Carphone Warehouse faces prosecution for the way it has been handling customer information.

The mobile phone retailer, along with sister company TalkTalk, faces action, after the Information Commissioner’s Office (ICO) said that the companies had caused “real damage and distress” by opening accounts using the wrong name, which allowed online clients to view other customers’ account details and resulted in incorrect information reaching credit referencing agencies and debt collectors.

The ICO said that if Carphone Warehouse continued to break the “basic principles” of the Data Protection Act, it would be prosecuted.

The retailer said it was aware that a “very small number” of customers had raised concerns over the way their data had been used, but that it had taken “immediate steps” to rectify the situation.