Mobile phone cashback

Mobile phone cashback when relating to mobile (or cell) phones is a term used to describe a retailer offering potential customers' cash at a future date in exchange for entering into a minimum term contract for a mobile phone, often on the condition that the customer keeps to the terms of the contract (i.e. pays their bills on time).^{[citation needed]}

Structure and mechanism

For example the contract might cost £40 per month for a minimum period of 12 months, this works out at £480 for the 1 year minimum period.

In the above example the retailer may advertise the contract as being £20 a month for 12 months. Usually, the customer will pay the £40 per month directly to the network and subsequently claim £240 in the form of cashback from the retailer, in one or more payments.^{[citation needed]} This ihttp://www.tipped.co.uk/listings/148281/microhards aimed to make the deal seem cheaper for the customer to entice them to enter into the contract and for the network and retailer to gain an additional customer.^{[citation needed]}

Some cashback deals are paid in one lump sum and some (the majority) are paid out in a set month during the contract term.

An example, £400 total for a 12 month contract with £300 cashback will be paid with £100 in month 4, £100 in month 7 and £100 in month 11. This pays the customer a total of the £300 cashback.

Aims and origin

The way Cashback start is a network (Vodafone, O2, Orange, T-Mobile, Virgin) will say to a retailer (Phones 4U, The Carphone Warehouse and independents), "We will pay you £500 if you bring us a new customer". Once this offer has been made, the retailers then decide what they want to do to bring in that new customer. Many cash back offers are based on a retailer's meeting a target set by the network, which will give it a bonus payout from the network operator along with commission paid for every connection.

From the £500 gotten for a new customer, it might offer £300 cashback meaning they entice a new customer in with a £300 cashback offer, they get that new customer and they have £200 left for their profits (£500 - £300).

Some say that the true reason to combat fraud. Some customers choose not to continue to pay their bills and most networks claw back their commission from retailers in such cases. The customer is then pursued by the network for non-payment, but as the network has clawed back its commission from the retailer, the only party that is truly out of pocket is the retailer.

This type of customer is called a neverpay. Retailers introduced cashbacks, which at first were meant to hold back a portion of money which that be claimed only once the customer had paid the bills. The gave the customer an incentive to pay their bills and it brought neverpay rates down somewhat.

Many retailers confused this as an opportunity to exploit innocent customers by promising to pay them cashbacks but not fulfilling their promise, which was when things started to get out of hand.

Customers should always check at the time of going in to contract what the procedure for a cashback is, as many smaller outfits use such a scam operation. Some are known to get aggressive when challenged. One such group is Microhard Telecommunications with tiny shops in Slough and Alperton.