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NEW MEASURES MEAN CLEARER PRICING IN MOBILE PREMIUM CONTENT SERVICES AND FEWER INTRUSIVE TEXT MESSAGES

17 July 2008


PhonepayPlus, the phone-paid services regulator, today proposed a series of measures to protect the public from harm in the mobile premium content market. With immediate effect, any subscription service that does not allow customers to stop it easily and quickly will be barred from operation.


No sign-up to subscription services without the consumer's express approval

Additional proposals - which could come into force by the Winter - are designed to ensure that consumers:

  • receive fewer and more targeted promotional text messages; are able to make informed purchase decisions; and
  • find it as easy to leave a subscription service as it was to join.


PhonepayPlus' Annual Report, also published today, shows an emphatic shift in the phone-paid services market toward mobile. In 2007/8 the mobile premium content market was worth more than £460million, a significant increase over the year before.

More use but, with it, more mistrust

UK consumers are finding great value in these services. As well as downloading ringtones, pictures and games people are using their mobile phone to participate in television programmes, receive news alerts, find contact details and enter competitions. As mobile devices become ever more powerful, innovative new services continue to appear. Location-based services, for example, could allow providers to offer services based on consumers' geographic whereabouts.

Research carried out for PhonepayPlus has showed that 38% of UK consumers have used a phone-paid service - 18 million people in total. The percentage of children (16 and under) regularly using phone-paid services on their mobile phone varied significantly: as many as 32% of children from low-income households compared to 18% for children in more affluent homes.

However, an extraordinary increase in complaints has accompanied this growth. PhonepayPlus received more than 8,000 mobile related complaints in 2007/8, an 108% increase on the previous year. In the first three months of 2008 alone, PhonepayPlus received more than 4,500 complaints. There is also anecdotal evidence of consumers, including young people, being charged several thousand pounds as a result of bad practice by content and service providers.

In 2007 PhonepayPlus adjudged 33 mobile services to be in breach and imposed fines of more than £360,000. In the first six months of 2008, we have already adjudicated on 25 mobile phone-paid services with total fines in excess of £390,000.

Subscription services

There are three areas which are of particular concern. The first is the rise in complaints related to subscription services such as ringtones, songs and other mobile personalisation products. In particular:

  • Consumers claim to have been signed up to subscription services with neither their knowledge nor consent; Some services are mis-using the word ‘free' or other similar words;
  • Consumers continue to receive chargeable messages after they send the ‘STOP' command and some have been re-subscribed without their permission.


PhonepayPlus is proposing the introduction of new rules mandating:

  • Once a consumer has selected a subscription service, they must be told the full cost and then actively confirm they wish to subscribe. No use of the word ‘free' or similar words to be in promotional material;
  • Where there is evidence of the failure of the STOP command, PhonepayPlus will look to place an immediate bar on the service while it investigates complaints.


Promotional text messages

Another concern for PhonepayPlus is around promotional text messages that are sent to consumers advertising premium rate products and services. The complaints we have received can be broken down as follows:

  • Consumers are receiving promotional messages - and are sometimes charged for them - with no recollection of having asked them to be sent. Upon opening the text message, the user is immediately ‘pushed' to a mobile internet website and charged for access; and
  • It is not made obvious how users can opt-out of receiving messages in the future.


PhonepayPlus will continue to work with the Information Commissioner, responsible for the use of personal data collected in marketing lists.

PhonepayPlus proposes that providers should provide clear information on how to opt-out of receiving marketing messages in the future. It also proposes that phone-paid service promoters should be able to provide evidence of each recipient's opt-in, and show that the promotion is relevant to the consumer's original purchase or reason to opt-in.

Pricing

Finally, the lack of clarity and transparency of the pricing of some phone-paid services. Many consumers have no idea, or a misperception, of the true cost, often due to misleading promotions. For example,

  • When consumers buy or view content from a website they are often not provided with the price information necessary to make an informed decision; and Consumers have received texts from what appears to be another mobile number inviting them to chat. In fact, the texts are from a phone-paid service and replying to them subscribes the user to a chargeable service.


In this area, PhonepayPlus proposes to require that:

  • The price of phone-paid services, including mobile internet pages, must be clearly signaled before the user is charged; and Promotional messages must not mislead consumers into thinking that they are engaging with another individual.


"There is a clear lack of trust among many consumers about mobile premium services and this is small wonder when you consider the kind of harm that is being done to them by some providers," said George Kidd, Chief Executive of PhonepayPlus.

"It's essential that we address this. Only by working together to build trust among consumers will we see a growing, sustainable, vibrant market for phone-paid services."

The proposals are subject to consultation and can be here

The closing date for responses is 11 September 2008.

Notes to Editors

PhonepayPlus is the organisation that regulates phone-paid services - the goods and services that you can buy by charging the cost to your phone bills and mobile pre-pay accounts. Further details of its work can be found at www.phonepayplus.org.uk.

There are clear rules in place that apply to the promotion, content and operation of all premium rate services, both fixed-line and mobile. The PhonepayPlus Code of Practice is binding on all service providers and sanctions for those services found to be in breach of the Code include, but are not limited to, fines of up to £250,000 and a bar placed on the service.

Other countries in Europe have seen similar growth in mobile-related complaints, and the areas of concern identified by PhonepayPlus are shared by other regulators. The European Commission has today (Thursday) announced the results of an EU-wide investigation into these kinds of mobile premium services.

This concern is mirrored by PhonepayPlus research from November 2007 which stated that, of those questioned that had not chosen to use a phone-paid service, 26% said that it was because they did not trust them.

STOP command

Some phone-paid services charge customers by sending text messages that are billed upon receipt to the user's mobile phone bill or deducted from pre-pay credit. Consumers can unsubscribe from a service or prevent chargeable messages being sent to their phone by texting the word STOP to the short code number they received the last message from.