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Compliance Update Prior permission for subscription services

2 May 2013

Background

In January 2009, PhonepayPlus introduced a prior permission regime for subscription services over £4.50 in a seven day period. At that time PhonepayPlus gave notice that subscription services which cost over £4.50 in a seven-day period but which used Payforit would be exempted from the requirement to seek prior permission. This was due to the assurances provided via the Payforit mechanic that a Level 2 provider would not control the presentation of key information to consumers prior to consent to a purchase, most importantly the cost of the service and that it is a subscription. 

 More recently, PhonepayPlus has been approached by the four UK Mobile Network Operators (MNOs) and informed of concerns relating to transparency of key terms and conditions associated with subscription services using Payforit, in particular competition services. These concerns are distinct from the presentation of key information prior to consent to purchase which Payforit ensures and can be summarised as follows:

  • Misleading marketing prior to the Payforit mechanic being engaged. So even though Payforit provides key information about price and the fact the service is a subscription, the consumer has been misled to believe that what is on offer is of greater value than is actually the case, and therefore the price is worth paying;
  • The increase over the last year in subscription services using the Payforit mechanic which also use web-based affiliate marketing. PhonepayPlus is currently consulting on Guidance around Digital Marketing which can be caused by rogue affiliate marketing; and
  • The increase over the last six months in the number of subscription services using Payforit which charge over £4.50 per week, and in some cases up to £10 every three days. This clearly increases the financial detriment to consumers who are misled, despite the use of Payforit to display pricing and other key information.

Next Steps

As a result of our assessment of these services, an increase in the complaints we have received about them and information given by the MNOs, PhonepayPlus is removing the exemption for providers who only utilise the Payforit mechanic. Level 2 providers who operate subscription services costing over £4.50 in a seven day period, and who use Payforit to confirm consumer consent to purchase, must now seek prior permission to operate with immediate effect.
Applications in respect of such services that are currently in operation must be made by relevant Level 1 providers (otherwise known as Accredited Payment Intermediaries) on behalf of relevant Level 2 providers for each such service within six weeks of this notice. The deadline for these applications is Thursday, 13 June 2013.  For all new services, applications must be made by the relevant Level 1 providers and permission must be granted prior to the operation of the services with immediate effect.

Applications can be made by email to priorpermissions@phonepayplus.org.uk.

For more information about our application process, please click on the link for further details.

Prior Permissions Notice: Subscriptions over £4.50 in any given seven-day period