Citizens Advice Press Release:
Tuesday 6 February 2007
Cash back phones may be cash back cons, warns Citizen Advice
Problem-solving charity Citizens Advice is warning people to be wary of
cash back mobile phone deals promising refunds that may never
The words of caution come during Scams Awareness Month, run by the
Office of Fair Trading to alert people to common scams costing the
British public a total of 3.5 billion a year.
Citizens Advice Bureaux are reporting increasing numbers of people who
have been lured into a mobile phone contract by a sales pitch promising
they will be able to claim back most of the money they pay out in
monthly bills, making it appear much cheaper than other contracts on
People are tempted by very low monthly rates which look like a bargain.
But often they miss out on the promised discount completely and end up
paying the full rate - or even being chased by debt collectors and
threatened with court.
The cash back offer is not part of the contract signed with the service
provider who does the billing: it's a separate contract with the shop
selling the cash back package. Many cash back deals have complex Terms
and Conditions buried in small print, and claiming cash back from them
may not be as simple as consumers are sometimes led to believe. In some
cases the firm that should have paid the cash back has gone bust,
leaving consumers with a provider's contract that is anything but cheap,
and which ties them in for a minimum period before they can switch.
Customers can find themselves out of pocket to the tune of hundreds of
In one case a CAB client signed a contract with a mobile phone company
offering a monthly cash back deal of 65, slashing the cost from 75 a
month to 9.99. After six months the company went bust, and the network
provider was demanding full payment of 75 a month.
In another case a client signed up to a package where she got a free
mobile and 40 a month cash back on her 60 payment. When the company
who should have been paying that 40 ceased trading soon afterwards, she
could not afford to keep up the full contractual payments to the network
provider and is now being vigorously pursued by debt collectors.
In a third case a CAB client received a letter from his mobile phone
company telling him that because he had missed the date for applying for
his first cash back payment, all future cash back payment claims would
be invalidated. When he checked his contract he found this was one of
the terms, but it had not been made clear to him when he signed up to
the deal.
In a further case, a CAB client was sold a mobile phone contract
promising him vouchers to claim 14 months of cash back, but only after
paying 18 months rental. When he sent off the vouchers, they were
returned address unknown. He lost 1300 that he had expected to get
Another CAB client took out a 12 month mobile phone contract on the
promise of cash back payments after six months and 12 months. When she
made her first claim the company denied having received it. Her second
application, sent recorded delivery, was retuned in the post. Two
friends who had signed up to the same contract also found their cash
back applications were 'lost in the post'.
A CAB client entered into a 12 month contract with a mobile phone dealer
with terms including redemption of a cash back credit, believing this
would reduce his monthly phone bills. He had to claim the credit within
30 days from the date of billing or lose his entitlement to the cash
back for the month concerned. Within the month the dealer had gone into
liquidation and ceased trading. The mobile network provider refused to
honour the cash back agreement, arguing that it was a private
arrangement between the dealer and the client to which they were not a
party. This left him facing large bills he could not afford.
A CAB client took out a mobile phone contract with a shop offering cash
back. He had two phones costing 80 a month but was to get 63 back once
the bill was paid each month. He received the cash back cheque for the
first few months but then the cheques bounced and the shop disappeared.
When he contacted the network provider they said they could not help, so
he stopped paying them and has now received a letter from debt
collectors threatening court action.
Citizens Advice Consumer Affairs Social Policy Officer Susan Marks said:

"Some cash back deals work well for mobile phone users who sign up to
them. But we are seeing growing numbers of people who lose money. People
are attracted to these deals because they appear to work out much
cheaper than other mobile phone packages, but once the money is handed
over it can prove impossible to get it back. In some cases people find
the company concerned has vanished into thin air when the time comes
that their refund is due.
"Shopping around for a good mobile phone package can be confusing
because there are so many different offers out there. The contracts can
be complex and often riddled with small print or only available on the
providers' internet site. But we would urge people to always take the
time to check the terms carefully and not make snap decisions based on a
slick sales pitch. Above all remember that it is much harder to get
money back once you've handed it over, so don't be tempted to pay up
front on the promise of cash back in the future unless you're prepared
for the possibility that you may never see that money again. Some of the
deals which look a little more expensive at first sight may work out
cheaper in the long run."
OFCOM, the telecommunications regulator, is monitoring the situation and
Citizens Advice is urging anyone who has experienced problems with a
mobile phone cash back deal to report this to OFCOM's contact centre on
020 7981 3040 or email
However, OFCOM cannot resolve individual problems. Consumers should
report these to their network provider, who may be able to help, or
consult their local Citizens Advice Bureau.