From Audit to Agreement: How Small Businesses Are Being Misled by Telecom Sales

Small businesses are being warned to be careful before signing-up to lengthy finance deals on costly phone contracts.

A recent investigation by the BBC has found unethical sales practices used by various phone companies are leaving some businesses on the brink of collapse after finding themselves forced to pay extortionate charges and fees and when they attempt to leave, the settlement fees often run into tens of thousands of pounds.

Technical Drive have helped a range of businesses move away from expensive phone rental agreements, in which they were paying extortionate charges and fees and when they attempted to leave, the settlement costs can run into tens of thousands of pounds.

We spoke to a Marketing Agency who after meeting with a salesperson, believed that they had agreed to an initial audit, but instead found that they had signed up to an extremely expensive, multi-year phone contract.

The BBC’s investigation found that the contracts were often difficult for small businesses to understand with clauses hidden within the terms and conditions.

They normally contain a universal rental agreement with the customer billed separately for the system rental by a third-party funder. As well as signing customers up to long term lease agreements, of up to 10 years, it’s not uncommon for some Telecoms companies to tie their customers into multi-year leases and encourage a renewal after a couple of years, with extensions framed as upgrades, but actually aimed at tieing them in for an even longer period of time.

Ofcom have said that if they continue to see widespread issues they can and will act against these phone companies.

The Finance and Leasing Association, said “It is important that clients recognise their responsibility to scrutinise the terms of contracts with suppliers to ensure that the agreements will meet their needs.”

We advise small businesses that might be looking at a new phone contract to read and understand the full terms and not to sign anything, even if you’re told by salesperson that it’s not a contract.

If you need any help, please speak to our team at Technical Drive who can offer impartial advice on your current contract or a deal that you might be considering.