Hung up on the Handset. An investigation into sales practices in the mobile phone market

Last year 21,500 people sought advice from the Citizens Advice Consumer Helpline about a problem with their mobile phone service. An analysis of a sub-sample of these cases revealed that 16 per cent of these problems related to misleading sales practices. Although the details of these cases vary, inaccurate information about the nature or cost of the service being provided emerged as a common strand. Our clients often find that they have entered into a contract which does not meet their needs as a result. This analysis chimes with the findings of BillMonitor’s 2012 research which found that more than three quarters (76 per cent) of mobile phone users in the UK are on the ‘wrong’ mobile phone tariff (‘wrong contract’ defined as any contract where the customer pays more than they should - including the price paid for minutes & data tariff allowances as well as bundles) at an estimated total cost of almost six billion pounds each year.

Mystery shopping research carried out by Ofcom in 2014 found that people are generally asked the right questions to establish their current usage, but tells us far less about how that information is then used by the retailer to guide their customer to the product which best meets their needs. We know that many people end up on expensive tariffs which include allowances far in excess of their actual usage - so are people being pushed towards high cost, high profit tariffs by retailers irrespective of their needs? Or is this a more fundamental feature of the way in which mobile phone tariffs are structured and marketed?

In order to get to the bottom of this question, we commissioned mystery shopping research to explore whether people are being pushed, or misled, in accordance with Ofcom’s definition of mis-selling (Ofcom defines mis-selling as sales practices where staff “(a) engage in dishonest, misleading or deceptive conduct; (b) engage in aggressive conduct; or (c) contact the Customer in an inappropriate manner”), into signing up for high cost contracts with allowances which significantly exceed their needs. Our researchers were asked to tell sales staff that they were currently on a pay as you go deal and were looking to move onto a contract which included the cost of a handset. They were instructed to specify that they would like a smartphone, but not to request a specific brand or model. They simply wanted the tariff which best met their needs as an ‘average’ user - using approximately 250 minutes, 250 texts and around 200MB of data per month (This profile is based on Billmonitor.com’s ‘classic’ usage profile, described as “Mr and Mrs Average”, from their typology of 12 different kinds of UK mobile users: http://blog.billmonitor.com/post/48733513308/billmonitorcom-defines-12-different-kinds-of).

Our researchers also carried out a desk based search of the tariffs advertised on the network’s websites and price comparison websites to establish which of the tariffs most closely matched the needs of the consumer in our scenario. This provides us with a baseline from which to assess whether sales staff directed our mystery shoppers to the most suitable tariff based on the information they were given about their consumption, or to more expensive tariffs which exceeded their needs. This report sets out the findings of this research. [ 0.95 mb]