Virgin Mobiles problem - advice appreciated!

[Crayfish]

I am having a consumer issue and would value any advice!

 

I bought a mobile phone from Virgin Mobiles. The handset is a HTC Desire, a fairly expensive smartphone. I signed up to a £35 per month contract over 18 months.

 

The handset arrived the day after the order and worked fine for one day. The next day I was unable to access calls, texts or internet, the error being given that my balance was insufficient.

 

I called Virgin Mobiles, they said they would chase the problem up and get back to me in 7 days. They gave me some temporary minutes, texts and data to last for that period.

 

About 12 days later, I hadn't heard anything and had nearly used these temporary allocations, so I called again. I was told that the phone was sent out in error, my credit check had failed (no reason given, non-negotiable), they aren't prepared to put me on the contract that I signed up for and I will have to post the handset back to them.

 

They have put the £4.99 delivery charge on my SIM to pay for a couple more days use while their prepaid envelope arrives. I said I would rather have that payment refunded and was told "this isn't a refund, it is a gesture of goodwill". They did make the concession that I could keep the memory card, as I have personal data on there.

 

Is this reasonable? Is there any way I can dispute it?

 

I have been using the handset for nearly two weeks, it took me quite a while to set up my contacts etc. and I have since realised that I also have around £10 worth of downloaded apps on the handset.