Example two

A salesperson approached a small business owner promising him a package comprising a new phone system, handheld phones and a laptop computer (the equipment) if the owner transferred his landlines and mobile services to the service provider recommended by the salesperson. The salesperson reviewed the business's phone bills and said the owner's costs would be lower than with his previous provider and he would also be able to reduce the number of lines used.

The salesperson said several times that the entire package would cost no more than $650 a month. The owner would also receive monthly call and line rental credits from the service provider. The salesperson assured the owner that he could terminate the contract at any time without penalty if he returned the equipment. As a result of these assurances, the owner signed the contract. The owner came to the TIO a few months later, seeking to either receive what he had been promised or to be released from the contract.

He said:

• the telephone bills were two times higher than with his previous provider and the number of lines could not be reduced without affecting his business
• he was not receiving the full credits that had been promised as these credits only applied to selected call types
• the salesperson did not tell him that the equipment was on a five-year lease with a finance company
• he was paying $650 a month for the finance charges relating to the equipment. The telephone costs were separate to this monthly charge
• the telecommunications service provider had a clause in its contract which did not allow him to leave the contract without penalty until after 12 months
• if he wanted to cancel the finance contract, he would need to pay the finance company $25,000.

The small business owner was willing to continue with the finance contract if he received the full credits and if the entire cost for the telephone service and the equipment package was not more than $650 a month as promised by the salesperson.