Dixons Carphone, the owner of Carphone Warehouse, has been fined £29.1m for pressure selling its “Geek Squad” phone insurance and tech support to customers who didn’t need it.
The mobile phone retailer trained staff at its Carphone Warehouse business in “spin selling” to customers who already had insurance, the Financial Conduct Authority (FCA) said.
More than a third of people who signed up for Geek Squad cancelled it within three months, a clear sign that it had been mis-sold, the watchdog said.
The company failed to focus on whether people actually needed the product and instead sought to “objection handle”, an investigation found.
The FCA said Carphone Warehouse also failed to properly deal with customer complaints.
The £29.1m fine is dwarfed by the £444.7m in sales that Geek Squad brought in for Carphone Warehouse between 2008 and 2015.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The Carphone Warehouse and its staff persuaded customers to purchase the Geek Squad product which in some cases had little to no value because the customer already had insurance cover.
“The high level of cancellations should have been a clear indicator to the management of mis-selling.
“Without whistleblowers coming forward, these practices may never have come to light.”
In response to the ruling Dixons Carphone said it has improved staff training and monitoring among other measures.
The company has also carried out two customer redress programmes to sort out complaints and cancellations.
Dixons Carphone chief executive Alex Baldock said: “We’re obviously disappointed that Carphone Warehouse fell short in the past. But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015.
“We’re committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them.”
As Dixons Carphone has accepted the FCA’s findings it qualified for a 30 per cent discount. Otherwise the fine would have been much higher, at around £41.6m.
