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'I am not loan shark': money scheme involving handphones
Thu, Feb 04, 2010
The New Paper

By Tay Shi'an

EVERY year, the telecommunication companies (telcos) here write off millions in bad debts. Some of that debt is contributed by owners who can't pay their handphone subscription.

People like Mr David Yeo, the manager of a handphone shop at Toa Payoh, may be contributing to the problem.

But the second-hand handphone buyer calls his business a service.

He advertises in newspapers and entices potential customers with flyers.

Need quick cash? He has a solution.

Mr Yeo will walk with you into a M1, SingTel or StarHub shop and let you pick a phone.

He forks out money for you to pay the subsidised price of the phone while you sign up for a plan. You then hand over the phone and he gives you the rest of the cash as payment for it.

You walk away with the money, he walks away with the phone.

It's quick and costs you nothing, except for the monthly subscription.

Mr Yeo is offended when comparisons are made between him and a loan shark.

He said: "How am I an Ah Long? If you have nothing to sell, how can I give you money? After you sell, I don't owe you, you don't owe me, thank you very much.

"How am I an Ah Long? If you have nothing to sell, how can I give you money? After you sell, I don't owe you, you don't owe me, thank you very much. If I were an Ah Long, would I publish my address so big in the newspaper?" - Mr David Yeo, manager of a handphone shop at Toa Payoh

"If I were an Ah Long, would I publish my address so big in the newspaper?"

He said about 70 per cent of his customers come to him because they are in financial difficulty - and he would rather they come to him than go to loan sharks.

Another handphone dealer in Yishun agreed. He declined to be named.

He said: "Just because you need a little bit of money, you don't want to create a big problem. I want to make profit, but I want to help you also."

Loophole

So customers are happy, shop owners like Mr Yeo have no complaints and the telcos say the problem does not have a significant impact on revenue.

What's the problem then? The handphone resellers maybe exploiting a loophole.

From electronic products, laptops and even jewellery, the instalment schemes have allowed customers easy access to quick cash. And the desperate have plenty of other schemes to pick from.

There are risky investments with CPF savings for commission kickbacks and upfront loans by so-called real estate agents who then slice the loan amount with interest from the sale price of the HDB flat.

They all share one thing in common - quick cash with little obvious pain.

The trouble comes when the buyers are unable to make the monthly payments.

The Consumers Association of Singapore (Case) is concerned - because the desperate usually don't realise how expensive these schemes really are.

Executive director Seah Seng Choon calculated that the difference between the cash received and instalments or monthly bills paid out - the "interest rate" - can be as high as 20 per cent.

The young are being sucked in too. He said most of the handful of cases he sees each year involve angry parents, whose teenagers had chalked up massive bills after signing up for plans with telcos or electronics companies and failed to make the monthly payments - and that's just the tip of the iceberg.

"I would say there are a lot more cases in the market than those that come to us," he said.

Lawyers point out that Mr Yeo's business is legal.

It is also a competitive trade and Mr Yeo offers free transport and even advice on the telcos with the best offers.

When this reporter walked into his shop last Thursday, an employee put us on the line with him.

He was in Woodlands, helping two men in their 40s sign up for iPhones with a telco. He had lent them about $300 in total to sign up for the two plans.

His shop, which also sells clocks, video games and electronic goods, is manned by five employees.

Sell at a loss

Said the 48-year-old, who has run the shop for about nine years: "My deal is simple. You need cash, you come to me. You have the ability to sign (for a new line), I will buy the phone from you, you take the line and you get to use it. Why not?"

Mr Yeo said he has provided the upfront payment and transport service for about four years, to ensure the customer sells the phone to him.

Because each trip takes two to three hours, he takes only one or two such customers on average per day, leaving his employees to man the shop or accompany others.

After buying the phones, he sells them to walk-in customers or other dealers who come to his shop.

He said his margin is "less than $100 a phone", though sometimes he's forced to sell at a loss when business is not so good.

He said the number of customers is unpredictable and he doesn't want to disclose how much he earns per month,but he added that he gets a lot of repeat customers - those who come to him once their contracts expire.

He said he does give customers advice if they ask which telco or plan to sign up for, and reminds them about the monthly bills after.

He said: "I tell them, if you don't pay, the (telco) will chase you. It's up to you to deal with them, to tell them you cannot pay, or work out instalments...you must be responsible."

The Yishun handphone reseller has six branches around Singapore. He said he gives the same advice to customers, especially teenagers.

When asked if he felt responsible for the telcos losing money over this (see other story), Mr Yeo said that ultimately, the telcos themselves must take responsibility and do their own due diligence.

Mr Yeo said he doesn't make enough to drive a flashy car.

He said: "I drive an ordinary Toyota and I live in a normal HDB flat. I'm just a simple man, got food to eat can already."

While he spoke openly about his business, he stopped short of letting us take his photograph.

He said: "If the telco recognises my face, then don't do my business how?"

His bottom line is - everyone needs to make a living.

Mr Yeo said: "My principle is, as long as my price is fair, everyone is willing, I'm not cheating anyone, it's okay. The rest, no need to say."

- additional reporting by Woo Sian Boon and Aretha Loh, newsroom interns

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