Mobile phone scams and dodgy marketing

Mobile premium services offer users more than ring tones and chat services, but there are consumer protection and competition issues that worry us.
 
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  • Updated:25 Feb 2009
 

01.Whats wrong with mobile premium services?

Boy using mobile phone

They’ve been around since 2004, but Mobile premium services (MPS) are still causing consumer headaches. MPS offer a wide range of content from ringtones and wall paper to video and music clips, news, sports and weather information, horoscopes and R content. They also cover trivia quizzes and voting on TV shows.

But rather than offer products consumers can buy as they need them, many operators persuade or trick consumers into signing up for expensive subscription services at $30 - $50 per month.

Worse still many consumers report being signed up to MPS subscriptions without their consent, and others stay they have had trouble stopping the services once they’ve started. Mobile premium services are a significant and rapidly growing area of consumer complaint. The number of complaints to the Telecommunications Industry Ombudsman (TIO) hit 14,000 in the 2008 financial year.

What we want

Consumer protection in telecommunications relies on Codes of Conduct developed through a self regulatory process managed by an industry association called Communications Alliance. We think this system does not protect consumers and have called for legislative reform – see Telecomms industry needs reform  for more.

In the meantime we have pressured Communications Alliance, to prepare a new Mobile Premium Services Code.

To end mobile premium scams and unfair marketing we need:

  • A much more effective code
  • adequate monitoring of compliance with the Code by an independent body
  • Enforcement of meaningful sanctions against offenders (including withdrawal of access to '19' numbers)
  • Review of the Code after two year’s operation.

To be more effective the Code should:

  • Require that the consumer confirms they understand the subscription nature of the product through a “double opt-in” before any charging begins
  • Stop children being signed up to subscription service by banning advertising Mobile Premium Services to children during prime viewing times
  • Entitle a consumer to bar access to Mobile Premium Services on their phone account
  • Prohibit use of the term ‘free’ for services which, in fact, come with strings attached.

CHOICE welcomes the newly created 19 SMS Services, an online MPS guide at www.19sms.com.au. The website provides details of the general rules regulating MPS. Where you know the number of the content provider and you did in fact subscribe to their service, you can use the 19 SMS Service to find out further details, including how to contact them and the particular terms and conditions of each service.

However, if that doesn't work, you should go to the telco, and then the Telecommunications Industry Ombudsman. CHOICE believes that given that MPS is transmitted through the medium of mobile phones, it would be a very useful addition if consumers could access the 19 SMS Services through their phone handset. This type of innovate tool is available in the service offered by Phone Pay Plus, the UK regulator.

Video: Scamtones!

A parody advert for 'premium' mobile service providers.

What we're doing

We surveyed our members in December 2008. Of the 431 members who completed the survey:

  • nearly half had received one or more unsolicited MPS messages – and two thirds of these unwilling customers were charged for it.
  • 95% only subscribed to one service at one time and nearly all of those are no longer subscribing.
  • Of those who did knowingly subscribe to an MPS, almost two thirds later experienced difficulty cancelling the service.
  • Fifty percent of MPS customers surveyed reported either not knowing how to stop the subscription service, or say they attempted to cancel and received no response.

CHOICE wrote a submission in December 2008 on the draft Mobile Premium Services Code to the industry body, Communications Alliance.

CHOICE has released a report calling for much greater consumer involvement in developing consumer protection codes in the telecommunications industry and other improvements to the self-regulatory process.

What you can do

If you have a problem with a mobile premium service operator or a charge on your mobile bill that you can't resolve with your provider, you can lodge a complaint online with the Telecommunication Industry Ombudsman or contact them on 1800 062 058.

Tips on cancelling your mobile premium service

If you get a text from someone you don't know that looks like a quiz, joke, riddle, horoscope or anything else that is suspicious, reply with one word in caps: STOP.

Contact your telco to find out if you are being charged for any premium content on your current account - don't wait for the bill to arrive. Inform your telco you have texted STOP to the MPS service and make a note of the date and time you spoke to your telco and who you spoke to in case you need to know it later.

If you continue to receive messages after you have texted STOP and are charged for them on your bill, call your telco and take it up with them. If they are unable to provide you with a refund or a date when you "subscribed" to this service (or you disagree that you have subscribed) take it to the TIO. They will provide you with a reference number which you can then go back to your telco with which will encourage the telco to resolve the situation in a timely manner.

More information

CHOICE Chair Jenni Mack's speech at the 2008 Communications Consumer Dialogue (covers telecommunications regulation and consumer protection, with case studies on mobile premium services)
Our 2006 submissions to the TISSC Mobile Premium Services Draft Code and to the Australian Communications Authority Determination for the Regulation of Mobile Premium Services set out our then views on the requirements for an effective code.
Our media release of 20 February 2009 kept pressure on the telco industry and government to create a robust, consumer-focused MPS Code.

 

 
 

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