Consumers Turn To Booming Black Market For Cheap Cellphone Deals

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Pricey cellphone plans in many Canadian provinces appear to be driving consumers toward a booming black market business.

At last search, online ad site Kijiji in Toronto was crawling with advertisements for a bargain Koodo or Fido phone plan — just $48 a month for unlimited Canada-wide calling, texting and a big 5GB data package when you buy through a third party.

Telus actually charges almost double the price — $90 a month — for that Koodo plan in Ontario as well as most provinces.

koodo ad
An ad for a $48 Koodo plan, posted to Kijiji's Toronto section. (Screencap via Kijiji)

Rogers' Fido offers the same phone deal for more — $95 a month in most provinces.

But both companies charge only $48 a month for the same cellphone package in Saskatchewan and Manitoba, where the telecoms face more competition. 

The theory is, somehow these third-party dealers secure the cheaper phone plan out of Saskatchewan or Manitoba and then switch over a customer's phone number from another province.

As compensation, dealers ask for a one-time set-up fee ranging from $40 to $150.

Last year, CBC News reported a story about the cheap underground cellular industry. At the time, the highlighted ads had disappeared and telecom Telus said it was looking into the practice.

But almost a year later, advertisements for these $48 plans abound on the internet, targeted at customers outside Manitoba and Saskatchewan. And those involved tell CBC News that business is thriving.

"Purchasing plans via a third party is risky, and we are taking several steps to prevent it."— Telus spokesperson Luiza Staniec

Gary Ng, editor of the tech site iPhone in Canada, believes high cellular service prices in most provinces are helping fuel an underground business.

"Because our Canadian wireless prices are some of the most expensive in the world, some people will always want to find a better deal and they might do whatever it takes to get it," he says.

Plans by Jamie

On Kijiji in Toronto, the deals are offered by many vendors with business names such as "Plans by Joe" or Drew or Tony or Jamie or what have you.

Jamie Walker with Plans by Jamie agreed to speak with CBC News by email. He said he offers both the $48 Fido and Koodo plans to anyone in Canada. His fee is $100.

Walker told us that "business is amazing" and that he is "surprised at the amount of people taking advantage of it."

Walker added he doesn't see anything wrong with his operation because he believes that telecoms charge too much. So, he concludes, consumers should "take advantage and save as much as you can where you can."

Walker would not reveal how he arranges the $48 a month deal for people outside of Saskatchewan and Manitoba.

"I don't believe I can share the method," he said.

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Plans by Drew and Tony

Drew with Plans by Drew also boasts business is good with "hundreds of satisfied customers."

He has even set up a slick website, openly advertising his offer: a $48 a month Koodo deal to customers in Ontario, Alberta and B.C.

Drew declined to comment to CBC News. But his website gives some insight into how his deals work. He instructs customers to purchase a month-to-month Koodo plan then provide him with the details.

He explains that he will "change your plan to the $48 5GB plan" all for a one-time fee of $40.

"Plans by Tony," also appears to have a thriving business. Tony advertises the $48 Koodo deal for a $100 fee.

Tony boldly promotes his business on Twitter, Facebook, Kijiji, and a sophisticated website where he calls his company "The Cell Phone Man."

In an email to CBC News, Tony told us that most of his customers are in Toronto, followed by Vancouver, Alberta and then Nova Scotia.

He said business is good because he provides customer satisfaction and great phone deals. "There's absolutely no reason for plan prices to be this outrageous in this day and age," he added. 

Tony told CBC News he objects to the term "black market" to describe his business. He claims he works indirectly for Telus and that his plans don't originate in Manitoba or Saskatchewan.

According to Tony, he's able to offer customers outside those provinces special unadvertised deals.

telus building vancouver

A Telus building in Vancouver. Telus says it is working to prevent reselling of cellphone plans. (Getty Images)

Telecoms talk back

CBC News asked Koodo owner Telus if it has taken any action against these businesses. "Purchasing plans via a third party is risky, and we are taking several steps to prevent it," replied spokeswoman Luiza Staniec in an email.

Fido owner Rogers also sent out a warning. "Customers should use caution when exploring plans online that aren't being offered directly through one of our official channels," said spokesman Andrew Garas.

"Sharing your personal information can result in fraud."

Garas did not mention if Rogers was investigating the practice.

Tech writer Ng says telecoms may be reluctant to crack down on these underground deals because it could generate negative publicity.

"It just brings up the debate again, how expensive our plans are" outside Manitoba and Saskatchewan, he says.

However, the $48 deal may not last in Manitoba if Bell's acquisition of local carrier Manitoba Telecom Services goes through.

Some industry experts speculate the deal will lead to less competition and higher prices in the province.

If that happens, Ng points out that it may actually benefit third party dealers — as long as phone plans stay cheap in Saskatchewan.

"If prices do go up in Manitoba, they'd probably get more business," says Ng.