The secret of Telco "Free Equipment" Deals

This has been republished from "The Age" Newspaper after I stumbled across it earlier this week. A number of my clients have been "scammed" by Telco's who offer free Equipment (computers, laptops, printers etc) for signing into new contracts. These "free items" however are deceptively financed through a third party and the obligation is legally between the business and the financier (not the Telco) see below for the full article....

Investment bank Macquarie Group has been taken to task by the head of Australia's consumer watchdog, but it rebuffed his approaches on behalf of small business owners who had been caught by a finance scam.

According to ABC's Four Corners program, to air tonight night, Graeme Samuel, the head of the Australian Competition and Consumer Commission, personally asked Macquarie Bank chief executive officer Nicholas Moore to "be reasonable" in dealing with the small business customers affected by the scam but, he said, he hit a "brick wall".

Four Corners will report tonight that Macquarie is suing hundreds of small business customers who have been caught up in an alleged telco-finance scam, the ABC says.

ACCC chairman Graeme Samuel tells Four Corners that he personally asked Mr Moore to "be reasonable" in dealing with the small business customers.

"I'd like to think that when the chairman of the ACCC approaches the CEO of a major organisation like this ... that they'd listen to it and react receptively," Mr Samuel tells the program.

"I have to say, we're not encouraged by their reaction at this point in time."

Four Corners reports that Macquarie has been a major financier of deals for an industry known as "telephony bundling", which puts together telecommunications services with electronic goods or other equipment.

The ACCC says many small businesses have been misled into signing agreements by players in the industry.

"We've found far, far too many - literally hundreds if not thousands of small businesses have been caught by these sorts of arrangements," Mr Samuel said.

Typically, they have signed up with a telco on the understanding they will receive televisions, laptops, phones or other electronic goods "free", then been hit with bills for tens of thousands of dollars under multi-year rental contracts for the equipment from a separate finance company.

"What the small business doesn't realise is that almost invariably they're signing, as well as with the telecommunications company, they're signing a rental agreement with a finance company," Mr Samuel said.

Four Corners says its investigation has revealed evidence of deceit and trickery in selling some of the deals, with fraudulent or doctored contracts, forged signatures, and finance companies directly debiting money from bank accounts without authorisation.

Whistleblowers in the industry tell the program they were taught to hide the presence of rental contracts for the equipment and to trick people into signing the deals while maintaining the equipment was free.

Thousands of customers have signed up with small telcos only to find the company later goes broke, leaving them without phone services or phone call discounts they had been promised, yet still stuck in an expensive multi-year lease with a finance company.

Four Corners reveals that Macquarie, through its subsidiary Macquarie Equipment Rentals, has sued more than 300 small business customers caught up in the deals.

According to Four Corners, Mr Samuel, a former senior executive of Macquarie, says he approached three major companies at CEO level - Macquarie, Cisco Systems and Capital Finance, a subsidiary of Lloyds - and asked them to hold off enforcing contracts and pursuing small businesses through the courts.

But the finance companies rebuffed him.

Last Friday, Macquarie reported a half year profit of $403 million.

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