Under a ‘bundled services deal’ business model, a telecommunications company enters into a contract with a small business to provide telecommunications services and call credits to cover payments for what some customers think is ‘free’ equipment.

What some small businesses don’t fully appreciate when agreeing to these deals is that they are in fact signing two separate contracts – the first is for the phone calls with a telecommunications service provider, and the second is a lease of equipment from a finance company.

While the dual contract arrangement might meet the needs of many businesses, and be a legitimate packaged deal, the ACCC is concerned by the number of complaints from small businesses. Many of these small firms say they have been misled, have found themselves without a telephone service, and are locked into expensive equipment leases once the provider of the telecommunication service goes into liquidation.

As a result of the current legal action and the numerous other complaints regrading ‘bundled serves deals’, the ACCC warns small businesses who might be offered equipment leases bundled with telecommunication deals to take extreme care before signing contracts.

While some of these deals are legitimate business offerings, small businesses should take care when any of the following are represented as part of the deal:

	the equipment provided under the deal is free
	where deals include incentives of ‘free’ goods such as televisions or other equipment
	total charges for telecommunications services will not exceed either a stated amount or the customers' previous charges
	total charges under the bundled services deal will not exceed a specified amount per month
	the only contractual commitment being made by the customer is with the telecommunications company
	the price of calls will be lower than that of the customer's existing provider
	fixed line services will be ported to the telecommunications company within a short period of time, and/or
	the telecommunications company will supply mobile services using the customer's existing mobile carrier.

If any of these conditions are present in a telecommunications deal offered to your business, you should take some time to look into the product and make sure you know what exactly it involves.

The obligations you may incur by entering what seems like a simple contract can have a potentially disastrous effect on your business. Once a contract has been signed it gives rise to various legal obligations. While you may think they are unfair, they may not actually be illegal and you could be left owing a substantial amount of money to financiers.

The ACCC has placed a number of implicated finance companies on notice of its concerns and continues to investigate the collection activities of the financiers.

In addition to the ACCC’s investigation, small business should be aware that section 73 of the Trade Practices Act 1974 (the TPA) provides them with a private right of action for relief in certain circumstances – however because that is a private right, it must be acted upon by affected parties. The ACCC cannot take action on behalf of individuals.

Section 73 has the effect of making the supplier and the financier both liable in certain circumstances where a consumer suffers loss or damage in relation to goods or services the consumer has acquired from the supplier on the basis of finance provided by the financier.

If you are being pursued for payment in relation to obligations you did not know you were incurring, you should seek independent legal advice about the operation of section 73 and your options.

You may also wish to report your situation to the ACCC infocentre on 1300 302 502, or the ACCC Small business helpline on 1300 302 021.

Of course, the best course of action is to avoid entering a contract that will result in you incurring ongoing costs for unusable products.

To help with that, the ACCC recommends you ask the following questions, suggested by the Telecommunications Industry Ombudsman, prior to signing anything:

	who are the parties involved in the deal?
	are commissions paid as part of the deal, and to whom?
	how many contracts does the deal involve? Is it just one contract with one company or are they separate contracts?
	exactly what services are being offered by the phone company? If “credits” are being offered to offset the lease payments, how much are the credits and are there any limitations on when they are paid?
	is there a lease? If so, what are the monthly lease payments, and how long is the lease for?
	what happens if the telecommunications contract ends? Is the business still bound by the lease?
	what is the total cost of the deal over the term of the contracts?
	does it actually work out to be cheaper than the small business’s existing telecommunications arrangements?