SOURCE: H500 bluetooth headset
Turn down the volume on the PHONE, not the headset. Motorola 325i w/ H500. Again, turn down the volume on the PHONE, not the headset. In my case almost all the way down.
SOURCE: Echo in hs850 headset
You did not say what phone you are using but I found that this problem went away for me when I changed a setting on my blackberry. I turned "encryption" off in the bluetooth settings on my blackberry 7100t and solved the echo problem. Alternatively, there might be a "compression" setting also. This one made no difference for me but might for you on your device. Also, make sure any firmware or software updates for your phone have been applied. On blackberry devices you do this via a PC. On cell phones it usually involves a reset or update from some buried menu options or call to their tech support. good luck.
SOURCE: H700 Echo Problem.
Each party needs to keep their earpiece (listening) volume at the minimum level that is audible to reduce chance of feedback. Also, look to see if there is an encryption on/off option on the phone...this could be causing an echo in either state due to interference...try switching encryption on/off. Also, check your update options on the phone, you didn't say which kind of phone it is but some can get firmware updates that may be needed for bluetooth to work well. Finally, you may get results by deleting the device on the phone and re-adding it thru discovery.
SOURCE: echo when using HS850
It might be a problem with their sound setting. If their speakers are on while using the mic, they might get some feedback that could be the cause of the echo. They may even just have to tweak their mic settings (through the control panel sound options or their soundcard options).
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