Reporter's Notebook Nothing comes free, especially smartphones

By Kim Hyun-bin

People should remember the saying “nothing comes for free” when encountering signs about the latest 5G smartphone giveaways that are highlighted in front of telecom retail shops around the country.

Samsung's newly released flagship smartphone the Galaxy S20, which is over 1 million won, and the LG Velvet were heavily marketed as being “free,” which spread quickly through word of mouth to prospective consumers to the point where buying the latest smartphone at full price gave people the feeling of being “ripped off.”

But consumers need to beware, as there is no such thing as a free phone. It is all excessive marketing tactics and pitches to make consumers think they are getting the best bargain, while they are paying the full price for the gadget through higher rate plans and options required to register for to obtain the discount.

Stores are manipulating consumers to register for overpriced data plans and be left maintaining additional options for several months to receive the initial discount.

When releasing the Velvet in mid-May, LG Electronics allowed consumers to return the phone after two years and receive a 50 percent discount on the retail price under the “customer benefit program.” The program gave a 50 percent discount on phone purchases and customers were required to return the phone after two years, which is technically closer to leasing than a discount.

The problem is that scores of smartphone retailers are misleading the public by promoting the phones as free.

Retail stores are able to give large deductions as 25 percent discounts are provided by telecom companies when selecting higher rate plans in combination with credit card discounts as well as other selective options customers are required to register for to obtain the supposedly “free” phones.

In reality, the sales could be considered fraudulent as they are intended to mislead customers into thinking they are getting a bargain, when all the benefits are available to all customers from the start no matter whether they are new or existing customers.

Telecom retail stores work as a middle-man between the three major telecom companies SK Telecom, KT and LG Uplus and they should be obligated to transparently inform the public about the complex rate plans and the discounts they offer.

In addition, there have been endless cases of telecom retail stores providing illegal support to lure in prospective customers in the form of discounts and rebates.

The Korea Communications Commission (KCC) and major telecom companies' need to strengthen regulations and inspections of these unfair marketing practices.

Consumers could also lower their expectations and choose from a variety of other mid- to low-tier smartphone options instead of just excessively clinging to flagship smartphones.

All three ― the government, telecom companies and consumers ― need to work together in order for the misleading “free phone” marketing to disappear and for retail stores to conduct healthy and transparent marketing practices.