Between 18 July 2012 and 7 June 2013 May 2013, PhonepayPlus received 77 complaints regarding a virus and malware facts subscription service (the “Service”), which was operated by the Level 2 provider CommandM PTY. Limited on the shortcode 80990. The Level 1 provider was OpenMarket Limited.
Consumers subscribed to the Service as part of an upgrade on the Level 2 provider’s ‘Battery Booster Application’ (the “App”) which was available free of charge for smartphones from the Android Market. The Service was not promoted by any other means.
Consumers were charged £4.50 per week for the Service and received one virus fact every week. For example:
“‘virus’ 1st used in 1972 book ‘when HARLIE Was One’. A sentient pc writes virus 2get personal info 2blackmail the man wanting to turn it of [sic]”
The average consumer spend (based on complainants’ accounts) was £36.02, the largest charge incurred by a single customer was £150. Complainants either stated that they had received unsolicited, reverse-billed text messages and that they had not engaged with the Service, or acknowledged downloading the App but stated that they were under the impression that it was free. In addition, PhonepayPlus had concerns regarding the misleading nature of the Service, pricing prominence and the failure to disclose information likely to have a regulatory benefit.
The Executive raised the following potential breaches of the PhonepayPlus Code of Practice (12th Edition) (the "Code")
- 2.3.2- Misleading
- 2.2.5- Pricing
- 4.2.5- Failure to disclose information
The Tribunal upheld all the breaches raised. The Level 2 provider’s revenue in relation to the Service was within the range of Band 1 (£500,000+). The Tribunal considered the case to be very serious and issued a formal reprimand, a fine of £250,000, a requirement that access to the Service is barred until compliance advice has been implemented to the satisfaction of the PhonepayPlus and a requirement that the Level 2 provider must refund all consumers who claim a refund, for the full amount spent by them on the Service, within 28 days of their claim, save where there is good cause to believe that such claims are not valid, and provide evidence to PhonepayPlus that such refunds have been made.