New rules for mobile downloads

Premium-rate regulator PhonepayPlus (the "Regulator") has issued a Final Statement on mobile phone services, introducing new measures to protect mobile phone users from malpractice by content providers. The measures are intended to reduce complaints and encourage consumer confidence in the market.

Background

The new rules follow a consultation process by the Regulator in response to a reported 108% escalation in consumer complaints regarding the prices of mobile download content.

Premium-rate mobile services are used for a variety of purposes such as receiving news alerts, entering a competition, or downloading music, games and ring tones.

New Procedure

Having taken account of feedback from the consultation process, the Regulator has introduced two new rules:

a) Prior Permission
Providers who charge over £4.50 for their subscription content in any given week, or who charge on a pay-per-page basis on the mobile internet, must first seek permission to do so from the Regulator.

b) Active Confirmation
As well as providing a prior-permission undertaking, any consumer subscribing to a content service must first receive a text message, free of charge, confirming the costs and conditions of the subscription service. The consumer must then reply to the confirmatory text before being charged for the service.

The Regulator has issued a Statement of Expectation to accompany its Final Statement, to provide guidance on the additional measures required by the Regulator from service providers in order for them to remain compliant. These include:

• Companies who sell, or otherwise trade, third party marketing lists must provide evidence to the Regulator on request that consumers have agreed to receive promotional text messages for particular services
• Consumers must be able to send a STOP text message to subscription service providers, in order to opt out of their subscription at any time
• All prices must be displayed clearly and prominently, with no promotional material suggesting that any subscription service is 'free'
• Text-based chat services must not imply that users are exchanging messages with other individuals, or that consumers will be able to meet people by using the service, unless this is the case

Sanctions

The Regulator can impose the following sanctions for breach of its rules:

• Companies can be blocked from using the premium-rate numbers to which the breach relates
• A fine of up to £250,000 per breach can be issued
• Any failure to provide or accept a STOP text opt-out command can result in the service being immediately shut down whilst the Regulator investigates
• Named individuals can be barred from operating subscription services in an attempt by the Regulator to prevent black-listed companies from trading under a different name to evade detection.