Regulator tackles misleading online promotions as complaints double in a year

PhonepayPlus, the UK regulator of premium rate telephone services (PRS), today releases its proposals to protect consumers from aggressive and misleading online marketing. This follows a 100% rise in complaints related to online promotions of PRS. The regulator also announces today a fine of £200,000 against a company that allowed its service to be misleadingly promoted online.

PhonepayPlus receives around 350 complaints a month about digital marketing and has taken robust action against the PRS providers involved. In 2012 the regulator imposed fines totalling £1.38 million against 10 companies that used misleading promotions. The regulator is also taking action to stop these problems before they happen.  PhonepayPlus is particularly concerned about how some PRS providers use affiliate marketers. Affiliate marketers are paid by their performance in driving traffic to a site or service, for example, by posting links on social networking sites. The regulator recognises that many affiliate marketers provide a valuable marketing service. However, some techniques used by some of these affiliates in the push to drive traffic and earn commission are inherently misleading, including promises of free content which in fact have costs attached and the chance to win non-existent prizes.

Young people who have grown up with free web content can be particularly vulnerable, expecting to find content like films, game codes and live sports for free online. A typical misleading promotion lures users by offering a paid for service, such as a subscription only sporting event, for free if a survey is filled in. As part of the survey the user is asked for their phone number which, unknown to the user, can give permission to charge for services at a premium rate to their phone bill.

In a case published on 2 May by PhonepayPlus, Grenadines based Upright Line S.A. was fined £200,000 and ordered to give refunds after it employed affiliate marketers that misled consumers. PhonepayPlus monitoring identified misleading promotions on sites that appeared when searches such as ‘watch the Olympics online free’ or ‘get Xbox codes for free’ were entered into a search engine. These sites were found to have misled people into participation in a quiz service that charged £10 every three days, with some consumers receiving bills over £200. 42% of complaints involved under 18s.

Paul Whiteing, Chief Executive of PhonepayPlus, said:

“Although these marketing techniques are fast-moving and high tech, the way they work is very old. They promise something for nothing and the simple rule remains that if it seems too good to be true it probably is.
People should be aware that if they try to get something on the internet without paying for it, there may be hidden costs.

The guidance we are consulting on today is designed to give absolute clarity as to what we expect from PRS providers, who are increasingly using online marketing to promote a vast variety of services that most consumers enjoy without any problems. PhonepayPlus will continue to take strong action whenever we see PRS consumers being harmed by online deception.”