Do you really understand your phone contract?

Getting a new phone is exciting but finding a nasty surprise in your phone bill is definitely not. Unfortunately, “bill shock” is quite common. Many people don’t understand the details in their phone contract until it’s too late, according to a Deakin University study.

Even if you know what you want in a phone plan, the devil is in the detail, so it pays to take some time to make sure you understand what your new plan includes before signing on the dotted line.

Some common things that may catch you off guard include the amount of data included each month, how much you’re charged once you reach your data cap, and how you’re charged for phone calls when travelling overseas.

Thankfully, there are a few things you and your phone provider can do to help you avoid bill shock.

Don’t be afraid to ask

While you may not feel like you have any choice but to sign the contract or find another provider, you do have the right to understand what you’re signing.

Once you’ve signed your phone contract, it’s too late to complain that it was too complicated to understand except in specific circumstances; for example, if the salesperson misled or lied to you about what the contract really meant, or if you were pressured into signing without having the opportunity to read or understand it first.

In most cases, if you sign a contract it’s assumed that you’ve read and understood it, so your best option is to read the contract carefully and ask questions.

If you aren’t sure what a term or phrase means, ask the salesperson to explain it to you. It’s also a good idea to make a note of their explanation so you can refer to it later.

You can ask as many questions as you need to understand what you’re signing. If you’re still unsure, it’s best to hold off from signing until someone can address your concerns.

Understand the critical information

The Telecommunications Consumer Protections (TCP) Code states that your phone provider must give you a Critical Information Summary. This two-page document clearly sets out essential information about your phone plan and compares it to other plans so you can be sure you've chosen the best plan for you. It must include:

  • what services you’ll receive
  • the minimum and maximum amount each service will cost you
  • what you’ll pay for a standard two-minute call, SMS and 1MB of data in Australia
  • how long your contract will be for
  • what you’ll pay if you end your contract early
  • how your provider will handle any complaints you have, and
  • any other information that’s relevant, like if it will cost you more to use your phone overseas.

If you don’t receive a Critical Information Summary, you should ask the salesperson to provide you with one before you sign the contract. It’s still your responsibility to understand what you’re signing. But if you still don’t feel comfortable, ask for more information or shop around for another provider.

Look out for usage alerts

The TCP Code also states that your phone provider must send you an alert by text or email when you have used 50%, 85% and 100% of your data, national call and text limits. The alerts must be sent within 48 hours of you reaching the limit. So if you have a $50 monthly plan that includes 10GB data and $500 of calls and texts in Australia, you should receive an alert when you’ve used 5GB data or $250 of calls, 8.5GB or $425 of calls, and 10GB data or $500 of calls.

The alerts must include information about how much you’ll pay if you exceed your limit. However, you may not get an alert if you chose not to receive them, or if your plan has unlimited usage or is “shaped”. A shaped plan is unlimited but your internet connection slows down once you use a specific amount of data.

You should receive usage alerts for your home internet connection as well as your mobile phone. So, if you get a bill that’s more than expected and you didn’t receive an alert, you can make a complaint.

Remember help is at hand

If you believe your phone contract is unfair, you’ve been misled in any way, or your phone bill is higher than you expected, your first port of call is to complain to your phone provider.

Under the TCP Code, phone providers must provide a clear, effective and timely complaints handling process. They may also provide you with information, tools and options to repay your bill or restrict your phone service if you're having trouble paying your bill.

If you’re not happy with the outcome you can lodge a complaint with the Telecommunications Industry Ombudsman (TIO). They're responsible for making sure telecommunication companies comply with the TCP Code.

While phone contracts can be confusing, you do have the right to understand what you’re signing and get help if you experience bill shock.

Phone contract details

RELATED LEGAL SERVICES: Consumer protection

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Dimi Ioannou

Maurice Blackburn Melbourne
Dimi Ioannou is a Principal Lawyer and Practice Group Leader at Maurice Blackburn Lawyers in charge of the firm’s Public and Product Liability team in Melbourne. Dimi is an accredited specialist in personal injury law. Dimi works in the area of public liability and ...

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