Thursday, May 15, 2014

The budget phone contract 'scam'

Now, let me emphasise the quotes above - what I'm describing (ok, ranting about) here isn't illegal, it's simply.... misleading. And I'm not singling out any one phone network here, I'm simply using Three UK as an example - all the others do the same.

Look, I get the idea of contracts, especially at the upper end of the price spectrum - you get a nice, cheap, subsidised handset, you get more minutes, texts and Megabytes than you need, and all is rosy. You're paying £30 or more a month, but you're happy and, essentially, sorted.

However, down at the budget end, there's little or no subsidy in terms of hardware, yet there's massive possibility for swinging overage charges. Let me explain.

I'm looking at a Three UK run down of plans. They offer one at £6.90 a month. Which sounds great. 500MB of data, 200 minutes and 5000 texts. Perfect for a teenager, perhaps?

Maybe. Except that you can bet he or she will occasionally go over, with 'that' long call to a girlfiend or streaming 'that' movie. In which case, you could be looking at 300 minutes used in a month and perhaps 1GB of data used.

Only a bit over, right? You'd expect a few quid more to be charged to your card/account? Actually, the overage in this case is 45p/MB, which is £225, plus £25 for the calls.

Let me state that again. £250 overage on a £6.90/month account.

It's INSANE. Now, obviously, the networks will say that the user should simply switch to the next tiered contract, in this case at £9.90/month. Which is fair enough, but the user will have learned the hard way already, plus with data use increasing across the board, who's to say the teenager won't rack up 1.5GB, with another £225 overage charge?*

* Yes, apparently there's an option to get the network to cut off the account once the limit has been reached, but then what if there's an emergency and use is needed? It's a tough call to turn that on!

45p/minute is almost criminal and it's amazing that networks get away with it. Especially as, in this case, Three's normal pay-as-you-go rate for data is 1p/MB, on their excellent 321 plan. FORTY FIVE TIMES CHEAPER for data!

The upshot is that everyone's encouraged to go for a contract whose details include ANY possible usage. Just in case. Meaning that the margin of profit is kept high for the network, which I guess makes business sense.

Just be warned in case you're thinking about cheap contracts for members of your family. We've been there, done that, and been stung. (Thankfully not to the degree mentioned here.)

For the record, everyone in our family is now on the '321' pay-as-you-go deal. Some months my wife or daughter will go through £10 of credit, or even £15. But never £225! And some months, their balance hardly goes down at all. We average about £25 worth of vouchers for all three of us.

Comments welcome. Am I being overly critical here? Or should overage charges be a lot less severe?!

Monday, May 05, 2014

Anatomy of an eBay scam... dodged!

After a number of years on eBay, you learn the danger signs, the whiff of something not quite right. I won't quote actual eBay usernames here because I'm only 99% sure and not 100%, but I thought the procedure was still well worth writing up.

The task for me: to buy an item, in this case an iPhone 5, a high value item, we looked at it, at £190 or so with a day to go, with local collection (which was OK for us, it was only 20 mins away) and put in a max bid of £290 - the idea being that eBay would auto-increase this if needed, as other people bid on the item.

In hindsight, we rather overvalued the item and should have pitched in lower, as will become apparent.

The task for the seller: the sell us the iPhone for as much money as possible while dodging both PayPal AND eBay fees. And he almost managed it.

Here's the scam:
  1. He specified cash only on collection. Uh-oh. I queried this. It was to avoid PayPal's 3.4% fee, he said. Hmm.... OK, let's press on though....
  2. With only a few hours to go and the auction still at £190, it was pretty clear that the local collection and cash demands meant that we were the only buyers on the horizon. The seller (again, I'm speculating here, but my theories fit the facts) then recruited a couple of 'Mates'.
  3. Bear in mind that the seller doesn't know what my maximum bid is. He wants to get Mate no. 1 to bid something nice and high, forcing me over it, but he doesn't want to get Mate no. 1 stuck with the item and he also doesn't want to make all this too obvious. Mate no. 1 then starts bid every few minutes, adding £10 more until he ends up the highest bidder - and he then retracts the very last bid as a 'mistake', but not before I've been forced up against my maximum bid - entirely falsely.

  4. The next bit is even more devious. a few second before the auction finishes - remember the seller has already got me winning the item at my maximum, the seller gets Mate no. 2 to come in and put in a higher bid to 'win' the item.
  5. A few hours afterwards, the seller sends me a message that there's a 'problem' with Mate no. 2 and that I can still get the item at my maximum bid, but only by contacting him by text. The idea then being, presumably, to meet and pay cash and hand over the item, while the seller doesn't use the eBay 'second chance system' but instead reports to eBay that the transaction never went through and that there are therefore no seller fees to pay.
All very clever, if a little tortuous. We had seen too much and ducked out before completing our side of all this - thankfully. If the seller had got his way, we might indeed have got the item OK, if for a slightly inflated price. But the seller would have got the sale without paying eBay or PayPal a penny.

You may ask if I have evidence for all of this. The warning signs, other than the obvious, were in digging down into the activity of the two 'Mates'. Their activity for the last month consisted solely of bidding on one item - this seller's! Quite clearly, each had been recruited for the specific task in hand.

And, clearly, the seller thought he had stage-managed the accounts and bidding/selling process well in order to game the system. And me.

Happily, we dodged this at stage 5, having lost all confidence in the seller. But I wanted to write up how all this works in case other buyers start getting sucked in using the same scam.

PS. Again, I'm keeping all this anonymous, since I don't have 100% proof. It's possible that the other two accounts weren't friends of the seller. Possible. Just not at all likely!