Between 17 March 2015 and 29 March 2016, the Executive received 199 complaints concerning a glamour video subscription service, charged at £3 per week, operating on shortcodes 85878, 82999, 85223 and 88150, under the brand name “Hot4SexyBabes” (the “Service”).
The Level 2 provider for the Service was Live Communications Limited (the “Level 2 provider”). The Level 1 provider for Service shortcode 85878 was Zamano Solutions Limited. The Level 1 provider for Service shortcodes 82999, 85223 and 88150 was Veoo Ltd.
Complainants variously alleged that the Service charges were unsolicited. In addition, after analysing complainant message logs, the Executive noted that there was a high failure rate of chargeable messages following the purported consumer opt-ins, and the delivery status of Service messages was unclear.
The Executive raised the following potential breaches of the PhonepayPlus Code of Practice (the "Code"):
• Rule 2.3.3 – Consent to charge
• Paragraph 4.2.4 – Provision of false information to PhonepayPlus
• Paragraph 3.12.5 – Subscription reminders
The Tribunal upheld the three breaches of the Code raised. The Level 2 provider’s revenue in relation to the Service was in Band 1 (£1,000,000 +). The Tribunal considered the case to be very serious and imposed a formal reprimand, a fine of £180,000, and a requirement that the Level 2 provider remedy the breach by ensuring that it has robust verification of each consumer’s consent to be charged before making any further charge to the consumer, including for existing subscribers to the Service. The Tribunal also imposed a requirement that the Level 2 provider must submit to a compliance audit of its procedures for (i) promptly alerting management to issues with IT systems, including message delivery; (ii) investigating and resolving promptly the sources of any such issues; (iii) obtaining and retaining robust and verifiable evidence of consumer consent to charge; and (iv) properly and promptly addressing requests from regulators. The audit report must identify all factors which gave rise to such issues occurring previously, and identify robust methods to resolve such issues. The audit must be conducted by a third party approved by PhonepayPlus. The Level 2 provider must submit details of the auditor and the auditor’s proposal within 14 days from the date of publication of the decision, unless an extension is agreed with PhonepayPlus. The recommendations of the audit must be implemented within a period defined by PhonepayPlus. The costs of such an audit must be paid by the Level 2 provider. The Tribunal also imposed a requirement that the Level 2 provider must 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.
Administrative charge recommendation: 100%