The Australian Competition and Consumer Commission is urging caution after revelations that thousands of small business owners are being lured into a damaging telecommunications financing scheme.
Small telcos are allegedly selling telecommunications services to business owners under the false pretence of providing free electronic goods, ultimately leaving businesses broke.
As the telcos fold, small business owners are left without the phone services they purchased, while financing firms hound them regarding unpaid bills for goods they didn’t know they had purchased.
According to the ACCC, the telcos use a bundled-services-deal business model, and the “free” equipment is supplied to customers under rental agreements by finance companies not related to the telcos.
ACCC chairman Graeme Samuel told the ABC the alleged scam has potentially cost business owners tens of millions of dollars.
“What the small business doesn’t realise is that almost invariably they’re signing, as well as with the telecommunications company, a rental agreement with a finance company,” he says.
He adds: “If it sounds too good to be true, then it usually is. Don’t be suckered into these types of deals, and read the contracts you’ve been given. After you’ve read your contracts, you may even want to go over them with a legal representative, just to make sure that what you’re getting isn’t totally wrong.”
Samuel warns that a lot of these businesses are being told to ignore finance deals written into contracts.
“Don’t believe that,” he says. “You can’t take people at their word. Common sense dictates you need to check these contracts out for yourself.”
The ACCC says there are simple tips start-ups can follow to protect their businesses from scams:
