The Level 2 provider, R&D Media Europe BV operated an online subscription competition quiz service using the brand names “Zemgo Quiz” and “Zemgo Prizes” (the “Service”). The Service operated using Payforit at a cost of £4.50 per week and was promoted via affiliate marketing. The Level 1 provider for the Service was Netsize Internet Payment Exchange AB.
The Service offered consumers the opportunity to participate in quiz competitions. Consumers were sent a link to a quiz consisting of ten questions. Each correct answer resulted in a separate entry into a prize draw to win prizes, such as an iPhone 5. The winner was selected at the end of the competition period. The Service operated from 11 February 2013 to 1 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)
• 2.2.2 - 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 Services was within the range of Band 5 (£5,000-£50,000). The Tribunal considered the case to be very serious and issued a formal reprimand, a fine of £40,000, a warning that this was the second time the Level 2 provider had been adjudicated against as a result of non-complaint affiliate marketing promotions and 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. A requirement that the Level 2 provider refund all consumers who claim a refund, for the full amount spent by them on the Service, within 28 days of their claim, save where there is good cause to believe that such claims are not valid, and provide evidence to PhonepayPlus that such refunds have been made.