Best Buy Mobile/Koodo: Does this promo make any sense?

[habsfan321]

So I was reading this week's Best Buy flyer and I came across this. Now I'm very confused as to what they're offering. From what I understand the "tab" is usually used to reduce the upfront cost of a handset. You pay it off by getting a credit equal to percentage of your monthly service charges.

Now if you're bringing your own unlocked phone, they're not giving you a subsidy... Are they offering you a $150 gift card in exchange for committing you to a $150 tab? Are they even legally allowed to put you on a tab without giving you a subsidy on a device? Maybe I'm just misunderstanding this promo? Maybe it's a Koodo gift card/account credit? I know in Quebec (because of Bill 60), contract cancellation can't be more than the original subsidy of the phone (unless tabs don't qualify as contracts)? Can someone clarify?

http://f.cl.ly/items/3g1T0u443x0z3m413T2t/Screen%20Shot%202012-06-08%20at%209.41.38%20PM.png

EDIT: It's on page 8 of the flyer.... June 8 to 14th.

[Chadrax]

I'll be asking about this for sure.

[eiad77]

I am not sure about the legal aspects of this but I think this is how it works. You are essentially paying $150 (on tab) for a $150 gift card. Every month 10% of your phone bill will pay off that tab. So for example if your phone bill was $30 and you cancel after one month, you would owe $147.

[habsfan321]

I am not sure about the legal aspects of this but I think this is how it works. You are essentially paying $150 (on tab) for a $150 gift card. Every month 10% of your phone bill will pay off that tab. So for example if your phone bill was $30 and you cancel after one month, you would owe $147.
Then you're losing money right away. They give you a $150 dollar gift card, but the $150 on the tab is taxable, you'd be paying around $170 if you were to cancel on the spot. It sounds like a very shady deal if you ask me. It's almost like a loan. Either you end up paying for $1500 worth of Koodo services before being absolved of that "debt" or lose money by paying it off. You need to reduce your tab to $130ish just to payback the $150 when you cancel, so on a 30 dollar service plan that's roughly 6 months of service... Who in their right mind would sign up for this?

[eiad77]

Then you're losing money right away. They give you a $150 dollar gift card, but the $150 on the tab is taxable, you'd be paying around $170 if you were to cancel on the spot. It sounds like a very shady deal if you ask me. It's almost like a loan. Either you end up paying for $1500 worth of Koodo services before being absolved of that "debt" or lose money by paying it off. You need to reduce your tab to $130ish just to payback the $150 when you cancel, so on a 30 dollar service plan that's roughly 6 months of service... Who in their right mind would sign up for this?

Are you sure that the tab is taxable? I signed up for a similar deal (except it included a free phone too) and I don't think the tab was taxable. I do agree that it's not a very good deal, but I could be misinterpretting it or maybe people just see the "free" $150 gift card and believe it's a good deal without thinking.

[habsfan321]

Are you sure that the tab is taxable? I signed up for a similar deal (except it included a free phone too) and I don't think the tab was taxable. I do agree that it's not a very good deal, but I could be misinterpretting it or maybe people just see the "free" $150 gift card and believe it's a good deal without thinking.
Unless... I keep looking into this and I see that a Koodo tab can be positive or negative. Maybe when you open a Koodo account they give you a $150 positive tab credit towards a future phone (and it's not a Best Buy gift card??). That would make it somewhat of a hot deal.

Your Tab has caps. You can put up to 150 on it (shown as a negative Tab balance on your bill). And you can accumulate a credit of up to 150 (shown as a positive Tab balance on your bill). SOURCE (http://koodomobile.com/en/on/tab_noFlash.shtml)

I'm trying to google to find out if the tab is taxable but I can't find much. If it was a phone purchase, you can't avoid paying tax. Say a phone costs 149.99, there are two possible scenarios... you can either put $150 on the tab and pay the taxes right away in store, or put $150 on the tab and pay taxes when you cancel. I don't know which way is correct, I've never been with Koodo. If the first scenario is correct, there's no tax on the gift card. If the second way is right, you'd be paying the tax like I described.

This ad is really poorly worded. I bet they want to create confusion just to get you in the store.