Research undertaken by PhonepayPlus shows that millions of consumers are happily using services on the 087 number range (which includes numbers beginning 0871, 2, and 3 but excludes 0870). However, it also highlights some significant concerns around price transparency and the time some consumers are having to wait on the line before being connected to a service.

On 1 August, PhonepayPlus began to regulate 087 services under its Code of Practice. Providers now have to comply with rules that ensure that the price of the call is made clear and that, if there is to be a delay, the consumer should be able to make an informed decision as to whether to stay on the line.

The research reveals a lack of understanding around charges for 087 numbers among consumers and concern over the amount of time callers are prepared to wait to be connected:

• 44% have experienced problems with the service they have received in the past six months;
• 31% of people who use 087 numbers have no idea of the cost;
• 40% do not know there is an additional cost for calling from a mobile. In fact, it can cost considerably more (around 4 x as much); and
• Around 75% of all 0871 users felt that it was not acceptable if they were left on hold for more than 5 minutes.

However, 087 numbers provide access to a wide variety of popular services.

• One in three people in the UK are likely to have called an 087 number in the last six months creating a market that in 2009 is expected to be worth £85 million.
• Both large and small businesses receive calls via 087 numbers across a variety of sectors including ticket lines, tour and transport operators, financial services and technical helplines.
• Calls from mobile phones account for just 13% of the volume of calls, but 40% of the market’s overall revenue.

Commenting on the change in regulation Paul Whiteing, CEO of PhonepayPlus, said: “Services offered via 087 numbers are generally useful and convenient but the cost to call them can vary widely, especially from a mobile phone. Our experience regulating other premium rate services will ensure the necessary safeguards are in place to protect consumers, especially around price transparency.”

PhonepayPlus, the regulator for the phone-paid services industry, has today launched a wide-ranging discussion paper on the development of its 12th Code of Practice. PhonepayPlus is inviting response from industry, consumers and all other stakeholders in order to properly inform thinking as it develops its full Code consultation for later in 2009.

The paper takes into account recommendations made by Ofcom in its recent PRS Scope Review.

The Code of Practice is the document through which PhonepayPlus regulates the phone-paid services industry, enabling it to protect consumers from harm while providing reputable businesses with every opportunity to develop new, useful products and services for consumers to enjoy using their phones.

The 12^th revision of the Code will be among the most significant in the organisation’s 23-year history. PhonepayPlus intends to carry out a thorough examination of the current version to determine how it might be improved, especially with regard to developments in this technologically fast-paced industry, such as the explosion of mobile phone-paid services, which have changed the face of the industry in recent years.

Recognising it cannot regulate effectively in isolation from industry and other regulators PhonepayPlus is publishing this discussion paper ahead of an initial draft of the new Code, upon which it and Ofcom will consult later this year.

PhonepayPlus proposes, and explores the impact of, four main changes to its regulatory regime in the discussion paper. These are:

• That the new Code is based on identifying desirable outcomes, and supporting them with rules where appropriate, rather than prescribing a step-by-step guide to compliance
• That every business in the phone-paid services value chain will assume an appropriate degree of responsibility for the provision of compliant services and the delivery of consumer protection measures
• The creation of a database on which all Service Providers (SPs) and Information Providers (IPs) will be registered for due diligence and risk management purposes
• That providers must have in place adequate customer care facilities to ensure consumers are able to register a complaint and seek redress as quickly as possible

Commenting, PhonepayPlus Chief Executive, Paul Whiteing said: “Development of our 12^th Code of Practice is one of the most important activities we will undertake this year and it is imperative we get off on the right foot. We want to ensure the Code protects consumers in the ways it should do, while enabling reputable providers to offer innovative, compliant services. This is why we have published this discussion paper ahead of a draft of the Code; in order that we might canvass a wide cross section of views from industry, consumers and our peer regulators as early in the process as possible.”

Comments and submissions are invited from anyone with an interest in phone-paid services, industry, including peer regulators, trade associations and consumers. The closing date for comments is 1 August 2009.

Ahead of an industry workshop organised by Ofcom to discuss its PRS Scope Review, PhonepayPlus has prepared an initial assessment of the potential impact of the proposals on PhonepayPlus. To read this document, click here.

To read the Code 12 discussion paper click here.

To read Ofcom’s PRS Scope Review click here.

New rules for businesses apply from 1 August

Research released today by PhonepayPlus reveals a lack of understanding around charges for 087 numbers amongst consumers, and supports the need for introduction of new regulation to boost consumer confidence.  From 1 August, providers of 087 services (numbers beginning 0871, 2, and 3, but excluding 0870) must comply with new rules set out by PhonepayPlus.

Key findings from the research

Market overview:

• One in three people in the UK are likely to have called an 0871 number in the last six months.
• The overall market size for 087 numbers is estimated to reach £85 million in 2009. This represents a decline over 18 months, due largely to uncertainty around regulation and general consumer resistance to numbers beginning 087.
• 40% of revenue comes from calls from mobile phones, although this only equates to 13% of total minutes.
• The 087 number range is used by both large and small businesses, across all sectors, and is particularly popular amongst everyday services such as travel, ticketing, insurance and retail.
• 40% of businesses choose 087 numbers for the revenue share opportunity, and 8% to deter phone sales and drive customers to their website.
• The total volume of calls businesses receive via 087 numbers is estimated to be 731 million minutes in 2009.

Consumer feedback:

• 44% of 0871 callers have either made a complaint about or had an issue with an 0871 service in the past 6 months.
• Lack of understanding on price: When asked how much an 0871 call costs, one in three users said they do not know and 40% were unaware of the additional cost of calling from a mobile.
• Delays are a significant annoyance to callers: 70% of callers said they would complain if kept on hold for more than 10 minutes.
• Complaints: Customers cite problems with customer service and automated menus.

New rules for 087 services providers

On 5 February 2009 Ofcom announced the outcome of a review of the 0871 number range, which contained a package of measures to improve consumer protection and pricing transparency. Ofcom decided to make 0871 numbers subject to premium rate regulation as defined by the PhonepayPlus’ Code of Practice.

On 13 November 2007, PhonepayPlus published a Statement of Application for the regulation of 0871 numbers, which explained how it proposed to apply the existing requirements of its Code of Practice to services offered on the number range:

• Pricing transparency: Up-front information on the cost per minute of the call must be published prominently next to the number wherever it appears on adverts, websites or signage from the business providing the service. For an initial time period to help businesses implement the changes, it is acceptable for the charges to be clearly stated at the start of the call.
• Undue delay: The 087 service provider must ensure there is no unfair delay in a caller accessing the service on offer. Callers must be given an estimate as to how long they can expect to wait before accessing the service, and if appropriate, their position in the queuing system so they can make an informed decision as to whether to remain on the line.

Commenting on the research, Paul Whiteing, CEO of PhonepayPlus, said: “Consumers have made it clear that pricing for 087 services must be easier to understand. They must also be able to make an informed decision as to whether to stay on the line.”

“Our experience regulating other premium rate services will ensure the necessary safeguards are in place to boost consumer confidence in 087 services. We expect this regulation to be a boon to industry and consumers alike.”

To view the full research document click here

PhonepayPlus, the phone-paid services regulator, has launched an investigation following correspondence received from Stockport Metropolitan Borough Council regarding nine complaints it has received from members of the public.  Having contacted the Network Operator through whose network the service operates, PhonepayPlus considers the Service Provider responsible under the PhonepayPlus Code of Practice to be ‘Digital Select Limited.’

The complaints relate to a letter received by the complainants from a debt recovery company called ‘Redstone Recovery Ltd.’  The letter refers to an outstanding debt balance and states that legal proceedings will be taken against the complainant if payment is not made within seven days. The letter contains a premium rate number and asks the recipient to call the number to agree a payment plan in order to clear the outstanding debt.

Due to the very serious nature of the alleged breaches of its Code of Practice, PhonepayPlus has invoked its emergency procedure to bar access to the number associated with the service with immediate effect.  In addition, all revenue payable to the Service Provider has been withheld by the Network Operator pending the outcome of the investigation.

However, following further discussions with Stockport Metropolitan Borough Council, PhonepayPlus has become aware that the address for Redstone Recovery Ltd which appears on the promotional letter does not exist. In order to prevent further consumer harm whereby consumers are concerned about this apparent debt, but find themselves in a position where they are unable to contact someone to discuss it, PhonepayPlus has asked Digital Select Limited to reactivate the line with a recorded message which informs callers that Digital Select does not deem the debt recovery service to be legitimate and to disregard the letter. The recording also states that the service is currently under investigation. In addition, callers are directed to the Service Provider’s non-premium rate customer service number should they require further information.

PhonepayPlus regulates premium rate service providers, which are defined in paragraph 11.3.6 of the PhonepayPlus Code of Practice (Eleventh Edition Amended April 2008).

Background
The service is charged at £1.50 per minute from landlines, and potentially considerably more from mobile phones. It is brought to the attention of consumers when they receive a letter delivered to their home.  Complainants are concerned this is not a genuine debt collection notice and the company is not a genuine debt collection agency.

When PhonepayPlus monitored the service, a recorded message stated that callers had to be 18 and over and that they must have the bill payer’s permission. Callers were also reminded that calls cost £1.50 per minute and network rates may vary. There was then a ringing noise followed by the message:

‘All our operators are currently unavailable; please call back between 10am and 5pm, Monday to Friday.’

Throughout the call, the message was repeated on several occasions. After roughly four minutes, there was the option to leave a recorded message.

Our concerns
Our investigation initially focuses on the following paragraphs of the PhonepayPlus Code of Practice (Eleventh Edition Amended April 2008):

• Misleading (Paragraph 5.4.1a) – due to recipients of this correspondence potentially being misled into believing they have an outstanding dept and, as a consequence, misled into calling a premium rate number.
• Unreasonably Prolonged or Delayed (Paragraph 5.4.2) – due to PhonepayPlus monitoring during which the service placed the caller on hold for approximately four minutes before being put through to an answering machine in order to leave a message.
• Pricing Information (Paragraph 5.7.1) – due to the promotional material (the letter) failing to inform users what the charge would be for calling the number.

Next steps
We have written to both Oxygen8 Communications, the Network Operator, and Digital Select Limited, the Service Provider, setting out our concerns. Under paragraph 8.3.3 of the Code of Practice, we have also requested further information from them to assist our investigation.

Digital Select Limited has requested that PhonepayPlus deals directly with the Information Provider under paragraph 8.7 of the Code.  This request is currently being considered.

We aim to adjudicate on all investigations dealt with under the emergency procedure within 10 working days of the service provider’s response to the alleged breaches raised.

However, this timeframe may vary depending on the complexity of the case and on whether there is a need to request more information.

PhonepayPlus ensures smooth transition to premium rate regulation of 0871 number range with six month implementation plan

Ofcom has today announced that PhonepayPlus will take over day-to-day regulation of 0871 numbers on 1 August 2009, when numbers beginning 087 – with the exception of 0870 – will formally be recognised as Premium Rate Services (PRS), putting them under the remit of PhonepayPlus’ Code of Practice.

PhonepayPlus’ implementation plan

Ofcom has also announced a six month transition period, during which providers of 0871 services – which include technical helplines, ticket bookings, road traffic advice lines – must ensure they comply with the PhonepayPlus Code of Practice.

PhonepayPlus has responded with the announcement of an implementation plan which will ensure all stakeholders are fully aware of the changes; any responsibilities they may have under PhonepayPlus’ Code of Practice; actions they may need to take in order to become compliant; and which parts of the Code apply to them.

For consumers, the plan will provide greater clarity regarding the cost of calls placed to 0871 numbers, and their options should they have concerns about the promotion or operation of 0871 services.

PhonepayPlus’ implementation plan will include:

• Communication with 0871 Network Operators and Service Providers formally advising them of their responsibilities under the Code of Practice and actions they may need to take to become compliant;
• industry workshops to introduce 0871 Network Operators and Service Providers to the PhonepayPlus Code of Practice, its meaning and their responsibilities within it;
• media and marketing campaigns to educate consumers and industry about what the new regulatory regime means for them;
• online information and registration tools as a resource for industry and consumers to help them understand the changes and what they mean;
• publication of supporting materials including Helpnotes, FAQs, and a Statement of Expectation; and
• liaison with consumer protection groups to ensure they are fully briefed and able to direct concerned consumers as necessary.

Application, consultation, regulation – background to handover

Ofcom has today announced the outcome of a Review of the 0871 number range, which contained a package of measures to improve consumer protection and pricing transparency. Ofcom has decided to make 0871 numbers subject to premium rate regulation which is defined by the PhonepayPlus’ Code of Practice. The Code will also now extend to 09 numbers that are charged at more than five pence per minute (PPM) and less than 10 PPM.

On 13 November 2007, PhonepayPlus published a Statement of Application for the regulation of 0871 numbers, which explained how it proposed to apply the existing requirements of its Code of Practice to services offered on the number range.

Commenting on the change in regulation Paul Whiteing, Acting CEO of PhonepayPlus, said: "Services offered via 0871 numbers are generally very useful and highly convenient, but the cost to call them can vary widely, especially from a mobile phone. Our experience regulating other premium rate services will ensure the necessary safeguards are in place to protect consumers, especially around price transparency,"

"We expect this regulation to be a boon to industry and not a burden, by boosting consumer confidence in these services."

Questions or comments

Those with questions or comments regarding PhonepayPlus’ 0871 regulation, or requiring more information on the implementation plan, should contact PhonepayPlus on compliance@phonepayplus.org.uk.

- ends-

For further information, please contact:

PhonepayPlus press office on (020) 7940 7440.

PhonepayPlus’ recent review of mobile phone-paid services highlighted an issue with promotional material for various text-based Virtual Chat Services which implied that users may be able to meet other members of the public as a consequence of calling or texting the service.

This promotional material either implies or explicitly states that the people it features have joined the advertised dating service in order to meet other members of the public, and so may raise expectations that any meeting would result in sexual liaison.

PhonepayPlus has evidence that a significant number of these claims are misleading. Furthermore, in some cases operators working for Virtual Chat Services have been advertised as genuine "contacts," something we have concluded misleads consumers into believing they are communicating with another member of the public.
The Mobile Review’s conclusion can be found on pages 29-31 of the Final Policy Statement.
The Policy Statement’s main recommendation in respect of Text-based Virtual Chat and Date Services was as follows:

· Services should not imply that users are exchanging messages with other users, or that users will be able to meet others by using the service, unless that is in fact the case.

This Notice extends the above advice to all premium rate Virtual Chat and Date services, regardless of delivery platform or number range. This is due to monitoring and investigations which indicate that chat and date services which are delivered on fixed line platforms are also in some instances being advertised in the same, potentially misleading, way.

We hope that regulatory enforcement action will not be necessary and ask that all providers who are currently promoting or operating in the ways described in this Notice cease to do so and remove any current promotions, with immediate effect. Failure to do so is likely to result in breaches of the PhonepayPlus Code of Practice being raised.

PhonepayPlus has today issued a final statement on mobile phone-paid services and their marketing setting out new measures to protect the public from a range of practices in the mobile premium content market which are causing complaints and undermining consumers’ trust.

Having taken into account stakeholder feedback, PhonepayPlus is implementing the following rules:

- Prior permission: providers offering mobile subscription services charging over £4.50 in any given week or applying pay-per-page charges on the mobile internet must first apply for permission from PhonepayPlus;

- Active confirmation: as part of the prior permission undertaking, any consumer joining a subscription service must first receive a free confirmation text message detailing the cost and conditions of the service. The consumer cannot be charged until they have confirmed their subscription by replying to that text.

Hundreds of thousands of consumers use premium mobile services daily.  These include downloading ringtones, pictures and games, as well as participating in television programmes, receiving news alerts, finding contact details and entering competitions. Most of these services operate with no problem but some companies have adopted practices which are leading to increased consumer complaints. 

PhonepayPlus’ review of the premium mobile sector was prompted by a worrying 108% increase in mobile-related complaints received from 2006/7 to 2007/8. This was accompanied by anecdotal evidence of consumers, including young people, being charged several thousand pounds in some cases as a result of bad practice by content and service providers.

Impact

PhonepayPlus has issued a Statement of Expectation alongside the final statement, which summarises the changes and actions service providers may need to take in order to remain compliant.

Also detailed in the statement are rules pertaining to:

- Price transparency: price information must be clearly displayed – as prominent as any other aspect of the promotion. Promotional material must not suggest any premium rate product or download is ‘free’;

- Promotional text messages: providers sending free promotional messages must inform recipients that the message is free and make clear how to opt out of receiving similar messages in the future;

- STOP: providers offering subscription services or sending promotional text messages must enable consumers to easily opt out of the service via the ‘STOP’ command. Any failure of this command already results in the service being immediately shut down while PhonepayPlus investigates;

- Marketing lists: companies that sell or otherwise trade third party marketing lists must provide evidence upon request by PhonepayPlus that recipients have agreed to receive promotional text messages for particular types of services;

- Chat: text-based chat services must not imply that users are exchanging messages with other individuals, or that customers will be able to meet people by using the service, unless this is the case.

Commenting on the new regulations Paul Whiteing, Acting CEO of PhonepayPlus, said: "There are many innovative, useful and fun services available to consumers via their mobiles. These new measures are targeted at a small number of providers who do not offer services to customers in a fair and straightforward way. Consumers should not need to work hard to understand the full price of any service.

"The guidelines are the result of intensive research in to the mobile market, and PhonepayPlus expects them to result in fewer complaints and greater confidence in the market."

Click here to view the full statement

Click here to view the Statement of Expectation

PhonepayPlus, the phone-paid services regulator, has prohibited Nick Cracknell, of Burston, Staffordshire, from involvement in or contracting for the provision of any phone-paid services for a period of two years, effective from 4 December 2008.

The decision to prohibit Mr Cracknell followed an earlier adjudication against Nick Cracknell t/a NC Enterprises and after evidence was gathered detailing his involvement in services operated by various other service providers which seriously breached the PhonepayPlus Code of Practice.

In considering the Nick Cracknell t/a NC Enterprises case, the PhonepayPlus Code Compliance Panel imposed a number of sanctions including a £15,000 fine. It also decided to prohibit Mr. Cracknell under paragraph 8.9.2g of its Code, which enables it to: “prohibit a service provider, information provider and/or any associated individual found to have been knowingly involved in a serious breach or series of breaches of the Code from involvement in or contracting for the provision of a premium rate service for a defined period”. Full details of the adjudication can be found at

www.phonepayplus.org.uk/business/adjudications.

Network operators and service providers are reminded that they must not contract to provide services to prohibited individuals, or engage or permit the involvement of prohibited individuals in the provision of phone-paid services. As such, PhonepayPlus urges all relevant parties to remain vigilant to ensure that prohibited individuals do not start up or become involved in phone-paid services while they are subject to a prohibition.

PhonepayPlus, the phone-paid services regulator, today announced that nine more companies have been granted permission to provide phone-paid interactive broadcast services.  These companies are now able to provide any kind of broadcast phone-paid service. However, PhonepayPlus will not hesitate to revoke its permission where there is evidence a provider has not met all of the conditions contained in the licence.

In February 2008, Ofcom announced that it would amend television broadcasting licences to make licensees directly accountable for phone-paid services in programmes. Broadcasters, in turn, often rely on their telecoms service provider to ensure services are compliant, so PhonepayPlus announced at the same time a prior permission regime for service providers to help make sure consumers receive a fair deal.

The service providers that have today been granted permission to provide interactive television phone-paid services are:

• Advanced Telecom Services (UK) Limited
• Content Guru Limited
• Ericson IPX AB
• Invomo Limited
• Million21 Limited
• MX Telecom Limited
• Square 1 Communications Limited
• Sunrise Telecoms Limited
• Temple Interactive Media Limited

PhonepayPlus will continue to review applications and will announce further permissions awarded in the coming months.

For further information, please contact:

PhonepayPlus press office on (020) 7940 7440.

Phone-paid services regulator warns consumers to be extra watchful of scams during the festive season.

Christmas should be a time of celebration, but there are opportunists who will seek to use it for personal gain by conning consumers when they might be especially vulnerable to particular types of scam.

Almost one in two of us have used a phone-paid service in the last year. It is a fun, convenient way of personalising your phone, participating in a TV show or competition, receiving news alerts and much more. Almost everyone can expect to do so without any problems at all. However, consumers must still be careful.

PhonepayPlus, the market regulator, has already taken action against postal scams circulated via text message or post, which suggest recipients have missed a delivery and encourage them to call an international or premium rate number in order to rearrange it. Unfortunately, these seem to take place most often at Christmas time when families are expecting gifts.

Members of the public who receive such messages, or who are concerned by similar communications or promotional messages, should contact PhonepayPlus (0800 500 212, Mon-Fri, 8am-6pm, or www.phonepayplus.org.uk) to check the number’s legitimacy before returning the call.

PhonepayPlus will act quickly under its Code of Practice to punish service providers found to be facilitating scams using premium rate numbers, and will block the number concerned with immediate effect. While the Code of Practice does not extend to services accessed through international numbers, PhonepayPlus works with network operators to bar access to numbers that have been identified as operating scams.