Phones 4U agrees to end unfair practices after Ofcom investigation

Phones 4U did not give people replacement handsets they were entitled to, did not repair phones in time, did not offer fair terms on returns of goods and used unfair contracts in constructing their deals, Ofcom found.

Phones 4U said that it has made changes to its returns policy, 'chequeback' deal structure for consumers and cancellation rights.

Phones 4U also said that it has changed its sales practices, particularly in informing consumers what their network coverage will be, what mobile plans actually contain and what upgrades customers are entitled to.

Ofcom and Staffordshire Trading Standards conducted a six month investigation into Phones 4U. They found that company policies restricted consumers' rights in a way that breached the Sale of Goods Act, used contract terms which breached the Unfair Contract Terms Act and the Unfair Terms in Consumer Contracts Regulations, and made claims which breached the Control of Misleading Advertising Regulations.

"As part of its investigation Ofcom, together with Staffordshire Trading Standards, issued questionnaires to consumers identified from Consumer Direct’s database who had made complaints against Phones4U," said an Ofcom statement.

"Ofcom received a significant number of responses and the analysis of these revealed evidence of conduct by Phones 4U that Ofcom considered to be in breach of consumer protection law," it said.

Ofcom said that both it and Staffordshire Trading Standards would monitor levels of complaints against Phones 4U.

Ofcom has received undertakings from Phones 4U that it will change its practices in the way agreed. Those undertakings are legally binding and any breach will lead to Ofcom going to the High Court or a county court to obtain an enforcement order.

If Phones 4U then breached an enforcement order that would be contempt of court and lead to "substantial" fines, Ofcom said.