Regulator serves premium rate service provider with £800,000 fine for seeking to exploit elderly

It said that a number of pensioners ran up hundreds of pounds worth of phone bills entering "word search puzzle competitions" that had been advertised in national newspapers and other publications.

PhonepayPlus (PPP) fined Churchcastle Limited (Churchcastle) £800,000 and ordered it to refund any justified complainants after deeming the company to have sought to take advantage of a vulnerable group in a misleading fashion.

The company sent misleading "highly personalised direct mail marketing" material that encouraged "elderly consumers" who had completed the word search puzzles to call premium rate numbers in order to enter a prize draw or for a chance to win "low-quality jewelry" that had been labeled as "'strictly limited’ and ‘rare’," the regulator said.

However, Churchcastle failed to make the cost of calling the premium rate numbers either clear or prominent enough in its marketing material, PPP said.

The PPP Code requires that premium rate service do not "seek to take advantage of any vulnerable group or any vulnerability caused to consumers by their personal circumstances" or do not "mislead or be likely to mislead in any way".

The Code further requires that the cost of premium rate services be displayed to consumers prior to any purchasing decision and that the information is "prominent, clearly legible, visible and proximate to the premium rate telephone number, shortcode or other means of access to the service."

In addition providers are prohibited from "knowingly or recklessly" concealing or falsifying information that they provide to PPP, or from providing false or misleading information to the regulator "either by inclusion or omission".

PPP ruled that Churchcastle had breached each of those rules after receiving 15 complaints about the company.

"In many cases, PhonepayPlus was alerted to the consumer harm by relatives or carers who discovered that their loved ones had unexpectedly high phone bills," the regulator said in a statement. "PhonepayPlus received a number of complaints regarding elderly Churchcastle customers who were very shocked, and some distressed, about the costs that they had incurred. Some of these vulnerable consumers ran up £100’s worth of phone bills."

Paul Whiteing, chief executive of PPP, added: "We are saddened that elderly consumers have been misled in this cynical way. PhonepayPlus will not tolerate any misleading activity that takes advantage of vulnerable people and we encourage anybody who is concerned about an elderly relative’s use of premium rate services to contact us or check our website for advice at www.phonepayplus.org.uk"