• Koodo Combats Phone-flippers



    Bad news for anyone trying to game Koodo's tab system for financing hardware: as of this week if you cancel your tab you won't just have to pay back the balance, but any activation credits as well.

    iPhone in Canada illustrates with the following example:

    iPhone XR
    $1060 CAD retail price
    $480 in activation credits from Koodo

    Prior to this week you could cancel a plan with a medium tab, keep the phone and only be on the hook for $220 (the upfront payment) plus $360 (the balance of your tab), for a total of only $580.

    Though it took a bit longer than you'd expect, the carrier eventually got wise to this:

    "Over the past two years, Koodo has noticed an increase in the number of customers who activate new devices on our network when a phone credit is available, then cancel their service within days to turn a quick profit. As a result, we are adjusting our service agreements to require customers to pay back the phone credit when they choose to leave their 24-month agreement early.

    If a customer chooses to cancel or renew any time before the 24-month agreement is complete, they would have to pay back the phone credit that is owed for the remainder of the months. While the majority of customers abide by the agreement terms, we are implementing these changes to address a small subset of customers gaming the system."
    Seems fair to me... If you've ever flipped a phone with Koodo feel free to flex below.

    Source: iPhone in Canada

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    Andrew Currie has been blogging about mobile phones since 2001, smartphones (depending on how you define them) since 2002 and smartwatches since 2014.
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    This article was originally published in forum thread: Koodo Combats Phone-flippers started by acurrie View original post
    Comments 7 Comments
    1. dajs's Avatar
      dajs -
      I have never "flipped" a phone worth Koodo's Tab system. Still, I think this is wrong, and probably a violation of the Wireless Code.

      The idea of the Tab is the you are *not* bound, but that you can leave any time, just paying off the Tab.

      Nobody forces Koodo to advertise artificially inflated prices offer by "activation credits". They could simply offer a "Tab waiver" after x number of months.

      Or, you know, just attract customers with cheaper plans rather than handset subsidies.
    1. Que_Ball's Avatar
      Que_Ball -
      Well after the 2 years expires you do not owe them any activation credits. But it would be fair if they simply deducted a prorated amount of those activation credits from the device balance every month even though it's not something you are directly paying.

      So if you renew at 22 months you would only pay ($activation credit)/24*2 plus remaining tab balance.

      the big looser is someone who was going to get a new phone but only have a few months of tab balance left to pay off. They immediately get hit with a big lump sum to renew early. I suspect there will be some loyalty credits available to those who call in to complain if they need to renew early and have been a customer for years. But still it would be ok if they just made loyal customers like this not have to pay the entire lump sum of the initial activation credit.

      Or maybe we can hope manufacturers go back to sane levels of new phone prices at some point.
    1. dajs's Avatar
      dajs -
      Quote Originally Posted by Que_Ball View Post
      Well after the 2 years expires you do not owe them any activation credits. But it would be fair if they simply deducted a prorated amount of those activation credits from the device balance every month even though it's not something you are directly paying.

      So if you renew at 22 months you would only pay ($activation credit)/24*2 plus remaining tab balance.
      Not only would that be fair, it is required by the Wireless Code.

      Or maybe we can hope manufacturers go back to sane levels of new phone prices at some point.
      True. But it's not just the wholesale price. If Koodo can offer $480 "activation credits", it means that Koodo's price sticker is not related to the wholesale price they pay. It's a bit like Canadian Tire's "now 80% off!!!" scheme.

      But now Koodo uses that marketing phantasy to lock people in. It makes the whole thing less transparent, which means Koodo has become too big.

      It's a simle game: Big telco brands generally like to defend market share. They try to lock you in by various means, including obscured pricing. Small brands generally try to gain market share by making things very transparent and simple.
    1. turbogeek's Avatar
      turbogeek -
      Quote Originally Posted by dajs View Post

      But now Koodo uses that marketing phantasy to lock people in. It makes the whole thing less transparent, which means Koodo has become too big.
      Koodo is a division of Telus; it was born too big.
    1. Mr.Peppermint's Avatar
      Mr.Peppermint -
      Violation of Wireless Code
      The precedent has already been set that hardware needs to decrease by an EQUAL amount every month
      Backloading is ILLEGAL

      (eg $240 phone over 24 months MUST decrease $10 per month, so if you cancel in month 23 you would pay a $10 penalty
      If they theoretically decreased $5 per month and tried to charge a $125 penalty CCTS would be all over them)

      I strongly suspect this "Activation Credit adjustment" will be a manual process so they can argue subscription fraud because otherwise noone will pay anything
    1. turbogeek's Avatar
      turbogeek -
      To All Concerned
      I have a new Koodo contract in front of me:
      Quote Originally Posted by Koodo Service Agreement
      You can cancel your service at any time. If you cancel your service or if Koodo terminates the Agreement in accordance with the Service Terms, any Tab balance plus the phone credit balance becomes due and payable. All other charges owing to Koodo for use of the service will remain due upon the termination of this Agreement. The remaining Tab balance and phone credit balance will be calculated based on an equal monthly reduction over a 24-month period.
      (my emphasis)
    1. Que_Ball's Avatar
      Que_Ball -
      Quote Originally Posted by turbogeek View Post
      To All Concerned
      I have a new Koodo contract in front of me:
      (my emphasis)
      Ok, so that is fine, it complies with wireless code requirement. I'm guessing if you were close to the end of your remaining balance it might be worth a call to loyalty to see if the might do something like waive the remaining credit to renew a bit early.

      The marketing message was just a little off the legal reality at first.
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