Telus flanker brand Koodo has made some changes to its Tab system, which now makes it in line with competitors Virgin Mobile and Fido.
The changes effective today, August 25, 2019, will result in customers getting a chargeback on activation credits if they end up cancelling before their 24-month term is up.
For example, right now an iPhone XR is available for $220 upfront on Tab Medium ($360 loan), which offers $480 in activation credits. Prior to today, you could sign up and pay $220 upfront for the phone, end up “changing your mind”, cancelling, then repaying the Tab Medium subsidy at $360.
This results in an iPhone XR for $580 plus taxes and activation fees, which is a deal compared to the $1,060 iPhone XR retail price.
But starting today, cancelling your plan when signing up a new device on a postpaid plan means you won’t be able to just keep the iPhone XR at $580. You’ll now get a charge back for the $480 in activation credits.
This policy change most likely aims to deter those who were signing up and cancelling, getting devices at discounted prices (and possibly reselling). The CRTC Wireless Code allows consumers to cancel their phone plans at any point, as long as they repay remaining hardware subsidies.
The internal documentation iPhone in Canada saw details this change only applies to postpaid customers and not prepaid. Those who signed up to a 24 month plan before August 25, 2019, are not impacted. Employees are being told to discuss this new policy change with customers before they sign their contracts.
Update August 26, 2019: A Koodo spokesperson issued iPhone in Canada the following statement regarding this change:
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.