11/26/2007 9:49:00 AM
Thousands lose out in collapse
Around 39,000 customers will be left out of pocket following the collapse of yet another major cashback retailer, Mobile Media Systems Ltd.
Administrators revealed details of the failure hours before a 'cashback summit' between MPs and operators in the House of Commons on Tuesday, adding to the pressure on the industry.
Mobile broke news of the company's failure on Mobiletoday.co.uk last week.
Mobile Media Systems, trading as Phoneboxdirect, Coolnewmobile and Phones2yourdoor, folded owing customers up to £10m in unpaid cashback.
There has been a mixed reaction to the collapse from operators. O2's sales director, Mark Stansfeld, wanted to see operators doing more to clamp down on bad cashback. 'It drives me round the bend.
We need to learn that if customers aren't recruited in the right way, they don't stay. Certain brands, if they continue to do it, will become more and more tarnished,' he said.
'If we find unacceptable practices happening, we [operators] should let each other know. We should manage our own businesses, so people don't do that.'
Vodafone, on the other hand, hinted that it would take a harder line in enforcing contracts than in the last major collapse. 'It's possible the offers will be different to those offered after Dialamobile,' said a spokeswoman. 'Vodafone believes it has enforceable airtime contracts with these customers and will consider offers on a case-by-case basis.'
Vodafone allowed some Dialamobile customers to drop down to as little as £5 per month.
If operators do take a tougher line, they will be more likely to enforce clawback penalties to distributors.
A source told Mobile: 'Operators were paying £365 commission plus a £25 accelerator. That could mean potential clawbacks of £13.5m.'
Dextra is reported to be a major supplier and is the only distributor mentioned on the company's websites. However, managing director James Browning said that Dextra had reduced the business it did with cashback retailers after it was exposed to a £3.5m hit from the Dialamobile collapse.
'I guess the result is that we are in a better position than if we had carried on with the run-rate trading we experienced with cashback dealers,' he said.