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.