PhonepayPlus, the phone-paid services regulator, has launched an investigation following six complaints from members of the public about a service called ‘SMSWinner’. The service, operating on SMS shortcodes 64546 and 60032, has been suspended pending the result of the investigation. PhonepayPlus considers the Service Provider responsible under the PhonepayPlus Code of Practice to be ‘Ericsson IPX AB’.
The complaints relate to a competition service promoted online at smswinner.net, which offered consumers the chance to win high-value prizes, such as international holidays, by correctly answering a series of questions by text message in the quickest time possible.
During the course of its preliminary investigation, PhonepayPlus identified a number of issues, which it believes contravene the PhonepayPlus Code of Practice (Eleventh Edition Amended April 2008). These include:
Chargeable messages, costing £2 each, being sent after the ‘STOP’ command had been received
Not sending users subscription initiation messages
Not sending users reminder messages
Not applying for prior permission from PhonepayPlus for a service which costs more than £4.50 per week
Stating on the website that users would receive two quiz question messages at a cost of £2 each when, in fact, eight £2 messages are sent, followed by eight more for each subsequent competition, until the subscription is ended
In all, PhonepayPlus suspects the service to breach 11 paragraphs of its Code. As such PhonepayPlus has invoked its emergency procedure to bar access to the numbers 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.
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
Visitors to smswinner.net were asked to complete a three-step process. Step one was to select a competition prize, for example, a holiday to Japan. Step two was to enter the name of their mobile operator and their mobile phone number. This generated a password to send to an SMS shortcode to initiate the completion: step three. Whilst the site explained at the end of step two that the service was subscription-based, it gave no details of what that subscription entailed.
After initiating the service, users were immediately sent two free messages, the first informing them that they would have to answer eight questions, and the second explaining the format required for their answers. After completing the answers to the eight questions, users were automatically entered into the next eight-question quiz unless they sent the ‘STOP’ command.
Some complainants, and PhonepayPlus’ preliminary investigation, found that sending the ‘STOP’ command did not end the delivery of charged messages.
Phonepayplus concerns
The regulators investigation initially focuses on the following paragraphs of the PhonepayPlus Code of Practice (Eleventh Edition Amended April 2008):
Prior permission (Paragraph 5.1.1) – due to the service costing users £16 to complete each eight-question quiz (often over the course of one day) when PhonepayPlus requires prior permission for all services which cost more than £4.50 in any seven-day period
Pricing information (Paragraph 5.7.1) – due to the service being promoted on the website as a two-question service at £2 per message when PhonepayPlus’ experience shows that there are eight questions
Identity and contact details (Paragraph 5.8) – due to the sending of messages following receipt of the ‘STOP’ command that did not identify the sender or contain the sender’s contact details
Promotional material – Cost (Paragraph 7.6.2a) – due to the service costing more than £1 and failing to display the full cost of participating
Information disclosure (Paragraph 7.6.4b) – due to the promotional material failing to indicate how information on the winner of the competition can be obtained
Competition closure (Paragraph 7.6.5) – due to the site not stating the closing dates of the competitions
Competition terms (Paragraph 7.6.7) – due to the competition organisers not making it clear that they are offering prizes 365 working days from the end of the competition when the Code states these details must be prominent if prizes are not offered within 28 days of the closing date
Promotional material – Subscriptions (Paragraph 7.12.3) – due to the service not clearly indicating that it was subscription-based on its website
Subscription confirmation messages (Paragraph 7.12.4 a-f) – due to confirmation messages failing to inform users of the name of the service, the cost of the service, that it is subscription- based, how to leave the service or including contact details of the service provider
Reminder messages (Paragraph 7.12.5) – due to the failure to provide users with messages when they spent over £20 in a period of less than one month
‘STOP’ command (Paragraph 7.12.6a) – due the service provider continuing to send chargeable messages after the ‘STOP’ command had been issued
Next steps
Phonepayplus have written to the mobile network operators and Ericsson IPX AB, 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.
Once the response is received from the Service Provider, the case will be submitted to a Tribunal for a decision to be made on the alleged breaches and any appropriate sanctions imposed. Phonepayplus 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 from the parties involved.
For information kindly visit the Phonepayplus website.