PhonepayPlus action in response to Ordanduu and Optimus Mobile judgement

Following legal advice, PhonepayPlus lodged an appeal on a limited basis against the finding that Ordanduu and Optimus were entitled to damages. Following the lodgement of the appeal, Ordanduu and Optimus have reached a settlement with PhonepayPlus (the terms of which are confidential). It is possible for PhonepayPlus to manage payment of this settlement in one year without going beyond the parameters consulted on for the 2015/16 levy.

The judgment itself concerned use of the Emergency Procedure which was initiated by PhonepayPlus in 2013 in response to concerns by PhonepayPlus that there was a serious risk to consumers posed by malware linked to the use of affiliate marketing. The case brought by Ordanduu and Optimus Mobile focussed on the way in which PhonepayPlus applied the Emergency Procedure and its Code of Practice in relation to services operated by the two providers, in the context of the law and in particular an EU Directive. The case did not challenge the fact that malware had been used by an affiliate publisher to market some of the providers’ services.  

The judge made clear that the judgment does not affect PhonepayPlus’ Code of Practice or the processes set out within it. The judgment is therefore specific to this case and the way in which the Emergency Procedure was applied in the context of the law. We will continue to apply our Code with due regard to all relevant law, making necessary changes to our processes and the Code to ensure we are able to do so effectively.

Following internal review, discussions with Ofcom and other stakeholders, PhonepayPlus is taking the necessary steps to learn lessons and to address the issues raised in the judgment.

As a matter of good regulatory practice, PhonepayPlus is taking external legal advice on the small number of Emergency Procedure cases against other providers that arose around the same time, and involved the same affiliate marketing and ransomware, as the Ordanduu and Optimus cases. PhonepayPlus is communicating directly with the other providers involved.

PhonepayPlus is also looking to undertake a more in-depth review of the investigations, adjudicatory procedures and sanctions part of the Code (‘Part 4’). PhonepayPlus is operating as a regulator in a changing market and legal landscape, in particular in relation to EU law. In looking to undertake the review we have taken on board the industry’s feedback on our proposed changes to Part 4 in last year’s consultation on the proposed new Code 13.

PhonepayPlus will also take this opportunity to consider whether other changes may be appropriate in relation to its Code, processes and procedures. Since 2013 we have already made a number of improvements, including reforming monitoring and notification procedures during investigations in relation to both premium rate providers and PhonepayPlus Code Compliance Panel members. This process improvement programme continues.

PhonepayPlus will continue to work closely in collaboration with our stakeholders and industry partners to deliver fair, proportionate and effective regulation which works for responsible business and consumers alike. Our priority remains to ensure that anyone can use premium rate services with confidence whilst maintaining a healthy and innovative market.

We are now in discussions with Ofcom and will communicate more on this in due course.