Premium mobile phone services rip off continues


New survey uncovers serious problems.

Consumer group CHOICE says it’s time for the industry code of practice for mobile phone premium services (MPS) such as ringtones, horoscopes, music videos and wallpapers to deliver real consumer protection.

The consumer group wants to ensure consumers really mean to sign up to high cost premium subscription services through a ‘double opt-in’ system. CHOICE also wants users to have the right to block MPS access to their phones on request.

A survey of CHOICE members has found of 431 people, nearly half had received one or more unsolicited MPS messages. And two-thirds of these unwilling customers were charged for it.

“It's a bit of a joke when so much of an industry’s profits seem to depend on charging people for something they never asked for in the first place,” said CHOICE Policy and Campaigns Director Gordon Renouf.

Of those surveyed, 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.

“Such abysmal levels of customer service show this is an industry committed to quick profits – not customer care,” said Mr Renouf.

Complaints to the Telecom Industry Ombudsman (TIO) about these messages continue to climb sharply – with more than 22,000 complaints lodged in the 2008 financial year alone.

The mobile phone industry, eager to appear to be taking charge of the soaring number of complaints, is due to finalise their own voluntary code this month.

“The industry advocate, Communications Alliance, promises their new Mobile Premium Services Code will rein in these rip-offs, but without proper oversight or enforcement powers CHOICE is concerned the new code will amount to little more than talk,” said Renouf.

To address the problems, CHOICE says the following action is needed:

  • The requirement for consumers to send two messages, known as a ‘double opt-in’, before any subscription service begins.
  • A consumer right to bar MPS from their account.
  • Restrictions on advertising to children.
  • An independent monitoring mechanism to ensure MPS providers comply with the new Code.

Survey results

Survey of 431 respondents in December 2008

Used for:

  • 35% of respondents surveyed had subscribed to an MPS service.
  • The most common MPS were quizzes and competitions.
  • One in three subscribers subscribed to ringtones.
  • Almost one in three respondents had used their phone to vote for a television program.

Why respondents cancelled the service:

  • Almost all (97%) cancelled their service due to technical issues.
  • Over half (58%) cancelled because of cost.

Cost:

  • Slightly more than half had paid more than $5 a week for the service.
  • Just under a quarter paid over $10 for the service.

Percentage still subscribing to a MPS:

  • Only 5% are still subscribing to an MPS service.

How long people subscribe for:

  • Slightly more than one in three will only subscribe for less than one week.
  • 10% of respondents had been subscribing for over six months.

How many at a time:

  • Most people only subscribed to one service at a time (85%).
  • The most they subscribed to at any one time is three.

Unsolicited MPS responses:

  • 47% have received an unsolicited MPS.
  • 68% were charged for this service.
  • 66% were charged more than $5.
  • 57% made a complaint.
  • 47% were not satisfied with the outcome, and 4% are still waiting.
  • 45% had difficulty cancelling the service, only 6% did not cancel the service.
  • It took more than 1 month for 32% of respondents to cancel their service.

Other key points:

  • Around 50% paid over $5 a week for their MPS.
  • 58% decided to terminate the service because of cost.
  • 62% experienced difficulty cancelling their service.
  • 49% didn’t know how to cancel the service.
  • 49% received no response when they attempted to cancel (no confirmation).
  • 30% said it took too long to cancel.
  • 29% were still charged for the service after cancelling.
  • 81% were not satisfied with the last MPS service they subscribed to, mostly because of Cost (67%) and Difficulty exiting (49%).
  • 45% made a complaint about their lack of satisfaction with the service.
  • 53% were not satisfied with the outcome.

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