Vodafone has told its investors that it signed an exclusive deal with Phones 4u to get quality, and doesn’t expect its indirect acquisition costs to fall on the high street as a result.

A statement from Vodafone read: ‘Indirect connection commissions in the second half of the current financial year are expected to be similar to those in the same period of the previous. Vodafone expects to deliver greater value to customers acquired through the indirect channel through a closer working relationship with Phones 4u and better targeted propositions.’

Thirteen Phones 4u stores have been banned from using Chip and PIN as a contract proof to prevent fraud, just weeks after the system was introduced.

The stores, primarily based in London, include two Oxford Street branches, Tottenham Court Road, Chelsea and East Ham.

Phones 4u operations director Tom Shorten said the Chip and PIN ban was ‘preventative rather than active’. He said: ‘They haven’t been following the process accurately which may lead to fraud. Therefore we need to make sure that until they are trained and fully understand the process, we don’t want them to use it.’

A source told Mobile: ‘Phones 4u’s London stores have a hell of a lot of fraud going on right now. The Northamptonshire region is having problems as well. It’s causing major issues across the company.’

Phones 4u’s Aylesbury store, which was recently held up as an example of excellent performance to other stores, has also been at the centre of a fraud investigation. Several staff members have been suspended, including the manager. Shorten confirmed that some are suspended due to HR issues on which he would not comment. He said: ‘There was an element of fraud which we dealt with and there were other issues.’ The store manager had been rewarded earlier for its performance with a dinner with top Phones 4u executives, according to staff.

Sources suggest that the branch’s customers were using Forces IDs to carry out the fraud. Aylesbury is one of the few stores that is allowed to accept this form of ID, due to the large number of armed services personnel based in the area. Forces IDs have often been associated with fraudulent connections.

Shorten said: ‘We continue to review adherence to our policies and procedures for the protection of our customers and our business, and we take action where appropriate.’

Fraud is a recurring problem in the mobile industry. The Carphone Warehouse launched a major fraud investigation earlier this year focusing on fraudulent contracts and sales of Nokia 8800s.