The Carphone Warehouse has been fined £29.1 million for mis-selling the Geek Squad mobile phone insurance and technical support product to customers.
A Financial Conduct Authority (FCA) investigation found that Carphone Warehouse failed to adequately train its sales consultants to assess whether customers actually needed Geek Squad.
Sales consultants were trained in ‘spin selling’, where the focus was on persuading customers to purchase Geek Squad and on selling the features of the product, as well as ‘objection handling’, which saw them focus on overcoming objections.
Training in both was given instead of assessing whether the product was suitable for the customer.
Between 1 December 2008 and 30 June 2015, Carphone Warehouse sold more than £444.7 million worth of Geek Squad policies.
According to the FCA, a high proportion of these policies were subsequently cancelled early. For example, in January 2014, 35% of policies were cancelled within the first three months.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “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 the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals.”
Alex Baldock, chief executive of Carphone Warehouse, said the company was disappointed it had fallen short in the past. “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.”