Provision of illegal music downloads using premium rate service billing

Those involved in providing PRS should familiarise themselves with the following information:

Background
The International Federation of the Phonographic Industry (‘IFPI’) represents the recording industry worldwide, with a membership comprising some 1,400 record companies in 66 countries and affiliated industry associations in 45 countries. Among IFPI’s responsibilities is the safeguarding of the rights of record producers and ensuring that others do not profit from pirated music.

The City of London Police (‘CoLP’) works with the IFPI, where appropriate, to take action against those providing pirated music for sale by download to a consumer’s PC or other device (such as a mobile handset or MP3 player). One of their key aims is to ensure that pirated music is not used as a way of laundering money, or otherwise generating income, which is then used to fund organised crime or terrorist activity.

Pirated music downloads and PRS
Until relatively recently, pirated music downloads were almost exclusively paid for by consumers using credit cards. However, following discussions between IFPI and CoLP and providers of credit card services, credit card companies have begun to identify and exclude merchants offering pirated music.

There is therefore a risk that those who still intend to offer pirated music may now turn to PRS as a quick and easily accessible form of payment. While there is little evidence at present of pirated music being offered using PRS, PhonepayPlus has agreed to work proactively with the IFPI and the CoLP in order to prevent potentially criminal activity damaging the ongoing reputation of the overall PRS market.

Next steps
The enforcement bodies responsible for dealing with music piracy, the IFPI and the CoLP, have agreed to pass details of any promotional material, including but not limited to websites, suspected of offering pirated music downloads by premium rate means to PhonepayPlus. We will then disseminate this information to relevant parties (in particular, mobile aggregators) within the PRS market to ensure they are aware of the potential risks of contracting with clients associated with such promotional material.

Providers should be aware that, where PhonepayPlus discovers evidence of pirated music downloads using PRS, we will share this information with IFPI and CoLP. Where we are asked directly by IFPI or CoLP to assist with their investigations or preventative activity in relation to pirated music downloads offered using PRS, we will support such requests appropriately, and to the full extent of our powers.

PhonepayPlus may also work with the IFPI and the CoLP to contact any party within a PRS value-chain and inform it that a service which they are involved in providing is illegal. It is important to note that, if any provider has been put on notice that a service is illegal and either continues to provide, or subsequently provides, payment services to, or for, the site(s) in question, the provider may be criminally liable under Section 328 of the Proceeds of Crime Act (2002).

Where a provider of pirated music downloads is found to be liable under Section 328 of the Proceeds of Crime Act, PhonepayPlus will examine whether providers further up the value-chain, who have contracted with the merchant, have performed their due diligence and risk assessment responsibilities, as required by the PhonepayPlus Code of Practice (12th Edition) . For avoidance of doubt, these requirements are set out at paragraphs 3.1.3 and 3.3.1 of the Code.

PhonepayPlus will continue to monitor premium rate services, and perform other such checks as are necessary to assist the IFPI and the CoLP and to ensure that the Code is complied with.