PhonepayPlus Gets Tough on Mobile Content Cowboys

PhonepayPlus, the phone-paid services regulator, has proposed a series of measures to protect the public from harm in the mobile premium content market. The measures, unveiled last week, mean that with immediate effect, any subscription service that does not allow customers to stop it easily and quickly will be barred from operation.
Additional proposals, which could come into force by the Winter, are designed to ensure that consumers receive fewer and more targeted promotional text messages; are able to make informed purchase decisions; and find it as easy to leave a subscription service as it was to join.
PhonepayPlus recently-published Annual Report shows an emphatic shift in the phone-paid services market toward mobile. In 2007-8 the mobile premium content market was worth more than 460 million, a significant increase over the year before.
UK consumers are finding great value in these services, the regulator says. As well as downloading ringtones, pictures and games, people are using their mobile phone to participate in television programmes, receive news alerts, find contact details and enter competitions. As mobile devices become ever more powerful, innovative new services continue to appear. Location-based services, for example, could allow providers to offer services based on consumers geographic whereabouts.
Research carried out for PhonepayPlus has showed that 38% of UK consumers have used a phone-paid service, amounting to 18 million people in total. The percentage of children (16 and under) regularly using phone-paid services on their mobile phone varied significantly: as many as 32% of children from low-income households, compared to 18% for children in more affluent homes.
However, an extraordinary increase in complaints has accompanied this growth. PhonepayPlus received more than 8,000 mobile-related complaints in 2007-8, a 108% increase on the previous year. In the first three months of 2008 alone, PhonepayPlus received more than 4,500 complaints. There is also anecdotal evidence of consumers, including young people, being charged several thousand pounds as a result of bad practice by content and service providers.
In 2007, PhonepayPlus adjudged 33 mobile services to be in breach and imposed fines of more than 360,000. In the first six months of 2008, the regulator has already adjudicated on 25 mobile phone-paid services with total fines in excess of 390,000.

Subscription services
There are three areas which are of particular concern. The first is the rise in complaints related to subscription services such as ringtones, songs and other mobile personalisation products. In particular, some consumers claim to have been signed up to subscription services with neither their knowledge nor consent; some services are mis-using the word free or other similar words; and consumers continue to receive chargeable messages after they send the STOP command and some have been re-subscribed without their permission.
PhonepayPlus is proposing the introduction of new rules mandating:
    Once a consumer has selected a subscription service, they must be told the full cost and then actively confirm they wish to subscribe.
    No use of the word free or similar words to be in promotional material;
    Where there is evidence of the failure of the STOP command, PhonepayPlus will look to place an immediate bar on the service while it investigates complaints.

Promotional text messages
Another concern for PhonepayPlus is around promotional text messages that are sent to consumers advertising premium rate products and services. The complaints received include instances of consumers receiving promotional messages and sometimes being charged for them – with no recollection of having asked them to be sent. Additionally, upon opening the text message, the user is immediately pushed to a mobile Internet website and charged for access. Finally, it is not made obvious how users can opt-out of receiving messages in the future.
PhonepayPlus says it will continue to work with the Information Commissioner, who is responsible for the use of personal data collected in marketing lists.
PhonepayPlus proposes that providers should provide clear information on how to opt-out of receiving marketing messages in the future. It also proposes that phone-paid service promoters should be able to provide evidence of each recipients opt-in, and show that the promotion is relevant to the consumers original purchase or reason to opt-in.

Finally, PhonepayPlus says it is unhappy about the lack of clarity and transparency of the pricing of some phone-paid services. Many consumers have no idea, or a misperception, of the true cost, often due to misleading promotions. For example, when consumers buy or view content from a website, they are often not provided with the price information necessary to make an informed decision. Additionally, some consumers have received texts from what appears to be another mobile number inviting them to chat. In fact, the texts are from a phone-paid service and replying to them subscribes the user to a chargeable service.
In this area, PhonepayPlus proposes to require that the price of phone-paid services, including mobile Internet pages, must be clearly signaled before the user is charged; and that promotional messages must not mislead consumers into thinking that they are engaging with another individual.
There is a clear lack of trust among many consumers about mobile premium services, and this is small wonder when you consider the kind of harm that is being done to them by some providers, says PhonepayPlus Chief Executive, George Kidd. Its essential that we address this. Only by working together to build trust among consumers will we see a growing, sustainable, vibrant market for phone-paid services.
The proposals are subject to consultation and can be viewed on the PhonepayPlus website. The closing date for responses is 11 September 2008.