1/21/2008 5:16:00 PM
Charles Dunstone defends cashback deals
Carphone Warehouse has defended its cashback deals in light of greater scrutiny on cashback promotions from Ofcom and bad publicity surrounding cashback.
CEO Charles Dunstone said: 'Cashback deals are a reflection of the aggression people have to get new connections. Subsidies are now significantly higher than the cost of the phones and the margins people are looking to make, so the residuals are given away as cashback.'
Several thousand customers were left with unpaid cashbacks after Dialamobile and Mobile Media Systems collapsed last year. 'Although Ofcom is looking at it, it is an issue for customers who have bought from very small outlets, and been promised cashbacks and [the companies] have gone bankrupt. It's an issue of fraud of people setting up a business, promising cashbacks and then collapsing the business rather than coming from networks or reputable businesses like ourselves.'
Dunstone added: 'It [cashback] will continue because that's the way the market is. If it was to stop we would make a lot more money, but I can't see that happening.'