of
- Extended introductory offers – where there is a huge price hike upon completion
- High pressure sale tactics
- Lengthy contracts
- Mention of separate billing by third-party funders
What can you do?
Speak to us or go direct to the BBC, the more we highlight this issue the better. Talk to Ofcom, the communications ombudsman. If your business has ten employees or fewer, you can technically be classed as a consumer. This means any telecoms contract for phone system services, not the hardware lease, signed after December 2021 that’s longer than 24 months could be invalid if challenged.
This isn’t a loophole — Ofcom added it in to their regulations (General Conditions of Entitlement, published 21st of December 2021).
Unfortunately, business deals signed by limited companies do not fall within the remit of the Financial Conduct Authority, who view them as unregulated business leases.
Being stuck in expensive long-term leasing and rental contracts is no joke. And if this is you, you are not alone. Unfortunately, these contracts maximise financial value for the supplier and do not meet the real needs of the consumer.
As we understand it, this is a problem that has been going on for the last 20 years, and Ofcom has not done enough to help protect businesses. In addition, leasing companies have been complicit to these malpractices, and they haven’t been held to account for what they are doing. There hasn’t been enough press coverage to reveal this exploitation either, but as more evidence comes to light, we hope this will galvanise Ofcom to take action.
For more information or support speak to us about phone systems