Providers offer ‘free’ accessories and then charge for them

The issue

Telco A and Telco B offered accessory plans to customers who were signing up to a new mobile plan. Customers could have the cost of items like mobile phone cases, bluetooth speakers, or phone chargers added to their account and pay them off in instalments.

Customers told us the salesperson said the accessories would be free if they signed up to a new plan, but they were later charged for them. We were concerned the offer of ‘free accessories’ could influence a customer’s decision to buy or upgrade their plan.

The investigation

We began an investigation with each provider and found neither was accurately describing the accessory plans to customers.

Both providers were using terms like ‘free’, ‘gift’, and ‘included’, or telling customers the charges would be credited if they bought or upgraded their service plan.

Telco A’s Critical Information Summary for the mobile plan did not include terms or conditions for the accessory plan, and it had not given customers access to the Critical Information Summary before sign-up.

The outcome

We worked with both providers to help them improve the way they sold accessory plans. During our investigation, Telco A credited the cost of accessories to affected customers. It also updated its Critical Information Summary for mobile plans to include key terms for accessory plans and made this available to customers before sign-up. It trained sales staff to accurately describe the plans and reviewed the sales practices of stores with complaints about them.

Since these changes, the number of complaints to us about Telco A’s accessory plans has significantly reduced. We continue to work with Telco B to improve its sales practices.

*Names of individuals, organisations and companies have been changed.