O2 misadvertising their 0% handset plans

codan84

Hi all,
I am unsure if this is the right forum to write about this.
I am unsure if what O2 is doing is completely fine or if it falls into some kind of grey area (it does in my opinion).
I am unsure if other mobile networks do this too (I haven't checked).
Ok, to the point. So what O2 does is: when buying a handset on contract, the handset is advertised as being on 0% interest rate loan. However, the Airtime plan that comes with the handset is almost twice as expensive as equivalent sim-only airtime plan.
To break it into numbers let's imagine two scenarios:
1. I am buying a (imaginary) phone worth £480 on contract. The contract is 24 months so monthly payment for the phone is £20 if it's a 0% loan. The airtime o2 would offer me, for 5Gb of data and unlimited minutes/texts would cost me £23/month. The total I would pay over 24 months would be £480 (phone) + £552 (airtime) = £1032.
2. I am buying a (imaginary) phone worth £480 cash, and a sim-only contract. The airtime plan O2 offers me for 6Gb of data (more than in point 1) and unlimited minutes/texts is now only £15/month. The total cost for me over 24 months is now £480 (phone) + £360 (airtime) = £840.
The difference is quite significant, and O2 sales person asked about it told me that "O2 has to make money somewhere".
Now, calculating the difference to be £192 on a phone that costs £480, over 24 months that would be interest rate of about 35% APR if I am not mistaken. But instead of being honestly advertised they hide it in higher charges for airtime.
What do you think? Should something like that be reported to some kind of authorities? Do other mobile carriers do this too?

Cornucopia

Have you got a link to the "0% phone" deal? I had a quick look on Google and nothing came up.

Are the cash phones sold by O2, or is that the general market price?

codan84

Cornucopia wrote: »

Have you got a link to the "0% phone" deal? I had a quick look on Google and nothing came up.

Are the cash phones sold by O2, or is that the general market price?

If you go to the O2 website, choose any contract phone and then click the little (i) next to the "total cost" you will get a popup with the detailed price breakdown. This clearly states that the device plan is a 0% APR.
An example:


Representative example
Duration of Device Plan 24 months
Monthly device payment £29.84
Credit amount £716.00
Interest rate (fixed) 0%
Representative APR 0%
Upfront cost £30.00
Total amount payable for device £746.00
Cash price £746.00

worried_jim

No free lunch.

Cornucopia

codan84 wrote: »

If you go to the O2 website, choose any contract phone and then click the little (i) next to the "total cost" you will get a popup with the detailed price breakdown. This clearly states that the device plan is a 0% APR.
An example:


Representative example
Duration of Device Plan 24 months
Monthly device payment £29.84
Credit amount £716.00
Interest rate (fixed) 0%
Representative APR 0%
Upfront cost £30.00
Total amount payable for device £746.00
Cash price £746.00

If O2 are selling the same phone for less than £746 when you buy it for cash, then that would be a problem.

If £746 is just a higher price than the same phone costs elsewhere, then that's not a problem for O2.

[Deleted User]

codan84 wrote: »

Hi all,
I am unsure if this is the right forum to write about this.
I am unsure if what O2 is doing is completely fine or if it falls into some kind of grey area (it does in my opinion).
I am unsure if other mobile networks do this too (I haven't checked).
Ok, to the point. So what O2 does is: when buying a handset on contract, the handset is advertised as being on 0% interest rate loan. However, the Airtime plan that comes with the handset is almost twice as expensive as equivalent sim-only airtime plan.
To break it into numbers let's imagine two scenarios:
1. I am buying a (imaginary) phone worth £480 on contract. The contract is 24 months so monthly payment for the phone is £20 if it's a 0% loan. The airtime o2 would offer me, for 5Gb of data and unlimited minutes/texts would cost me £23/month. The total I would pay over 24 months would be £480 (phone) + £552 (airtime) = £1032.
2. I am buying a (imaginary) phone worth £480 cash, and a sim-only contract. The airtime plan O2 offers me for 6Gb of data (more than in point 1) and unlimited minutes/texts is now only £15/month. The total cost for me over 24 months is now £480 (phone) + £360 (airtime) = £840.
The difference is quite significant, and O2 sales person asked about it told me that "O2 has to make money somewhere".
Now, calculating the difference to be £192 on a phone that costs £480, over 24 months that would be interest rate of about 35% APR if I am not mistaken. But instead of being honestly advertised they hide it in higher charges for airtime.
What do you think? Should something like that be reported to some kind of authorities? Do other mobile carriers do this too?

Since O2 doesn't appear to offer those particular sim only deals this is a nonsense post I'm afraid. You've basically just made up your own figures to prove your point.

PHK

Several money saving forum members have got a good deal by taking out a O2 handset and airtime contract. Then cancelling the airtime contract.

mobilejunkie

Basic rule for any moneysaver; no-one generally lends money (with all the risks apart from the loss of interest while on loan) for free. It's almost invariably recouped in other ways. You don't need to read the threads on here; always ignore the jargon, the marketing and the slight of hand and work out comparable figures.

This applies to tons of situations - from basic multibuys in supermarkets (where it's often cheaper to ignore the offers and buy different sizes which aren't on offer) to more complex transactions like buying cars, mobile phone contracts and all sorts of other things.

d123

codan84 wrote: »

I am unsure if other mobile networks do this too (I haven't checked).
Ok, to the point. So what O2 does is: when buying a handset on contract, the handset is advertised as being on 0% interest rate loan. However, the Airtime plan that comes with the handset is almost twice as expensive as equivalent sim-only airtime plan.m not mistaken. But instead of being honestly advertised they hide it in higher charges for airtime.

So you’re comparing a 30 day type sim only contract (you can cancel the airtime component at any time) to a 12 month sim only contract?

codan84 wrote: »

What do you think?

You could do better research?

codan84 wrote: »

Should something like that be reported to some kind of authorities?

Now you’re just being silly...

codan84 wrote: »

Do other mobile carriers do this too?

Make 30 day contracts more expensive than longer contracts? Yes.