Regulator warns of secret app charges and proposes industry guidance

Out-Law News | 27 Sep 2011 | 8:00 am |

Some makers of mobile phone apps are secretly charging phone users for services they never asked for, premium rate phone regulator PhonepayPlus (PPP) has said. It has proposed guidance that it hopes would prevent consumers being harmed.

PPP has uncovered instances of publishers using apps to take payments from users that PPP said were not authorised. One supposedly free battery-saver app went into the phone's text message function and signed up to a premium rate subscription service, PPP said.

It is consulting on proposed guidance (23-page / 230KB PDF) that would demand that all consumer consent to charging is clear; that services which combine free and paid-for elements are clear what is free and what is not; and the details of virtual currencies, such as how much they are worth, are clear.

"We need to be nimble and flexible in our approach. We know that the best regulation is one that works collaboratively with industry to pre-empt before problems occur that harm consumers and damage markets," said PPP chief executive Paul Whiteing.

"We will not hesitate to use our robust sanctioning powers to drive out rogue providers who could damage a vital part of the UK’s growing and innovative digital and creative economies," he said.

The guidance recommended that where an app has installed malicious software on a phone that a PPP Tribunal is allowed to disregard call records or phone messages as proof of consent to charges.

It also recommended that apps demand password entry every time they are opened to prevent children using them to operate accounts.

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