Crazy John's caught manipulating confusing contracts

Mobile phone contracts are notoriously confusing and difficult to understand. Different carriers, different devices, different plans. Contract? Pre-paid? Free calls? Texts? 3G? Mobile TV? There has been a high degree of dispersed coverage throughout the media over the years commentating on the confusing nature of choosing mobile phone contracts.

Research conducted by Nina Weerakoddy of Deakin University associates "...inflexible mobile contracts, confusing and aggressive marketing strategies specifically aimed at the teenage market, and inadequate information provided to prospective subscribers..." (Kingston, p.1-2) with mobile cost blowouts resulting in financial pressures on teenagers. Simply, the fact that mobile phone contracts are so confusing is a contributing factor for teenage financial strife resulting from mobile phone use.

Weerakoddy's research builds on that conducted by Customer Experience Measurement company, Global Reviews. Findings released in 2006 suggest:

"Australia's largest mobile telephone companies are leaving customers confused and unsure of their options.... The study revealed that major telcos left many customers unable to identify a suitable mobile phone plan online, that large numbers of emails receive no response, and that many phone operators did not actively seek to help customers identify the right plan for them.... Websites were also found lacking, with only one of the four telcos offering and online tool that helps customers choose a suitable plan. Most companies offered plan and pricing options online, but made it complicated for customers to understand which of those options was most suitable." (Winzer)

The clear connotation behind the findings of this research is that the major mobile phone telcos are complicit - even intentional - in creating customer confusion. I may be a bit suspicious, but when the major responsibility of a private company is to their shareholders, customer confusion, resulting in larger bills being collected by the telco, may just contribute to higher profits. What incentive is there to provide higher quality service and aim for clarity and simplicity in mobile phone contracts, if confusion gives a greater pay-off?

Perhaps this is just personal bias, but as the old saying goes: just because you're paranoid, doesn't mean they're not after you! I have been thinking for a long time now about getting a new phone - a 3G - but have put off in a large part by the confusing complexity of the options available, not just in terms of the devices, but largely in terms of the contract options. So, it was with a smug sense of satisfaction that I read today of the Australian Competition and Consumer Commission (ACCC) slapping a writ on Crazy John's (mobile phone provider) for misleading advertising.

The ACCC '...alleges the mobile phone dealer...engaged in "misleading and deceptive conduct" through its advertising. The ads offered handsets on its Crazy Phone Plans "free" of for "$0". But the ACCC alleges customers had to pay for the handsets through call rates that were higher than those available on comparable plans that did not include a handset. It says Crazy John's breached two sections of the Trade Practices Act." (Leyden, Jan 18, 2008, p.23)

No doubt Crazy John's will have a vigorous defence provided against this charge: that the ads are no longer running, that these plans are only a small percentage of their overall sales (10%), or perhaps that it has something to do with their use of the Vodafone network. Whatever the defence, and whether or not this mobile phone retailer is found guilty of false advertising, one thing is clear: the confusing nature of mobile communication options and contracts overall contributes to enabling manipulation of consumer perceptions of what is a 'good deal' when purchasing a phone.

A free phone no doubt sounds like a great deal, but with charges on mobile communications so varied across providers, how many consumers would really be able to tell if they were being charged to much for their use of the phone? Was it cheaper than any of the other providers? As the reserach of Weerakoddy and Global Reviews mentioned above points out, it frequently difficult to know.

References

Kingston, S. (June 27, 2007). Media Release. Deakin University. Retrieved on 18 January, 2008 from: http://www.deakin.edu.au/news/upload/A260620087Nina_phones_final.pdf

Leyden, F. (January 18, 2008). "Watchdog acts on phone ads." The Herald Sun, p.23.

Rennie, R. (January 17, 2008). "ACCC charges Crazy John's with false advertising." The Age.

Winzer, J. (May 10, 2006). "Mobile Telcos Not Helping Confused Customers." Global Reviews. Retrieved on 18 January, 2008 from: http://www.globalreviews.com/images/press10052006.pdf