China's three telecom giants – China Mobile (0941), China Telecom (0728), and China Unicom (0762) – have halted their financial installment phone purchase services, or so-called "free phone" offers, after many customers complained that the schemes were essentially loans in disguise, according to mainland media.
The promotions appear to offer a phone for free upon subscribing to telecom services, while customers were instead required to sign loan contracts, with the repayment amounts included in their monthly phone bills, reports said.
A consumer said he was promised a free handset for signing a three-year network plan. But days later, he got a text notifying him of an approved new consumer loan of 1,950 yuan (HK$2,278.84) to be paid over 36 months per the contract, according to the report.
An unpaid phone bill would likely lead to suspension of the telecom service, while missed payments under the "free phone" plans can damage one's credit record. Such offers have resulted in thousands of complaints, spanning being registered as borrowers without adequate consent, defaulting on loans due to unpaid bills, and the high difficulty of canceling the contracts.
Notably, the suspension came before the Measures for the Administration of Online Marketing of Financial Products will come into effect on Wednesday. It explicitly requires that online marketing of financial products must not contain false or misleading information, and that bundled financial products should be presented to consumers with clear and prominent disclosure.
