Cloudspace Limited

Between 20 March 2014 and 12 August 2014, PhonepayPlus received 32 complaints from consumers in relation to adult and glamour video subscription services (the “Service(s)”) operated by the Level 2 provider, Cloudspace Limited (the “Level 2 provider”). The Services operated under the names “UrHottestBabes”, “Fun-sexygirls”, and “HornyHotBabes” on the premium rate shortcodes 89333, 85222, and 88150. Consumers were charged either £3 or £4.50 per week depending on the Service they engaged with. The Services commenced operation in March 2012 and June 2013 and were initially operated by another Level 2 provider, Circle Marketing Ltd (“Circle”). The Services were novated to the Level 2 provider in January 2014 and they continue to operate.

The Services were promoted by sending consumers a wireless application protocol (“WAP”) push message which led them to a Service webpage to subscribe. Consumers could also engage with the Services using an Android application (the “Application”) which utilised mobile originating (“MO”) opt-in.

The majority of complainants stated that they had received unsolicited, reverse-billed text messages but that they had not engaged with the Service. Further concerns were identified regarding the Application, as the PhonepayPlus Research and Market Intelligence team (“RMIT”) tested an Application for the Service and found malware that suppressed the receipt of Service messages.

The Executive raised the following potential breaches of the PhonepayPlus Code of Practice (12th Edition) (the "Code"):

• Rule 2.3.1 - Fair and equitable treatment
• Rule 2.3.3 - Consent to charge
• Rule 2.4.2 – Consent to market
• Paragraph 3.9.2 – Appropriate use of a number range

The Tribunal upheld all the breaches of the Code raised. The Level 2 provider’s revenue in relation to the Services was within the range of Band 4 (£100,000 to £249,999). The Tribunal considered the case to be very serious and imposed a formal reprimand, a warning that if the Level 2 provider fails to demonstrate that it has robust verifiable evidence of consumer’s consent to charge in the future it should expect to receive a significant penalty, a fine of £80,000, a requirement that the Level 2 provider remedy the breaches of the Code by implementing adequate consent to charge and consent to market procedures for the Services and ensure that the Services operate on the appropriate premium rate shortcode, and produce evidence of compliance to the satisfaction of PhonepayPlus, within four weeks from the date of publication of this decision. In addition, a requirement that the Level 2 provider must refund all consumers who claim a refund, for the full amount spent by them on the Services, 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.