MP Calls For Action on Mobile Phone Contracts

Neil Gerrard, Labour MP for Walthamstow, is calling for action from the Government and the regulator, Ofcom, after the collapse of a company offering cash-back deals to mobile phone customers.

“I have been contacted by constituents who have found themselves in financial difficulty after their deals collapsed” said Mr Gerrard. “People who took out contracts with a company called Mobile Connections which offered attractive sounding cash back deals, have now been told by the Mobile Phone companies that they are liable for the total cost of the contract. In order to cancel the contract they are faced with paying its total costs for many months.”

“It seems that Ofcom is unable to offer any protection to people in this situation, and I am asking the Government to intervene by launching an investigation and calling the companies together, with Ofcom, to get agreement that people can get early release from contracts they cannot afford.”

“It appears that this is not the first time this has happened. I would urge anyone taking out a mobile phone contract which seems to offer attractive cash discounts via a third party company to be cautious. Deals which sound too good to be true often are.”

Mr Gerrard is supporting motions in the House of Commons on this issue.

Note:   The text of the two motions follows:

That this House views with the gravest concern the behaviour of airtime providers in seeking to enforce, in full, the terms of contracts taken out by customers following the collapse of Dial a Mobile trading as Mobile Connections; notes the increasing reports of the listing of former customers as debtors and subsequent pursuit through debt collection agencies leading to negative credit references; further notes the complete absence of any regulatory protection for customers, which continues to allow airtime providers to be complicit in the sale of expensive contracts through third parties offering cash-back deals yet still to demand full payment in the event of administration; and calls on the Secretary of State as a matter of urgency to call a meeting of Ofcom, the industry regulator and the airtime companies to negotiate early release for customers who are being pursued in this manner and suffering genuine financial hardship.

That this House views with the gravest concern the current financial situation faced by many customers of Dial a Mobile Group PLC, formerly Mobile Connections, following the closure of its Birmingham retail shop; notes that the absence of the agreed cash-back discounts from Dial a Mobile now leaves many people facing the prospect of paying the full monthly contract fee to their airtime provider and added financial hardship; further notes that the practice of offering attractive cash-back offers on expensive airtime contracts continues with the tacit approval of the airtime providers and that Dial a Mobile is not the first such company to leave customers in financial difficulties; commends Birmingham Trading Standards for its early intervention in this matter and prompt action; and calls on the Secretary of State as a matter of urgency to launch an investigation and to convene a meeting of airtime service providers and Ofcom, the telecommunications regulator, with a view to strengthening the regulatory framework and releasing affected customers from existing contracts.

November 2007

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