Are cashback mobile-phone deals as dodgy as they seem? Read about the pros and cons, plus eight great tips for using cashback deals.
This week the regulator Ofcom capped the charges that mobile networks charge each other for connecting calls with other networks. The intention is to reduce customers' phone bills, but I suspect that it won't result in significant reductions.
However, one way to cut your bill is to use cashback mobile phone deals. With these, you can get a free mobile phone and claim back some of the monthly bill for bundled calls and texts. In many instances, you can claim back the whole lot so that the phone and your bundle are totally free!
Of course, retailers need to make their money somehow, so there is a fair bit of dodgy business going on. Many businesses don't last long, either because they fail to find a way to be profitable (unsurprisingly!) or possibly because they were simply created to take people's money and disappear, leaving them to pay their expensive monthly bills to their networks, which had nothing to do with the cashback deal.
They use dodgy tricks too. Cashback deals usually require that you pay £30 or £40 per month. A great number of people are either too disorganised to claim their cash back or fail to do so according to the terms and conditions, which are often made difficult on purpose. This is how many of these companies make a profit.
There is anecdotal evidence to suggest that even the more reputable firms cause serious difficulties in getting cash back. Firstly, you have to claim it back during specified months, e.g. the 3rd, 6th and 11th months of the deal. You may also have to make your claim within a two-week window, or lose the cashback.
Other tricks include contracts that only exist on the Web, and only remain downloadable for two weeks, so subsequently you have no proof of how much you can claim. Often people face huge delays, difficulties and resistance when claiming.
Well, if you're still interested in cashback deals after all these warnings, here's how to go about it.
Where to begin your search
You can find deals on referral sites, which search for the best cashback deals. Favourites from our Mobile Phones and PDAs discussion board are Reestit Mutton and Mobile Price Hunter. There is also Hot UK Deals, where users post details of the latest deals they've discovered.
Top cashback companies
The companies that have received the most positive comments on our discussion boards are those in the Carphone Warehouse Group: Carphone Warehouse, e2save and onestopphoneshop, although they haven't escaped all criticism.
Carphone Warehouse itself has probably received the best balance of feedback. From the small number of users who have commented, it seems that its terms and conditions are clear and easy to comply with, and 'nowhere near as demanding as certain other companies', as one user says.
Plus it has an 0800 number to call its sales team if there are initial problems with documentation, and one user writes that you can go into any Carphone Warehouse store to claim the cashback. The biggest complaint about Carphone is that its deals aren't as attractive as some of the no-name websites. Typically, you can expect to get half your money back.
It can be difficult to see which offers on the Carphone Warehouse's website are cashback deals. Wherever you see it say 'half price line rental', expect to have to pay in full and then claim cash back.
Eight tips for using cashback deals
1. You can often find the best deals at the end of the month, when retailers scramble to achieve their targets. Referral sites are often too slow to track these deals, because they appear and disappear quickly. You may get lucky on Hot UK Deals. Otherwise, you'll need to scour the retailers' websites directly.
2. Make sure you can afford the upfront payments.
3. Do your research and ask for a second opinion from Fools on the Mobile Phones and PDAs discussion board.
4. Read the terms and conditions thoroughly and save a copy. Don't sign up if you don't understand them, and be happy that you can and will claim your cash back at the right times.
5. Prepare your cashback returns the moment you get your phone.
6. Stick with companies that are reputable, although these can be hard to find! Heed this warning from the boards:
'There are several relatively new outfits offering "too good to be true" deals. They do not all appear to be wholly independent of each other and some potential customers may be worried that the fragmentation is intended to allow one outfit to go under without bringing down the whole house of cards.'
Posted by JohnEBehr
7. Send cashback claims by special delivery with the Royal Mail's 'consequential loss' cover to ensure sufficient compensation if its undelivered. Remember to check the address to send it to each time, to ensure it hasn't changed. This has caused problems for claimants before.
8. Get even more cashback by clicking through to the retailer from Quidco!
I know a few Fools who do this, with mixed success. Personally, I don't want the hassle of making a claim, and I don't want to risk these dodgy deals if it means I might end up paying £360 to £480 in one year! I'm going to stick to negotiating with my current provider every year, which has worked well for me so far.
Special thanks to JohnEBehr from the boards, whose posts provided the bulk of these tips.
> More about mobiles: The Lazy Guide To Mobile Phones | Eight Tips For Cheap Calls From Abroad
