Crackdown planned on mobile cashback dealsOfcom says mobile companies face fines

18 March 2008

Phone companies are facing fines if they don't clamp down on unacceptable sales practices and dodgy mobile cashback deals.

Telecoms watchdog Ofcom says it’s been forced to take action because the mobile industry has failed to clean up its act.

The move follows a report by Which?, in January this year, which found thousands of people had lost money through dubious deals.

False information

Ofcom says some mobile phone companies and sales agents are still engaging in unacceptable practices that are against the consumer interest.

These include customers being given false or inaccurate information when they want to buy a mobile contract.

Ofcom’s also concerned that customers are failing to get their refunds from some cashback promotions.

Code

Last July, the five mobile phone operators signed up to a voluntary industry code to tackle the problems.

But Ofcom says it has continued to receive a large number of consumer complaints about mobile mis-selling and cashback issues.

Ofcom is now proposing a new rule - which could be in place by this summer - to tackle mis-selling and to ensure that cashback deals are fair.

'Marketing malpractice'

Companies which breach the rule could be fined up to 10% of their relevant turnover.

Ofcom Chief Executive Ed Richards said ‘The UK has one of the more competitive mobile phone sectors in the world. But strong competition is no excuse for marketing malpractice.

‘We warned the industry last year that unless it cleaned up its act we would consider introducing new rules. The facts show that this hasn't happened, so we are now proposing tougher measures to protect consumers from unacceptable sales and marketing practices.’

Which? spokeswoman Jaclyn Clarabut said: 'Which? would have liked to have seen these deals banned.

'We have seen many companies offering these "generous" cashback deals go bust, leaving people with an expensive phone contract and no way of getting out of it.'