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Numerous small businesses across the UK are facing exorbitant charges for renting phone equipment under lengthy finance agreements, according to a BBC investigation. Experts have criticised these practices as unethical, highlighting how businesses are being pushed to the brink of collapse due to these costly contracts.

Gary Pride's graphic design business, which has weathered economic downturns and even a fire, now struggles under the weight of a £54,432 bill over 10 years for just five phones and related software. This financial burden, stemming from a seven-year finance deal with 4Com, has profoundly affected Mr. Pride. He speaks emotionally about how the contract has disrupted his life, forcing him to forgo his own salary to keep up with payments, affecting his mental health and leaving him feeling he's let down his staff.

Mr. Pride claims he wasn't adequately informed about the true costs involved when he initially signed the contract, only realising the extent of the financial commitment after the introductory period ended and his bills skyrocketed. Despite complaints, he felt compelled to stay with 4Com to manage his monthly expenses, ultimately signing another contract that added to his financial woes.

The situation isn't isolated to Mr. Pride. Many small business owners, following an undercover investigation, reported similar experiences of being misled by telecom companies into signing complex leasing agreements. They allege sales pitches misrepresented the terms and rushed them into agreements without full disclosure.

These revelations paint a disturbing picture of predatory practices within the telecom industry, exploiting small businesses already struggling with economic challenges.

Once signed, customers were locked into five- or seven-year contracts, with no cooling-off period, as UK business-to-business agreements are not subject to the same consumer protections.

More than half of the small business owners who contacted the BBC were 4Com customers. Many ran family-run firms with fewer than 10 employees and described the severe emotional and financial toll these deals were taking:

• One woman called the BBC in tears, saying she was on the verge of losing her business.
• Another said the contracts were so unclear, they didn’t even know what they were paying for.
• In one case, a company was offered a reduced termination fee, but only if it signed a non-disclosure agreement.

4Com strongly denies any wrongdoing. It says it is transparent about its pricing and services, and rejects claims of mis-selling or price inflation. The company says that upgrades are optional and that all costs and terms were clearly communicated to customers, including Mr. Pride.

A 4Com spokesperson also said that the examples provided to the BBC represent less than 1% of its customer base, adding that the majority of its 17,000 clients are satisfied.

However, undercover footage obtained by the BBC paints a different picture. In a secretly recorded sales meeting, a 4Com representative made verbal claims that contradicted the contract details:

• The salesperson claimed the monthly price was fixed, only admitting otherwise when questioned after urging the customer to sign.
• He said an upgrade would “wipe” the old contract, but in reality, customers like Mr. Pride were still liable for previous equipment costs.
• He told the customer the deal was a "lease purchase" that would lead to ownership after five years, but the contract clearly stated it was a rental agreement.

4Com says the salesperson in the footage no longer works for the company and that it employs thorough sales checks and staff training that exceed industry standards.

The BBC showed several 4Com contracts to four independent telecoms experts. While the HiHi phone’s pricing isn’t publicly disclosed, all four experts concluded the charges were grossly inflated, in some cases, several times higher than typical market rates. They said many of the included “extras” were either unnecessary for small businesses or already standard with other providers.

Some also criticised leasing firms involved, accusing them of enabling exploitative deals. One expert described the seven-year contracts as designed “solely to maximise finance revenue,” with little regard for the customer’s actual needs.

Jonny Rae, a telecoms consultant with 15 years of experience, said the pricing was “outrageous” but not surprising, as he’s seen these “unethical” tactics in the industry for more than a decade. He also dismissed 4Com’s argument that higher prices were justified by superior equipment or services. “They’re charging for basic features like call logs,” Rae said, “which come free with any standard phone system. It’s almost laughable and the finance company is signing off on it.”

“It’s the opposite of transparency,” he added. “If I find it confusing, imagine how a small business owner feels.”

Take Richard Jackson, who runs a small letting agency in Sheffield. In 2021, he signed a finance deal with 4Com that cost him over £20,000 for just three phones and software. Frustrated and feeling “ripped off,” he later asked about adding a fourth handset. The quote? A seven-year finance deal worth £40,391 excluding VAT for four Yealink phones.

Independent experts told the BBC those phones could be bought outright for under £2,000 , even accounting for software, they said the price was “grossly inflated.” Mr. Jackson declined the offer, and says he regrets not spending that £20,000 on a new hire or even his dream motorbike.

4Com says it found no evidence Mr. Jackson was misled or overcharged.

Many of the businesses the BBC spoke with had tried to escalate complaints through the Communications Ombudsman. However, most cases weren’t upheld, partly because the finance arrangements are “unregulated” business leases, putting them outside the Financial Conduct Authority’s jurisdiction when signed by limited companies.

A spokesperson for Ofcom said: “If we see evidence of widespread issues, we’ve shown we can and will consider taking action.”

The Finance and Leasing Association, which represents asset finance providers, told the BBC its members “seek to put the customer first,” but also stressed that SME owners have a responsibility to read and understand contracts before signing.

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