The Captain's Blog ™

The following announcement is taken from one of the websites previously operated by the companies behind these online mobile phone dealers:

“Mobile Media Systems Limited – t/a Phoneboxdirect and Mobile Affiliates Limited t/a Coolnewmobile and Phones2yourdoor.

These companies were placed into administration on Wednesday 14 November, the joint administrators being Philip Lyon and Steve Wood of Mazars LLP.

Phone Box had been actively marketing via the internet mobile telephones which offered cash-back incentives to customers, providing certain conditions were met by those customers.

Unfortunately the number of customers that were able to comply with the terms and conditions and hence became eligible for the cash-back payments exceeded the company’s expectations. The company is therefore no longer in a position to meet its ongoing liabilities to those customers.

It had been hoped that negotiations with the supplier of the telephones and the networks involved would have enabled a “rescue package” to be implemented to assist those customers affected.

Unfortunately it has not been possible to achieve that objective within the timescale available to the company.

The company has insufficient money available to enable payments to be made to employees and therefore it will no longer be able to answer any individual telephone enquiries. In addition, it follows of course, that email communications will remain unanswered.

We are in the process of obtaining the company’s records of the email addresses of all customers. Any future communication will be by email or posting to the company’s website (www.phoneboxdirect.com) or (www.coolnewmobile.co.uk).

We anticipate that customers main queries will be regarding cash-back claims. Our initial investigations show that these liabilities may be between £4-10 million. There is no possibility that the company will be able to make any meaningful payment to any creditor, whether consumer or supplier.

The second query from customers is in connection with their ongoing contracts with the network suppliers. We are unable to advise individually on this point and would suggest you to contact your network supplier direct or you may wish to take legal advice or contact your local Citizens Advice Bureau or Trading Standards Office.”

Unfortunately, this serves as a stark reminder of the risks of buying from a mobile phone dealer, when your main motivation for doing so is a great cashback-based deal.

These sites – in common with many others – were previously renowned for offering sizeable line rental discounts via cashback claims – sometimes up to “12 months free”.

Such processes typically involve you paying in full for your line rental each month, then sending a number of claims over the course of a mobile phone contract (comprising claim forms together with original or copy bills) to the mobile phone dealer, which then issues cheques (ie cashback).

In order to be paid successfully, you need to have met all the terms and conditions that the dealer has stipulated – eg sending claims within certain timeframes, enclosing the correct bills, etc.

The dealers rely on enough people forgetting or not bothering to claim in order to turn a profit – a calculation that evidently didn’t work out for these particular companies. The only losers in such situations are, of course, the unlucky consumers whose claims will no longer be paid.

We’ve previously mentioned this risk specifically at the top of our mobile phone directory section. I actually removed it a while back, because I felt it seemed like we were trying to scaremonger people into buying direct from mobile phone networks, whose deals often aren’t as competitive.

But I’m afraid the risk of mobile phone dealers going out of business remains very real, as underlined by this most recent example. So the explicit warning has been reinstated.

As with all things, you need to weigh up the risks in deciding where to buy from.

For maximum peace of mind, I’d personally choose to buy either from a large mobile dealer, like The Carphone Warehouse or Phones 4U, or direct from a mobile phone network operator.

You might find cheaper deals elsewhere, but as this recent disappointing event serves to highlight, you can never count your “cashback chickens” until they’ve actually hatched.

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