Archive for June, 2009

PhonepayPlus, the regulator for the phone-paid services industry, has today launched a wide-ranging discussion paper on the development of its 12th Code of Practice. PhonepayPlus is inviting response from industry, consumers and all other stakeholders in order to properly inform thinking as it develops its full Code consultation for later in 2009.

The paper takes into account recommendations made by Ofcom in its recent PRS Scope Review.

The Code of Practice is the document through which PhonepayPlus regulates the phone-paid services industry, enabling it to protect consumers from harm while providing reputable businesses with every opportunity to develop new, useful products and services for consumers to enjoy using their phones.

The 12^th revision of the Code will be among the most significant in the organisation’s 23-year history. PhonepayPlus intends to carry out a thorough examination of the current version to determine how it might be improved, especially with regard to developments in this technologically fast-paced industry, such as the explosion of mobile phone-paid services, which have changed the face of the industry in recent years.

Recognising it cannot regulate effectively in isolation from industry and other regulators PhonepayPlus is publishing this discussion paper ahead of an initial draft of the new Code, upon which it and Ofcom will consult later this year.

PhonepayPlus proposes, and explores the impact of, four main changes to its regulatory regime in the discussion paper. These are:

• That the new Code is based on identifying desirable outcomes, and supporting them with rules where appropriate, rather than prescribing a step-by-step guide to compliance
• That every business in the phone-paid services value chain will assume an appropriate degree of responsibility for the provision of compliant services and the delivery of consumer protection measures
• The creation of a database on which all Service Providers (SPs) and Information Providers (IPs) will be registered for due diligence and risk management purposes
• That providers must have in place adequate customer care facilities to ensure consumers are able to register a complaint and seek redress as quickly as possible

Commenting, PhonepayPlus Chief Executive, Paul Whiteing said: “Development of our 12^th Code of Practice is one of the most important activities we will undertake this year and it is imperative we get off on the right foot. We want to ensure the Code protects consumers in the ways it should do, while enabling reputable providers to offer innovative, compliant services. This is why we have published this discussion paper ahead of a draft of the Code; in order that we might canvass a wide cross section of views from industry, consumers and our peer regulators as early in the process as possible.”

Comments and submissions are invited from anyone with an interest in phone-paid services, industry, including peer regulators, trade associations and consumers. The closing date for comments is 1 August 2009.

Ahead of an industry workshop organised by Ofcom to discuss its PRS Scope Review, PhonepayPlus has prepared an initial assessment of the potential impact of the proposals on PhonepayPlus.

PhonepayPlus, the phone-paid services regulator, has launched an investigation following correspondence received from Stockport Metropolitan Borough Council regarding nine complaints it has received from members of the public.  Having contacted the Network Operator through whose network the service operates, PhonepayPlus considers the Service Provider responsible under the PhonepayPlus Code of Practice to be ‘Digital Select Limited.’

The complaints relate to a letter received by the complainants from a debt recovery company called ‘Redstone Recovery Ltd.’  The letter refers to an outstanding debt balance and states that legal proceedings will be taken against the complainant if payment is not made within seven days. The letter contains a premium rate number and asks the recipient to call the number to agree a payment plan in order to clear the outstanding debt.

Due to the very serious nature of the alleged breaches of its Code of Practice, PhonepayPlus has invoked its emergency procedure to bar access to the number 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.

However, following further discussions with Stockport Metropolitan Borough Council, PhonepayPlus has become aware that the address for Redstone Recovery Ltd which appears on the promotional letter does not exist. In order to prevent further consumer harm whereby consumers are concerned about this apparent debt, but find themselves in a position where they are unable to contact someone to discuss it, PhonepayPlus has asked Digital Select Limited to reactivate the line with a recorded message which informs callers that Digital Select does not deem the debt recovery service to be legitimate and to disregard the letter. The recording also states that the service is currently under investigation. In addition, callers are directed to the Service Provider’s non-premium rate customer service number should they require further information.

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
The service is charged at £1.50 per minute from landlines, and potentially considerably more from mobile phones. It is brought to the attention of consumers when they receive a letter delivered to their home.  Complainants are concerned this is not a genuine debt collection notice and the company is not a genuine debt collection agency.

When PhonepayPlus monitored the service, a recorded message stated that callers had to be 18 and over and that they must have the bill payer’s permission. Callers were also reminded that calls cost £1.50 per minute and network rates may vary. There was then a ringing noise followed by the message:

‘All our operators are currently unavailable; please call back between 10am and 5pm, Monday to Friday.’

Throughout the call, the message was repeated on several occasions. After roughly four minutes, there was the option to leave a recorded message.

Our concerns
Our investigation initially focuses on the following paragraphs of the PhonepayPlus Code of Practice (Eleventh Edition Amended April 2008):

• Misleading (Paragraph 5.4.1a) – due to recipients of this correspondence potentially being misled into believing they have an outstanding dept and, as a consequence, misled into calling a premium rate number.
• Unreasonably Prolonged or Delayed (Paragraph 5.4.2) – due to PhonepayPlus monitoring during which the service placed the caller on hold for approximately four minutes before being put through to an answering machine in order to leave a message.
• Pricing Information (Paragraph 5.7.1) – due to the promotional material (the letter) failing to inform users what the charge would be for calling the number.

Next steps
We have written to both Oxygen8 Communications, the Network Operator, and Digital Select Limited, 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.

Digital Select Limited has requested that PhonepayPlus deals directly with the Information Provider under paragraph 8.7 of the Code.  This request is currently being considered.

We 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.