Out-Law / Your Daily Need-To-Know

Text message subscription service fined £300,000 over opt-in worries

22 Oct 2009, 2:04 pm

A text message subscription service which costs £3 per week has been hit with a fine of £300,000 by the premium rate phone regulator over doubts that users had actually opted in to the service.

PhonepayPlus (PPP), the body that regulates the premium rate phone industry, said that it had received 450 complaints about Pointfactory, which its promoters say is a points-based incentive gift system. The complaints relate to the service as operated by Reach Communications Ltd through two different mobile system service providers.

PPP imposed a fine of £140,000 for the activity carried out via service provider Zamano and £160,000 for the activity carried out via Tanla Mobile. It also told Reach to repay users all the money they spent on the service.

"Complaints related to the receipt of unsolicited or misleading messages from the service," said a PPP statement on its ruling.

"During the course of its investigation, PhonepayPlus became concerned that consumers had received marketing messages or charged text messages without providing full verifiable opt-in confirmation, and that consumers were not being provided with sufficient details of the service (i.e. how it worked, how much it cost and what was being offered to users)," it said.

In both cases PPP's Tribunal, which rules on breaches of its Code of Practice, issued fines for breaches of its rules on legality; fairness; the prominence of pricing information; and promotional material for subscritipn services.

"The Tribunal considered the case to be very serious," said the PPP statement. "The Tribunal imposed a bar on all subscription services and related promotional material for a period of 12 months."

Pointsfactory cost users £3 a week, a sum that was added to their phone bills. For this they received 1,500 points which they could redeem online for products advertised there. They could also buy more points or play games online which would either earn or lose them points.

Four products are currently available for purchase with points, including a piece of plastic which holds eggs to be boiled for 3,950 points and jewellery in "gold finish" for 4,500 points.

PPP said that the people behind the company operating the service had previously run rule-breaking services.

"PhonepayPlus was concerned about the identity of the Information Provider as the individuals involved appeared to have historically been involved in non-compliant services," said the regulator.