Once our heart is set on a mobile phone plan, we're likely to only give a contract a quick skim before "agreeing" to the terms and conditions by signing our names on the dotted line.
New research confirms what's long been suspected – consumers don't have an adequate understanding of their telecommunication contracts.
And, interestingly, it shows the more confident a customer is of their ability to comprehend a contract, the less likely they're actually able to recall the details.
The research has prompted fresh calls for telcos to improve their sign-up process and follow-up with new customers after three billing cycles to make sure they understand their obligations.
"There's this facade of informed consent but in reality we think: 'I've got no choice and I can't negotiate clause 7a so I may as well say I agree," said Paul Harrison from Deakin University's Centre for Organisational Health and Consumer Wellbeing.
"The contract appears at the end of the sales process when people have committed to buying the product."
The study involved 362 participants going through a mock mobile phone plane sales pitch. One-third also received a two-page Critical Information Summary, while another third received both the summary and the full terms and conditions.
The next day they sat a knowledge test. Only 42 per cent could correctly answer questions about the mobile phone plan.
While 92 per cent knew that a gigabyte (GB) was more than a megabyte (MB), only 34 per cent knew if 1800 numbers were included in the plan, and 24 per cent were able to work out when they'd reach their free SMS limit.
"We found that the optimal amount of information to give a consumer at point of purchase was a standard, clear critical information summary," said Dr Harrison.
"Sometimes telcos are quick to penalise people when in fact they should be recognising that most don't know the details. They have to be consumer-focused, not so contract-focused."
Teresa Corbin, head of Australian Communications Consumer Action Network, which commissioned the study, said consumers didn't fully absorb the terms because they were non-negotiable and the telcos didn't encourage them to.
She said one common problem was confusion over internet speeds. She said too often customers found out too late that they're not able to enjoy the speed advertised.
"A recommendation is they follow-up after three billing cycles to see whether the customer needs further assistance," she said.
"Truth is, you don't understand everything at sign-up point. It's a gradual process."
John Stanton, head of the industry peak body Communications Alliance, argued that its members already employed a range of strategies to ensure customers are well informed and satisfied.
Pointing to falling complaint numbers to the industry ombudsman, he said: "even if all the contract terms are not well understood by all the consumers, this is not in itself generating problems for consumers."
The research also revealed regulators had the most realistic expectations of consumers' understanding of their agreements, while consumer advocates underestimated, and telecommunications representatives overestimated.
An Australian Communications and Media Authority spokeswoman said the regulator was examining how consumers use CISs, introduced in 2012, ahead of the Telecommunications Consumer Protections Code review.
"The ACMA is closely considering the findings of the Deakin University research and will draw this research, as well as the findings of its own benchmarking research, in preparation for the 2017 review of the TCP Code," she said.
Five things in our mobile phone contracts we don't really understand
- 11 per cent – Participants who knew the cost to port their number to another telco
- 12 per cent – Participants who knew the early termination charge
- 14 per cent – Participants who knew how much data will be used when streaming a TV program
- 24 per cent – Participants who knew when they'd reach their free SMS limit
- 34 per cent – Participants who knew if calls to 1800 numbers were included
(Source: Paul Harrison, Deakin University)
