Is there a catch? "Free" 3 mobile contract...

MascaraMinx

Hello! Last week I discovered the advice on this site regarding mobile phones and how to get a better deal. I looked on the Onecompare link (http://www.onecompare.com/?skn=moneysavingexpert) and saw that if I go through this particular company (can't remember the name just now) I can get a new mobile with the 3 network and get 400 mins x-net anytime plus 250 texts PLUS get the £35 per month line rental refunded and don't have to sign up for more than 12 months! So effectively this would mean a FREE mobile.

Does anyone know of the catch here - this seems to good to be true..... We rang and asked but they say they make money on commission from 3 - how can they make more than £35 commission per month per customer?!?!

Reestit_Mutton

MascaraMinx wrote:

Hello! Last week I discovered the advice on this site regarding mobile phones and how to get a better deal. I looked on the Onecompare link (http://www.onecompare.com/?skn=moneysavingexpert) and saw that if I go through this particular company (can't remember the name just now) I can get a new mobile with the 3 network and get 400 mins x-net anytime plus 250 texts PLUS get the £35 per month line rental refunded and don't have to sign up for more than 12 months! So effectively this would mean a FREE mobile.

Does anyone know of the catch here - this seems to good to be true..... We rang and asked but they say they make money on commission from 3 - how can they make more than £35 commission per month per customer?!?!

In short, the network pays the retailer a big chunk of money upfront. The network has calculated that a certain percentage of new customers will stay with them for many years so it is really the long-standing customers paying full line rental year after year that subsidise the commissions available for new sales.

However, the truth of the matter is that that the money on offer is usually more than the retailer has to give. The nature of the cashback beast is such that the retailers require a certain percentage of customers not to claim their money for their financials to stack up. The T&Cs are usually designed to achieve this goal. As long as you follow them to the letter you should have no problems. However, the cynic in me wonders whether retailers don't try it on from time to time with batches of customers whenever they haven't met their required quota of failures through natural means (similar to the way that insurers say "no" far more often than they really should in the knowledge that a certain percentage of customers will simply accept their decision and walk away).

For instance, many retailers require the use of vouchers yet state in their T&Cs that you have 14 days to notify them if these vouchers aren't sent with your phone otherwise they will not reissue them. What is to stop them purposefully forgetting to include the vouchers with a batch of orders in the hope that X% of these customers fall foul of the stated notification timescale? The way that I see it, this is a mechanism that retailers can use at will to assert a level of control over their cashback failure rate.

Of course, the above is merely a pet conspiracy theory of mine for which I have no proof. However, if you are aware of how/why these deals work in practice, watch out for the pitfalls in the retailer's T&Cs and choose a reputable retailer you should, in the main, be fine.

As for which retailers are deemed to be "reputable" - that's a very big question, and one that is best answered by referring you to the following thread as a starting point:

http://forums.moneysavingexpert.com/showthread.html?t=190478

HtH
Reestit Mutton

MascaraMinx

Great advice & info thanks. At least I now understand why they are doing "free" phones. I'm wondering if it's worth trying to claw back the money each month if they are just out to skank their customer.... hmmm... back to o2 I go to see what is the best offer they will give me I think

Reestit_Mutton

MascaraMinx wrote:

Great advice & info thanks. At least I now understand why they are doing "free" phones. I'm wondering if it's worth trying to claw back the money each month if they are just out to skank their customer.... hmmm... back to o2 I go to see what is the best offer they will give me I think

You may find that you will get most mileage with O2 if:

(a) you ask for your PAC to take your number over to another network, thus demonstrating that you are serious about leaving the network unless they offer you a good enough deal to stay

(b) you have a good example of a deal available on another network that suits your needs but is much cheaper than they are prepared to offer you initially - this is where sites such as One Compare have their uses even if you DON'T want to go down the cashback route.

Basically, no company is in business to hand out freebies - they will only do so if they believe that there is a bigger prize for them further down the line (in this case your longer term business, if you are a reasonably high spender e.g. £30+ per month). Thus, if you ask them nicely with no threat to leave and no obvious motive for moving on they will only ever offer you peanuts.

HtH
Reestit Mutton

Quinny_2

My wife got the contract you mention,and it was via Simply3G.

You also got double minutes and texts for the first 3 months,and yes,she gets ALL of her line rental back,in 3 instalments at 4,8 and 12 months,so in effect,a free phone and line rental.

It will remain to be seen if Simply3G keep their end of the bargain,as I know we will in order to get a freebie.

Ken.