This is part of the report from the Watchdog program:
17 October 2007
Cashback is the secret weapon of the mobile phone industry. Offers of up to £1,000 cashback are used to lure customers into signing mobile phone contracts. But you know what they say about deals that sound too good to be true...
Viewers have complained that they haven't received their cash and have been left tied into high-cost contracts with the networks.
In August this year, retailer Mobile Connections/Dial a Mobile went out of business owing 60,000 customers an estimated £12m in cashback deals.
We've had complaints about other companies, too. Wayne Shepherd took out a 12-month mobile phone contract with Chatterbox.com in October 2006. The offer included cashback of £321 in three instalments. His contract has now expired, but he still hasn't received a single penny.
So why is the cash not coming back? Kevin Patel, CEO of Chatterbox.com, blames the networks. He claims 3 Mobile in particular has worked on the basis that only 40 per cent of customers bother to claim their cashback. He says the actual figure is more like 80 per cent - and that he can't afford to pay all those customers.
In August this year, the major networks agreed to a voluntary code of practice set out by Ofcom. They promised to protect consumers from the mis-selling of mobile phone contracts. Ofcom plans a review this week and will impose mandatory regulations if it's found the networks aren't protecting their customers.
3 says: "3 has never encouraged dealers to follow a 40 per cent redemption model. Cashback is an arrangement between retailers and the customers - the networks are not liable for any arrangements between the retailer and the customer. However, 3 is concerned by the cashback-related complaints it continues to receive and has an established process through which all cashback complaints are dealt with."
Orange says: "Orange does have a responsibility to ensure that its customers are supported appropriately. Any Orange customer who is unhappy with the way they have been treated by Dial a Mobile, and feels they have been signed up to a contract that does not suit their needs, should call Orange to change their package." The cheapest Orange monthly package is £20 per month.
There is also a video clip on there site
BBC - Consumer - TV and radio - Mobile Phone cashback offers