Orange did this to me two years ago.
I broke my contract phone, and had to fork out £200 cash for a new replacement handset (Phone was not insured).
The replacement arrived, but I could not activate it. Went back and forward with Orange for over a month, and still could not make the damn thing work.
Eventually discovered that he handset had been blacklisted, which is why they could not activate the handset. I asked Orange how a brand new handset could possibly be blacklisted, and it got worse! It turned out that the handset was not ‘new’, but had been ‘reconditioned’, by Orange. It had been previously blacklisted by another network before Orange got hold of it, so Orange could not un-list it for me either.
So, I caught Orange selling a reconditioned stolen hanbdset (Why else would it be blacklisted?) as ‘new’ product, for the full list price??
I reported them to the OFT, and have avoided Orange like the plague ever since!