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Free phone systems - too good to be true?

In 2011 three directors of a telecoms company in Norfolk were sent to jail for fraud http://www.bbc.co.uk/news/uk-england-13214888. They enticed companies and charities with the promise of free phones. Those who took up the offer then found themselves stuck in expensive, long-term contracts far out-weighing the ’free’ phones.

Like many scams they keep resurfacing - and companies are still being caught-out.

Dave Millett of Equinox, who has helped businesses avoid and escape these deals, explains how to recognise if the offer is genuine or a dirty trick.

The scam usually starts with the promise of a brand new phone system for less than your current outgoings. It is supported with a proposal that purports to compare current and future costs. It implies there are savings but it is very short on detail and obscures the fact that you’re signing a lease hire agreement. The deal also involves a long term commitment to lines and calls.

If you’re approached with this type of deal here are the questions to ask. Only accept answers in writing. If you then sign the contract, add a clause that is based on the responses you’ve received and state that it is on that basis that you have signed.

Question 1: What are the actual prices for the lines and calls? Compare the prices to what you are currently paying to confirm the claims. Are those prices guaranteed or only for the first year. Do you have the right to cancel if they raise prices?

Question 2: Have they quoted for all the services you currently have? If you’re currently paying for an alarm line or lines for PDQs they often get included in the current costs but excluded from the proposed costs.

Question 3: When they present back your existing costs - check them against your actual bills. Go through your recent bills and check that they are accurately reflected in the current cost column of the comparison.

Question 4: Specifically ask if the system is being provided on a lease hire or lease purchase. If the latter what are the options at the end of the contract? Is there a cost for the transfer of title so you actually own it? If so, is that reflected in the savings? If it is a lease hire, what happens at the end of the agreement? What happens if you need to expand the system during the lease? Will any equipment that’s added link to the same end date as the original agreement?

Question 5: Ask for a separate quote for outright purchase of the equipment. Then verify that by asking other suppliers of that solution for a purchase price - so you can compare. Ask them to break out the elements of the costs, not just give a total figure. Ask them to confirm the rate of interest being charged.

Question 6: What equipment is actually being supplied? Ask for make and models of all elements. Visit the manufacturer’s websites and see if they are current – and the prices quoted are indicatively right.

Question 7: Ask if there are any charges that will be levied that are not identified in the proposals.

Question 8: Finally ask who is providing the finance. If it is a third party finance contract then be wary as it will make it harder if you want to challenge the contract at a later date. If the finance is provided by the supplier or the equipment manufacturer then you have a greater chance of disputes being resolved.

Reputable suppliers who have a genuine offer should willing answer these questions and agree responses are part of the contract.

Once you have all the answers rework their before and after pricing. Does it still show a saving or has it swung to a point where it is costing you money.

What if you have already signed one of these deals? There is still hope. If there was a false inducement to purchase - the deal could be struck down by a court. Trading Standards is another option. If you are a company of fewer than 10 people check to see if the supplier is registered with the Ombudsman scheme as they offer free binding arbitration. http://www.ombudsman-services.org/communications.html.

There are some genuinely good deals being offered but there are also far too many dodgy ones. The old adage ‘if something looks too good to be true’ holds here – if it looks too good, it’s probably dodgy.

Dave Millett has over 35 years’ experience in the Telecoms Industry. He has worked in European Director roles for several global companies. He now runs Equinox, a leading independent brokerage and consultancy firm. He works with many companies, charities and other organisations and has helped them achieve savings of up to 80%. He also regularly advises telecom suppliers on improving their products and propositions.

This was posted in Bdaily's Members' News section by Kenny Mac .