How telco and finance scams work
You may get a call from an Australian phone company saying they will reduce your telephone bills. Or you may have been referred by a friend.
They come out and meet you and are nice, they seem legit. They ask to see other phone records which you willingly show them to ensure they get below the costs you're already paying.
They put together a package for you which looks great. The amount is less than what you are currently paying per month, they say it includes all of the costs of the phone calls as well as a phone system with phone lines and broadband. They may also include other equipment such as mobile phones, plasma TVs, coffee making machines, multi purpose printers.
It looks like a great deal, the only problem is that it's for 5 years but you think it's worth it, having a known phone bill every month and getting the added equipment for free.
You read their contract which is branded by their telephone company and that seems ok, the phone system and call costs are all written on their contract. So they arrange an appointment to visit you to sign the contract.
Again, all seems normal and they're friendly and you sign the contract. There is usually only one representative present from their side.
Next, the telephone company starts billing you for more than the agreed monthly value. They say these are for calls made on top of the amount you’ve signed up for. So you’re paying more than what you expected.
Next, the phone company goes bankrupt and you think, ok not so bad we’ll just go to another telco provider. Then the finance company who actually funded the supposed extra ‘free’ bundled equipment says they still want their monthly agreed amount. But you still have to pay for calls on top of that. The finance company won’t release you from the contract. You didn’t realise that the contract you signed was not with the telco company at all, but was with the finance company and didn’t include phone calls, just the equipment. Thus the phone, telco, finance scam can continue as the bankrupt telco company opens up under a new name.
If you stop paying the finance company they become aggressive and threaten you with legal action. If you continue paying you’re going bankrupt yourself with paying double for your phone bills. The money they want from you is the total of what’s left on the contract term. This in most instances is over $10,000 and sometimes as high as $80,000+! Some finance companies take you to court and the local courts find in their favour, on top of costing you thousands of dollars in legal fees. They know that small business can’t beat their legal team which is what has happened till now.
It is illegal!