Your phone bill might be too much to handle
Deloitte’s 2018 survey indicated that 9 out of every 10 Australians own a smartphone. And today’s mobile services are as expanded as ever, packed with entertainment and data inclusions in SIM plans from major and smaller telcos.
Modern SIM plans ensure you can do pretty much anything on your smartphone these days. Browse the Internet, snaps for social media, stream full length high definition movies, and more.
But these things cost money – the more data your plan has, the more expensive it is. And today, you get the most inclusions from postpaid plans, and you can even tag on the most recent flagship device on a monthly payment plan, which all add up to contracts that create more and more debt obligations.
Initially, monthly SIM and device plans seem cheap. But that’s only if you’re looking at the short term monthly payments and not the long term cost. Most device payment plans last 2 or 3 years – within that time, it is more than likely that better deals will surface while you are locked in your multi-year contract.
Telcos are aware of this, and will upsell you from your initially desired simple SIM plan to a more expensive SIM and device plan. This make them money, which is the ultimate goal of running a business.
But somewhere down the line, these plans could become too expensive to maintain. You might face financial hardships that make it difficult to pay your phone bill. The coronavirus pandemic is a great example, where many Australians lost their jobs and others had to stay home away from their businesses. Such hard times can set you back significantly, leaving you struggling with how to pay that expensive phone bill that initially look affordable.
So what do telcos do to alleviate such financial hardships? Unfortunately, not enough according to a recent report. In this post, we’ll discuss how financial counsellors view telcos’ approach to their difficulties paying bills, and look into what you can do if you can’t pay your phone bill.
Survey shows Australian telcos have “poor” financial hardship policies
The Financial Counselling Australia (FCA) recently released the Telcos and financial hardship: Feedback from the frontline report that surveyed financial counsellors to determine how telcos respond to customers’ financial hardships on a scale of 1 to 10. Here are the results:
- Telstra – 6.2
- Optus – 5.6
- TPG Telecom/Vodafone – 4.4
- Smaller telcos – 3.5
According to the FCA, a score of 7 or above indicates acceptable financial hardship policies and practices. As noted above, none of Australia’s telcos meet that bar, landing them a “poor” rating throughout the telco industry.
This is especially troubling considering the same report notes that 50 percent of Australian customers are struggling to pay off telco debts. And telcos’ response to this daunting matter has been rated as “worse” or “much worse” than the four major banks, the non-major banks, and electricity retailers.
How Australians fall into telco debt
That 50 percent of Australians are struggling to pay off their telco bills is troubling in itself. But what’s even more troubling is that most of these debts are created by telcos themselves.
The FCA report indicates that 80 percent of financial counsellors clients were mis-sold telco products. Most of these customers fall into vulnerable groups, ranging from the mentally disabled to non-English speakers and beyond.
Mis-selling involves selling telco products to people who clearly cannot afford it or people who clearly do not need it. The practice is unethical, and could actually have legal implications.
Last November, the Australian Competition and Consumer Commission (ACCC) initiated court proceedings against Telstra for mis-selling products to Indigenous Australians.
The telco signed 108 Indigenous Australians to postpaid contracts through less than honest means. For instance, by manipulating credit assessments, then referring the customers to debt collectors when they inevitably fall into debt with Telstra for the products they were sold but obviously could not afford.
Telstra admitted to this unfair practice and refunded customers with interest. The telco also waived debts to the tune of $7,400 per customer.
Here’s what to do if you can’t pay your phone bill
It’s a great idea to keep your inclusions to a minimum, and only buy phones you can afford or pay outright. Do you really need that much data? Do you really need an entertainment plan? Do you really need that flagship phone? Chances are that you can live without all the bells and whistles of a large phone plan which might get you stuck in debt in the future.
But as we’ve already covered, many Australians fall into telco debt by no fault of their own. In many cases, the telco’s efforts to mis-sell you products you can’t afford is what lands you in debt.
If you can’t pay your phone bill, here are some helpful steps to take:
- Contact your telco. They are obligated to help, and have published details about their financial hardship policies on their websites.
- File a financial hardship complaint with your telco. They will be unable to take any action against you until your complaint is resolved as long as you have a valid claim. This is actually your right under the Telecommunications (Consumer Complaints Handling) Industry Standard and the Telecommunications Consumer Protections Code.
- Contact a financial counsellor. If you don’t know where to find one, start with your telco’s website – they provide information on how to find a financial counsellor in your area.
The worst thing to do is to not pay the bill, and just sit back without taking any action. Contact your telco and explore your options.