Premium-rate regulator steps up controls on rogue providers

But a group representing the industry has raised questions about whether the PPP's measures are too specific, despite a marked rise in complaints about operator behaviour, and has said that it is working on a new model of premium-rate regulation.

PhonepayPlus (PPP) regulates the premium rate phone industry and has said that though use of premium rate services is increasing, dishonest practice still flourishes and consumer trust in them is still low. The regulator fined mobile operators more in the first three months of 2008 than in the whole of 2007, it said.

PPP identified three areas where malpractice was particularly pronounced. Users are being signed up to subscriptions without their consent and not being allowed to unsubscribe; they are being bombarded with unasked-for and expensive promotional text messages; and they are finding accurate pricing information hard to find or entirely absent.

The PPP will now ban the use of the word 'free' "or similar words" anywhere in the promotion of premium rate phone services. It has also said that it will cut off any service which fails to respect a consumer's instruction to stop the service. This is done by texting 'STOP' to the operator.

“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,” said George Kidd, chief executive of PPP. “It's 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 Association for Interactive Media and Entertainment (AIME), which represents the premium-rate industry said that it would back the proposals.

"AIME will support the proposals and will be responding to PPP’s consultation to ensure the detail is both practical and proportionate, facilitating the growth of the industry and providing consumer protection," Sally Weatherall, chairwoman of AIME told OUT-LAW. "Trends across Europe seem to indicate a growth in consumer complaints related to premium rate mobile services. Such trends support the overall findings of PPP …[and] need to be addressed in an appropriate and proportionate manner."

Weatherall, though, said that most of the proposed measures already exist in PPP rules, and that the body may be becoming too specific in its regulation.

"On the face of it additional measures should be unnecessary. It should be more a case of effective enforcement," she said. "Are they necessary? If existing rules are being flouted then clearly there is a necessity to be more express. There is a legitimate question as to whether the PPP need to be, or indeed should be so prescriptive."

The regulator said in its annual report that it had noticed a significant movement in the past year of users of premium rate services from landline phones to mobiles. It said that £460 million was spent in the past year on mobile content.

"Research carried out for PhonepayPlus has showed that 38% of UK consumers have used a phone-paid service – 18 million people in total," said a PPP statement. "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, an 108% increase on the previous year," the regulator said.

The PPP has proposed that it be given the right to demand proof of a user's opt-in to a subscription service and said that it would work with the Information Commissioner's Office on operators' data protection compliance.

AIME's Weatherall said that it is difficult to target rogue content providers when PPP only regulates the service providers, which means the companies providing the technical infrastructure to allow services to be run.

"The network operators could ban the services but do not have the contractual links across the market to facilitate this easily. PPP have only a limited reach to the content providers and again this does not prevent the services simply migrating to other providers," she said.

"Clearly regulation needs to bite at the point of consumption, i.e. at the point where the consumer interacts with the content provider. Currently this is not the case. AIME and PPP and other industry participants are working to develop models of regulation that will enable the industry to ban the services of rogue content promoters and prevent them simply finding a route to market through alternative suppliers. These may include content provider registration schemes coupled with cross industry service bans."

PPP's consultation opened today and closes on 11th September 2008.