Mobile phone cashback
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Mobile phone cashback when relating to mobile (or cell) phones is a term used to describe a retailer offering potential customers' cash at a future date in exchange for entering into a minimum term contract for a mobile phone, often on the condition that the customer keeps to the terms of the contract (i.e. pays their bills on time).[citation needed]
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[edit] Structure and mechanism
For example the contract might cost £40 per month for a minimum period of 12 months, this works out at £480 for the 1 year minimum period.
In the above example the retailer may advertise the contract as being £20 a month for 12 months. Usually, the customer will pay the £40 per month directly to the network and subsequently claim £240 in the form of cashback from the retailer, in one or more payments.[citation needed] This is aimed to make the deal seem cheaper for the customer to entice them to enter into the contract and for the network and retailer to gain an additional customer.[citation needed]
Some cashback deals are paid in one lump sum and some (the majority) are paid out in a set month during the contract term.
An example, £400 total for a 12 month contract with £300 cashback will be paid with £100 in month 4, £100 in month 7 and £100 in month 11. This pays the customer a total of the £300 cashback.
[edit] Aims and origin
The way Cashback start is a network (Vodafone, O2, Orange, T-Mobile, Virgin) will say to a retailer (Phones 4U, The Carphone Warehouse and independents) "We will pay you £500 if you bring us a new customer". Once this offer has been made, the Retailer can then decide what they want to do to bring in that new customer. Many cash back offer's are based on a retailer meeting a target set by the network, which if they meet that target they will get a bonus payout from the network operator along with commission paid for every connection.
From the £500 they get for a new customer they might offer £300 cashback meaning they entice a new customer in with a £300 cashback offer, they get that new customer and they have £200 left for their profits (£500 minus £300).
[edit] Misc
[edit] Consumer Justification
Cashback deals do seem good and are a good way to have a contract Mobile Phone at a reduced rate and sometimes with cashback the year ends up being free.
[edit] Commercial justification
Cashback deals can seem too good to be true, but where the Network makes their money is by asking the customer to send back their bill for a specific month to obtain their payment. Which is fair enough and does seem easy to do, but some companies give timescales of 7 days or 14 days which not everyone can keep on track of and end up forgetting, missing out on that months cashback and the company keeping that cashback (on the above example , £100).
As long as you stick to the Terms & Conditions laid out by the company then there should be no problems at all and you will receive your cashback in full.
[edit] Controversy
It should also be noted that it is important to take out such a mobile phone cashback offer with a reputable firm. This is to ensure the firm does not go out of business which will result in no come back claiming their cashback.
Well known companies offering the facility include Dial-a-Phone.co.uk, Phones4U.co.uk, TheLink.co.uk, Mobileshop.com and The Carphone Warehouse owned websites e2save, ThePhoneSpot and OneStopPhoneShop.
In September 2007 a mobile company called Mobile Connections/Dialamobile Ltd in Bordesley Green, Birmingham closed down. This left thousands of customers with no cashback and locked into contracts with service providers such as Orange, T-Mobile, 3 and Vodafone with no option of cancellation. It is believed that the company got away with over £10 million.[citation needed]
