Woolworths and Comment Retail Services are refusing to respond to allegations that an organised buy-back operation may have been in place between the two companies over a prolonged period.
Such a scheme, although not illegal, would have artificially increased sales figures and contravened rules limiting the number of handsets that can be sold to a customer.
It is alleged that the two companies worked in concert to buy back operator-subsidised prepay stock that hadn’t been bought by genuine customers.
The allegations have been made by several sources who claim to have been close to the situation, and are supported by documents seen by Mobile. While neither of the companies are commenting officially, sources within Woolworths have strenuously denied the allegations.
The scheme supposedly involved Woolworths drawing up lists of handsets and specific stores for Comment to collect from. It is alleged - but denied by sources within Woolworths – that Comment employees would bring a blank cheque and fill it out according to the number of handsets taken away.
Mobile has spoken to individuals who say they were part of the scheme over a period of months. They claimed to visit 10 stores per day and could write cheques ranging from tens of pounds up to several thousand pounds.
Mobile has seen a number of examples of the supposed collection schedules, referring to stores in Preston, Croydon, Peckham, Chatham, Wimbledon, Warrington, Darlington, Dudley, Southend-on-Sea, Portsmouth and Ramsgate, detailing the number and model of handsets to be collected.
Handsets would have to be activated and used on the host network within a certain period to avoid the risk of operator clawbacks. Calls were also made to use the mandatory airtime top-up on the prepay handsets. The clawbacks are typically based on operators failing to identify a secondary top-up on a handset.
Such clawbacks can be made from retailers where there is a direct relationship, or from distributors who supply stock through wholesale arrangements. Mobile spoke to one distributor who claims to have suffered financially as a result.
The distributor said: ‘The situation has affected distributors that supply these businesses. Distributors are the people who get hurt. They don’t get paid until connections are made under strict terms.’
Mobile has also discovered that Virgin Mobile visited Comment’s premises last spring over concerns
relating to connection patterns. The operator discovered that a large number of handsets made the crucial first call on prepay handsets through a single cell site in Birmingham. Trading terms were adjusted as a result, and both sides continue to trade in a harmonious relationship.
Responding to the allegations, a source at Woolworths denied that money had changed hands. ‘We work with Comment, as you know they’re our preferred distributor. They are not even a distributor. [The company] has done some work moving stock within stores. We might ask [them] to move a collection of stock from one store to another.’
The source categorically denied that any buy-back agreement existed: ‘No! I’m shocked to be honest. I would like to understand where this has come from and what we can do about it.’
Sources at Orange have indicated that the operator enjoys a good relationship with Woolworths, and that it has a high regard for the retailer’s team. ‘We like the people there. We’d be very surprised if this was true,’ said the source.
Virgin Mobile is also very positive about opportunities in the Woolworths channel and is currently working on important promotions involving Sagem phones.
A number of sources at Woolworths and Comment suggested that the allegations originated with ‘disgruntled former employees’ from Comment.
Mobile also understands that Woolworths is to amend its terms for retail sales by limiting purchasers to one handset each, instead of two. The company said in a statement: ‘Woolworths does not comment on its confidential business arrangements with any of its suppliers.’