Questions Of Cash: I've been fleeced by my local phone shop

Q. In September 2006, I signed a 12-month contract with T-Mobile, through Mobile Connections, which provided me with two handsets, with 500 free minutes for each handset. I had to pay £35 monthly by direct debit. This was to be refunded to me each month, providing I presented a paid bill to their Birmingham shop, within 28 days of the date of billing. Three months later, I took a friend to Mobile Connections, but his account application was declined. Mobile Connections suggested I process his application using my bank account, with the staff pointing out that my money was not at risk as the money would be refunded to my account. He took up an 18-month contract with T-Mobile, with £35 taken from my account each month, to be refunded on the same conditions as with my account.

In June, I signed two more accounts with Mobile Connections. From June last year, I visited the Mobile Connections shop more than a hundred times to present my bills as per the contract terms, but the shop was always closed. I have not had any refunds since May last year. I wanted to take out a court case against Mobile Connections, but I was told that I would have to pay £350 to have the case processed. I am an international student at Aston University, must pay £8,500 tuition fees and I have to cover my living expenses. I cannot afford to lose this money. I thought the UK did not have companies like this. AL, Birmingham.

A. Sadly, not only does the UK have businesses like Mobile Connections, but there have been many of them. Dial a Mobile Ltd, which traded as Mobile Connections, ceased trading last August. Birmingham City Council's trading standards department has been in active discussion with the owners of the business, but expects the company to go into administration. It is unlikely that its many customers who, like you, are owed money will receive much, if anything. Detailed advice is provided by Birmingham trading standards on its website, www.birming ham.gov.uk. Mobile Connections is one of numerous mobile phone retailers that have closed down, after offering attractive cash back offers. The assumption by most of them was that a large proportion of customers would not comply with the conditions attached to the cash-back offer. In practice, a lot of customers claimed the cash backs – and many retailers did not make enough profit to meet the volume of claims.

Q. I have just received a card reader from Nationwide for my online banking. The reader is used with my debit card to verify my PIN number, then I am given a one-off code to login online. But what is to stop anyone getting this type of reader and using it to fraudulently find out the PIN of a debit card they have obtained illegally? There is no limit on how many times the PIN can be checked and it can be done at home rather than the limited access and public forum of using an ATM, or shop-located chip/PIN card reader. LW, Thetford

A. Your assumption is wrong – you are given just three goes to input the correct PIN, as you are with a cash machine. Nationwide's spokesman Roy Beale explains: "The new Card Reader Security introduced for our FlexAccount Visa debit card customers adds an extra layer of protection when carrying out certain transactions online, such as third-party payments. The card reader works in an identical way to a shop-located chip and PIN card reader. However, the customer's sign-on details – including user name and memorable data – are also needed to access Nationwide's Internet Banking facilities.

The Card Reader Security uses the customer's FlexAccount Visa debit card and PIN to generate a unique eight-digit passcode to validate transactions. The customer has three attempts to get the PIN right and, if inputted incorrectly three times, the card will be locked to prevent anyone making multiple attempts to guess the number."

Q. I recently returned from a holiday in Canada. As usual when I go abroad, I did not take local currency, but went to an ATM on arrival to draw cash, using my Visa debit card. But on this occasion I received a message saying my card issuer, Alliance & Leicester, would not authorise the transaction. I then emailed A&L to say that I was in Canada and would it unblock my card. Instead, A&L told me I must go into a bank to withdraw funds and that my card could not be used in local cashpoints.

This was very inconvenient as this was a Sunday, I had no Canadian dollars and I was staying a long distance from a bank, without a car. It was several days before I could get any money. A&L tell me the card was blocked for security reasons and that it would have worked if I had attempted to make a small withdrawal. When I complained, A&L said that it did not spell out this advice to customers, also for security reasons. TG, London.

A. A&L confirms that the information you were given is correct. It makes the reasonable point that "dealing with fraud whilst providing customers with information that could not be exploited by fraudsters is a difficult balance to strike". We agree with that, but banks need to stress that customers should notify their bank when they intend to travel abroad. It is also important for customers to know the limit of what they may withdraw.

A&L says that customers may only withdraw £50 a day from an overseas ATM – whether or not a customer notifies they are going abroad. It is considering ways that this information can be made more explicit, without breaching security. "The difficulty we have is that any information on specific limits on withdrawals in different parts of the world can change on a regular basis, rendering any previous guidance out of date," adds A&L's spokesman, Steve Gracey. But, in any case, a £50 daily withdrawal limit seems to us unrealistic and likely to cause considerable customer inconvenience.

Questions of Cash cannot give individual advice. Please do not send original documents. Write to: Questions of Cash, The Independent, 191 Marsh Wall, London E14 9RS; cash@independent.co.uk.