In some cases, it could simply be the casing.
In my case, at the top left just below indicator number 4, there is a small piece of plastic that snaps the controller together.
Being I got mine used, it has obviously seen previous repair and the previous owner damaged this plastic contact.
By opening up the base and carefully pushing this piece back in position with a flat head, the controller snapped properly in place. After screwing it back together tightly (the screws were also loose compared to factory) I resolved my phantom D-Pad issue.
I also resolved improper placement of the R2 trigger spring in the process XD