Steve Pardoe's Cellnet on Watchdog Page

BBC1's "Watchdog" programme has now featured four stories about Cellnet. They led with the Cellnet illegal billing story, featuring my case, on On Thursday 11. March 1999.

An update was broadcast on 25. March, after Cellnet had broken their promise to improve their security, and even more serious cases than mine had come to light.

This programme referred to Oftel, and the Office of Fair Trading. You can read my letters here to Oftel (who told Watchdog it's not their problem) and to the Office of Fair Trading (who have acknowledged my e-mail, and are making their own enquiries).

On 8. April, Watchdog again featured Cellnet in an unfavourable light, showing the difficulty some customers had had in cancelling their Cellnet "First" packages. Here's a link to the BBC's website with a synopsis of the latest programme. The programme also updated viewers on Cellnet's leaked memo regarding their passing off reconditioned phones as new (see the original BBC story).

Oh dear, oh dear. More trouble for Cellnet: on 15. April, Watchdog ran a story about how Cellnet are making it difficult for customers to get the six months' "free" airtime promised when they signed up for phones. Customers have to pay first, then wait months for a refund. This is hardly what most people would understand by "free". The BBC synopsis of this latest story is here.

Our main Cellnet story page is here, and here's a pointer to the BBC's synopsis of my story.

Finally, here is a précis of Cellnet's PR Response to some of the programme's questions, with my commentary. Their replies are, at best, disingenuous.

Oh, and I've still had no apology from Cellnet (and yes, they are still busily reading this stuff).

Sorry about the screen artefacts.    All images © BBC 1999


Cellnet are taking money from the credit card and bank accounts of thousands of innocent people, even though they haven't got a Cellnet phone. Cellnet know that this is happening, but have taken a cynically commercial decision to ignore it, and leave the innocent card holders whom their scheme is allowing to be defrauded, to sort the mess out.

Cellnet have charged three amounts of 50 each to my Barclaycard account, even though I have no Cellnet phone, and have never entered into any kind of contract with them. While Barclaycard have now cancelled my card and say that they will refund the money (together with a 50 gesture of goodwill), Cellnet's unhelpful and cynical response to my inquiries to them, and point-blank refusal to compensate me or to promise to stop taking money from my credit card, have prompted me to look more deeply into the problem, so that something can be done about it.

Q  How did Watchdog get involved?

I first contacted Watchdog about this some time ago, but their interest was first really aroused on 1. March, and took off from there when their researcher contacted me while I was abroad on business. Now that the programme has gone out, I can reveal some of the behind the scenes stuff.

Watchdog ran my story as the lead item on Thursday 11. March. Cellnet were invited to put up a spokesman, but declined, offering instead an anodyne statement of policy. There has already been a flurry of e-mail and user group traffic, along with over a thousand hits on these pages, and no doubt Cellnet's competitors are having a good laugh. Other, more official bodies may not find it all quite so amusing.

The matter was raised again on "Watchdog" on 25. March: Cellnet have broken their promise to make their pre-pay system secure within a fortnight, and have refused to give a date when they would do so. I have now heard of people having several hundred pounds, and in one case over 1000, taken from their credit card accounts by Cellnet. Who on earth could legitimately want to buy 1000 of pre-pay phone calls? Cellnet persist in saying it's not their responsibility, but this could be really serious, not merely inconvenient : imagine being stranded, unable to buy, say, petrol or even an airline ticket, because your credit card had been taken over its limit by Cellnet without your knowledge! Is this the kind of behaviour we should tolerate from a company with their ambitions in the mobile phone market (such as the take-over of Martin Dawes)?

Another victim, Nigel Morton, with whom I had already had e-mail correspondence on this subject, was named in the 25. March programme as having had six amounts each of 50 taken by Cellnet, who still insist that they have systems to detect and prevent fraud.

As a result of his experience, it now appears that Orange may also have had an insecure pre-pay system at one time, though they were very late in responding to Watchdog on this point.

Q  Barclaycard refunded you, with an extra ex-gratia payment, but what did Cellnet do?

Barclaycard, an innocent conduit in Cellnet's insecure procedures, have already apologised, refunded my money and offered a goodwill gesture.

Cellnet, who took my money three times but refused point blank to apologise, refund, or compensate me, have done nothing for me other than to instruct their lawyers, Messrs Lovell White Durrant of 65, Holborn Viaduct to browse our web site, presumably hoping to find something they could use to prevent me from publishing my story.

LWD describe themselves as "one of the largest international law firms", so you might regard this as a fairly expensive brief. They have offices all over the world, including this one in London.

Q  That seems a bit heavy handed, but how do you know all this?

Our server log showed a phenomenal volume of hits on our web site from Cellnet's "cellgate" server, running right through to the weekend [of 6./7. March]. They seem to be particularly interested in any pictures of me and my family, on holiday and so on. Lovell White Durrant's server clicked in at 16:52 on Friday 5. March, and (after a little trouble navigating the site) both they and Cellnet were downloading and viewing the material over the next few minutes.

Cellnet are still calling back regularly, most recently reading our trip report from Cotopaxi, for some reason, as well as the pages about them. Vodafone are also keeping up their interest.

Q  So what was the gist of the programme?

You can read a synopsis of Watchdog's Story, and also a feature in a previous programme showing up some more shabby tactics by Cellnet, in which they tried to shift refurbished phones as new, and issued an internal directive to deny it. Anyone reading these synopses might think that Cellnet's senior management seem quite comfortable with some pretty iffy business practices.

It was quite a short item, opening Thursday's programme, but it got the points across clearly enough. Cellnet, unlike the other three mobile licensees, don't require users to register their pre-pay phones before they're allowed to to top them up using a credit card. Since Cellnet have no way of correlating a phone and card number, absolutely any card can be used, and there is no way that Cellnet can trace the person doing it, so that they could be prosecuted, or identify the phone, so that it could be switched off. This obviously leaves people open to fraud if someone finds their card number, which is in plain view on every credit or debit card transaction slip. Shop and garage till drawers are full of them.

Cellnet's system was shown to be completely insecure, and to have caused loss and inconvenience to hundreds of people who've complained directly to Cellnet, and most likely thousands more who've been refunded by their card issuers. Despite this, they declined to be interviewed, and fell back on an anodyne PR statement. They said that "new security measures which will link the credit card number to a mobile phone will start in a fortnight. Anyone who's experienced this type of fraud will get their money back".

Well, of course they will get their money back, but this isn't Cellnet being generous! The card issuer will refund it, and since Cellnet can't prove any of these transactions, they have no choice but to refund the card issuer in turn. Every time.

Q  So how will Cellnet implement the change in operation? They can't write to their customers, as they don't know who they are, and Annie says there are 700,000 Cellnet pre-pay phones out there.

GSM phones can have an SMS text message broadcast to them, and the user will probably have to contact a service centre to make alternative arrangements to register the credit card they want to use in future. How quickly Cellnet can deal with 700,000 such customers is open to question.

Q  But why wait a fortnight? Surely during that time, now that Watchdog have broadcast how easy it is, Cellnet are wide open to fraud, which they will have to refund every time. In fact, any user could pretend to have been defrauded, and how on earth would Cellnet sort that mess out?

Beats me. I'd have thought that they could re-program their transaction systems overnight to disallow keyed card number top-ups, though it would be a major inconvenience to existing users. If viewers took up Annie's remark about topping up the phones with anyone's card, they could have a field day in two clear weeks. If even 10% of their 700,000 phones were each fraudulently topped up even for 150 each, like I was hit for, it would cost Cellnet over 10 Million in refunds. And if the users didn't like the new system and decided to return their phones, that would be really expensive.

Q  Yet Cellnet still won't apologise to you. Is that the end of the matter?

That depends on Cellnet. They should apologise publicly, and modify their systems to make them secure, as they've promised to do. They should also apologise, and refund double value, to all the people, including me, who've been defrauded as a result of Cellnet's deliberately irresponsible card security. Just a straight refund through the credit card companies is not enough, as there's no punitive element. Anyone who's suffered additional loss (for example through having to cancel cards and make other arrangements such as Continuous Authorities) should have proportionate compensation.

If Cellnet actually do all this, rather than just making bland and disingenuous statements such as those they tried to fob me, the Independent and Watchdog off with, I'll be delighted. If not, we'll have to consider what further information it's appropriate to reveal, and raise the profile of this issue in the financial press.

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