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Our new requirements for phone-paid subscriptions

06 August 2019, Simon Towler, Director of Policy and External Relations

Today we’re introducing new regulatory requirements for phone-paid subscription services. These are charges made to a phone bill for access to content on a subscription basis.

These changes are intended to raise standards in the market to meet consumer expectations, deliver a good consumer experience and support growth.

This market is worth half a billion pounds, and around three-quarters of this relates to services purchased from companies like Apple, Google, Spotify and Sony Playstation, alongside donations to charities like Comic Relief and Children in Need, and engagement with popular TV and radio shows such as Love Island and Strictly Come Dancing.

The potential is there. Operator-billed services grew by nearly £90 million in 2018-19, much of this being driven by subscription-based music services, TV and video content.

Despite this growth, we know that the consumer experience of all phone-paid subscription services is not always a good one. Independent research from Jigsaw told us that consumers expect the sign-up and payment process for a phone-paid subscription to be similar to what they are used to from other forms of mobile payment. Some providers already meet this standard, but others do not.

Building on these findings, and other research, responses to our call for inputs and market data, as well as our experience of monitoring the phone-paid services market, we’re putting in place new requirements for all subscriptions from 1 November 2019. These include:

  1. A two-stage sign-up process where the first stage requires an opt-in using either a PIN, account and password or Mobile Originating SMS, followed by a second opt-in confirmation stage.

  2. Greater clarity to ensure consumers are aware they are in a payment environment and signing up to a phone-paid subscription 

  3. Implementing receipting after every charge.

So, in brief, consumers will need to take two positive opt-in steps to confirm that they want to pay for a subscription, such as by creating an account, inputting a PIN, or texting a keyword to a shortcode. They should be taken to a secure payments page, rather than being able to sign up to charges directly from a promotion or homepage. And they will receive receipts for every charge for at least the first three months of a subscription, after which time they may be offered a choice as to how often they would like to receive receipts.

It’s worth noting that these policies are in-line with how many providers of phone-paid subscription services already operate. In effect, we’re creating a standard for industry, based on the existing good practice both in the phone-paid services market and drawing from other payment methods.  These changes will make the experience of phone payment more consistent and in line with what consumers tell us they expect.

When shopping online, consumers expect clarity about payments. They want a clear differentiation between a shopping/ promotional section of a website, and the section where they confirm charges. They expect several stages in which to confirm a purchase, so that they can consider their decision properly. And they expect receipts, via email or text message, every time they are charged.

These proposals have been published after extensive formal and informal stakeholder engagement, including an open call for inputs in September 2018, a consultation between February and May 2019 and several meetings and workshops with industry and consumer representatives. We are confident these changes will significantly improve the consumer experience of phone-paid services, by reducing harm, while also facilitating innovation and growth in the market.

Our new regulatory requirements will come into force on 1 November 2019.