UK Mobile Phone Retailer Goes Bust : New gizmos, Gadgets gazette Blog

Sunday, November 18, 2007

UK Mobile Phone Retailer Goes Bust

The UK based online mobile phone retailer, Phonebox Direct has filed for bankruptcy with reported debts of between £4-10 million. 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. In a statement on the company's website, it says that 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.

This is not the first time a mobile phone retailer has offered cash-back incentives to customers, then filed for bankruptcy before it was obliged to make payments to its customers. Dialamobile, another retailer following the same business model went bust a few months ago. The company was investigated by Trading Standards offices after the collapse.

Lancashire County Councillor Jean Battle, Cabinet member for Community Planning and Partnerships, said at the time "Our Trading Standards Service has previously warned consumers of the potential problems with 'cash back' offers, particularly those which are over 12 months in duration as businesses providing longer term cash back offers often cease trading before the 'cash back' contracts are completed leaving consumers stranded."

Phonebox Direct says that 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. It is thought that around 45 staff have been made redundant.

The closure seems to have been very sudden - as at the time of writing - the company was still placing adverts on the Google search engine promoting its services. Evidently, the staff were not given time to shut down their existing advertising campaigns before being asked to leave the building.


No comments: