11 October 2016
The Phone-paid Services Authority has recently seen a significant increase in the number of complaints from consumers regarding phone-paid services. In September this year, we received more than 3,800 complaints from consumers, surpassing the recent peak in June 2015. This is the fourth month in succession that consumer complaints received by the Phone-paid Services Authority have exceeded 3,000.
Online competition and adult services continue to drive complaint volumes. Over the three months (July, August, September 2016), these service types accounted for a total of 74% of complaints assessed by the Phone-paid Services Authority (to date)1. According to our Annual Market Review, the two sectors combined make up just over 10% of the phone-paid service market.
We are concerned that significant proportions of consumers of these services are unaware they are committing to purchases, which often involve recurring and ongoing charges. This view is supported by the research we published into Consumer Journeys Relating To Online Competition And Adult PRS, conducted by Craft.
We are also concerned that many consumers either do not fully understand these services, are not adequately informed about the nature of these services or are not being treated in a fair and transparent manner.
In light of the increased consumer complaints, we would like to remind providers of their Code responsibilities. The relevant Code rules are:
- Rule 2.2.1: “Consumers of PRS must be fully informed of all information likely to influence the decision to purchase, including the cost, before any purchase is made.”
- Rule 2.2.7: “In the course of any promotion of a PRS, written or spoken or in any medium, the cost must be included before any purchase is made and must be prominent, clearly legible, visible and proximate to the phone-paid services telephone number, shortcode or other means of access to the service.”
- Rule 2.3.1: “Consumers of PRS must be treated fairly and equitably.”
- Rule 2.3.2: “PRS must not mislead or be likely to mislead in any way.”
- Rule 2.3.3: “Consumers must not be charged for PRS without their consent. Level 2 providers must be able to provide evidence which establishes that consent.”
- Rule 2.3.11: “Where the means of termination is not controlled by the consumer there must be a simple method of permanent exit from the service, which the consumer must be clearly informed about prior to incurring any charge. The method of exit must take effect immediately upon the consumer using it and there must be no further charge to the consumer after exit except where those charges have been legitimately incurred prior to exit.”
Services that are not meeting the requirements of the Code of Practice may by subject to investigation and enforcement action.
We welcome steps from industry, including from the Mobile network operators, to address consumers’ concerns. We recently issued a consultation on additional regulatory controls for the online competition and online adult sectors in the form of Special Conditions. We look forward to reviewing feedback to our consultation which closes on 12 October. However, in the interim, we expect providers to meet the requirements set out in the Code.
1 Online competition services accounted for 55%, 55% and 57% of assessed complaints in July, August and September. Adult services accounted for 22%, 19% and 14% of assessed complaints over the same period.