Sometimes the 'drop-in dialler' appears when customers use web sites offering premium content, such as porn. The customer is asked to install some software to facilitate the downloading of the content, but this process installs a dialler that replaces the usual internet connection with one that dials a premium rate number, either in the UK or abroad.
Such diallers are legitimate - if they abide by the Code of Practice published by the industry watchdog Independent Commission for the Supervision of Standards of Telephone Information Services (ICSTIS).
The Code requires that price warnings are given prior to connection, and that customers are cut off automatically when a specific charge threshold is reached. However, if the price warning is unclear, the release mechanism doesn't work, or the download is hidden, then the customer ends up being charged for a very expensive and unexpected call.
The problem of rogue diallers is growing. According to BT, 19,000 of its customers have been subject to the scam. Complaints have now reached such a level that commentators are concerned that ICSTIS is unable to cope.
Reacting to the problem, two MPs, Sir George Young, Conservative MP for NW Hants and Derek Wyatt, Labour MP for Sittingbourne & Sheppey, yesterday launched a debate on the issue in Parliament.
According to the two MPs:
"We believe there is a criminal scam going on here, and we are concerned that the regulatory mechanism may be inadequate for the task. We know that, last year, two thirds of the fines levied by the regulator weren't paid and many people who call ICSTIS cannot get through".
"BT are in effect providing a credit card facility for people to buy services over the internet - but without the safeguards for the consumer that come with a credit card purchase and without BT having any control over what is sold. And BT pay out the money long before they get it back from their customers - leaving themselves exposed to the loss".
BT announced measures to protect its own dial-up customers yesterday, and promised not to claim its share of the money generated by the calls, but to give the revenue earned to the Childline charity instead.
However, the telco pointed out that for every £100 bill run up by a dialler, BT's share is just £1.85. Most of the rest goes to the operator of the premium rate number called.
Gavin Patterson, BT group managing director, Consumer and Ventures, explained the new strategy:
"When a premium rate number is suspected of being used to deliver rogue diallers we will block traffic to that number without waiting for the regulator to complete an investigation. We need to minimise the number of customers being affected as quickly as we can and we can't allow any more of our customers to fall victim while the sometimes lengthy investigative process gets underway. But customers also need to take action to protect themselves. We believe a substantial proportion of dialler problems aren't fraud, but are due to a lack of awareness from customers."
BT is also offering a free premium rate call block on all customer lines to prevent others from falling victim.
Part of the problem, according to Patterson, is that ICSTIS needs to change its Code of Practice to shorten the time it takes to investigate complaints. Another is that many of the premium rate operators are based overseas, and are effectively outwith the control of ICSTIS and the UK authorities.
One solution, suggested Patterson, is to ensure that network operators make fewer payments to those behind the premium rate numbers while they are being investigated.
Another solution, according to Patterson, would be to force the operators of premium rate numbers to lodge a bond with ICSTIS in advance, so that customers would have some protection if the companies went into liquidation, or disappeared entirely, while being investigated.
George Kidd, director of ICSTIS, said:
" As an industry we should all do everything possible to prevent dialler harm from happening. ICSTIS is looking at taking our registration process further and introducing some form of licensing.
"Where harm does occur we need to act fast. ICSTIS can bar services and set fines, but regulatory action may not be quick enough to stop fraudsters profiting. Action at the network level, like BT is taking, protects customers and builds trust in the internet and premium charging."