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Hectiq B.V.

Publication Date
22 August 2013
Case Reference
28901
Procedure
Emergency Procedure
Adjudicated Party
Hectiq B.V.
Service Type
Competition - non-scratchcard
Tribunal's final assessment
Very Serious
Sanctions
Code 12 para 4.8.2d - Fine
Code 12 para 4.8.2b - Formal reprimand and/or warning
Breaches raised
Summary

The Level 2 provider, Hectiq B.V. operated an online subscription mobile content and competition service using the brand names “ZigZagFone” and “Carambaba” (the “Service”). The Service operated on the premium rate shortcode 88101 at a cost of £4.50 per week and was promoted via affiliate marketing. The Level 1 provider for the Service was Oxygen8 Communications UK Ltd.
The Service offered consumers the opportunity to receive mobile content and to participate in competitions. The consumer who answered the most questions correctly in the shortest time period during the competition period, won a prize, such as an Apple product. The competition period was due to end on 31 December 2013.
The Service operated from 17 June 2013 to 8 July 2013 (when it was suspended as a result of the use of the Emergency procedure).

Serious concerns regarding the promotion of the Service were uncovered as a result of in-house monitoring of the Service conducted by the PhonepayPlus Research and Market Intelligence Team. The monitoring revealed that affiliate marketing, which generated consumer traffic to the Service, appeared to utilise a form of malware (ransomware) that stopped consumers’ internet browsers working, resulting in users being unable to access a large number of popular websites, including Facebook, Ebay and Google. Users were told that they were required to sign up to the Service (and/or other premium rate services) in order to unblock their browsers.

The Executive raised the following potential breaches of the PhonepayPlus Code of Practice (12th Edition):
• 2.3.1 - Fair and equitable treatment
• 2.3.2 - Misleading
• 2.5.5 - Avoidance of harm (fear, anxiety, distress or offence)
• 2.2.5 - Pricing prominence
• 2.2.2 - Written information material to the decision to purchase

The Tribunal upheld all the breaches raised save for the alleged breach of rule 2.2.2. The Level 2 provider’s revenue in relation to the Service was within the range of Band 6 (£1-£5,000). The Tribunal considered the case to be very serious and issued a formal reprimand, a fine of £23,000, a warning that if the Level 2 provider fails to ensure that it has sufficient measures in place to prevent actual or potential consumer harm being caused by affiliate marketing in future it should expect to receive a significant penalty.