Fraud Olympics: Jack Barnard takes UK Gold

[El Gringo]

but narrowly misses out on GB fine record

http://news.bbc.co.uk/1/hi/business/7572962.stm
Phone-line breach leads to fine
20 August 2008

A near-record fine has been handed out after consumers were thrown by a recorded telephone message that caused them to call a higher rate number.

Regulator Phonepayplus has levied its second-highest fine of £200,000 following the investigation.

Thirty-two people complained after receiving an unsolicited phone call which they thought was somebody trying unsuccessfully to talk to them.

It prompted them to call back on an 070 number which charged at a higher rate.

Complaints

The adjudication from Phonepayplus said that unsolicited calls were made to residential, business fixed-line, and mobile phone numbers using automated calling equipment.

Recipients said that the call lasted for about five seconds, when they heard a man's voice saying "Hello, hello, can you hear me?" before the call ended.

"This prompted consumers to return the call while being unaware of the higher-rate charges," the adjudication said.

The regulator's tribunal ruled that its code of practice had been breached and fined service provider Jack Barnard Telecom Services, of Epping in Essex, £200,000.

A Phonepayplus spokesman said this was the second highest fine, after new rules increased the maximum fine available.

Opera Telecom was fined £250,000 after viewers lost an estimated £20m in phone-in quizzes on GMTV.

Jack Barnard told the BBC that he intended to appeal against the fine, which he said was higher than the income generated by the calls, on a number of grounds.

He did not want to go into more detail until he had seen the full adjudication.

These 070 numbers are used by businesses which spend time on the road. They are called "find-me-anywhere" services and cost up to 50p a minute to call from a landline number or possibly more from a mobile phone.

More cases of alleged 070 number breaches are expected to be considered by the tribunal following this test case.

.

[silver]

Jack Barnard told the BBC that he intended to appeal against the fine, which he said was higher than the income generated by the calls,

wow - that makes a change,. yes a fine should be more than you made from the scam - usual perhaps but it does somewhat remove the temptation to repeat similar offences!

[gem]

A fine is a de-centive that is to say that the fine should always be more than the revenue generated. What's the point of a fine otherwise!

Perhaps on appeal they could double the fine.

[El Gringo]

A fine is a de-centive that is to say that the fine should always be more than the revenue generated. What's the point of a fine otherwise!

Originally Posted by gem

completely agree guys.
The problem is the 'fine' are regulatory fines and subject to the Communications Act 2003. They cannot exceed 10% of the revenue and are capped at £250,000.

does that go someway towards explaining why the same companies are being fined time after time
and complaints to PhonePayPus have been increasing by 40% year on year.

[gem]

It's an encouragement for them to continue - since they STILL make money and the publicity does not seem to bother/harm them!

But then again this is just the tip of the iceberg. I'll get off my horse now!

[mike99]

An odd case this though. Whether or not this fine exceeds the amount made during the scam (which PP+ claim to have halted after only a few days) it is certainly not a token amount (cf most PP+ fines).

So why do PP+ regard this particular fraud - where victims were only charged once and had to respond to the fraud to become a victim - as so much worse than completely unsolicited reverse charge text theft - where victims are charged many times (as part of a "subscription") and have made no contact whatsoever with the dishonest company?

[mike99]

Watchdog bares its gums

Watchdog bares its teethRegulator hands out £200,000 punitive fine for expensive callback scamThe Guardian, Saturday August 23 2008 Article historyA phone line that tricked people into calling a high-cost number has been shut by watchdog PhonepayPlus under its emergency procedures.

The regulator fined service provider Jack Barnard Telecom Services, of Epping, Essex, £200,000 - its second-biggest fine - following complaints over unsolicited calls made using automated calling equipment (ACE) to residential, business and mobile phones.

Victims received five-second calls during which they heard a recorded male voice say, "Hello, hello, can you hear me?" The call then ended, prompting many consumers to ring the number back. As the number started 070365, many believed they were calling a mobile phone, unaware 070 is reserved for personal "follow me" numbers which cost up to 50p.

The fine - for breaches of the watchdog's code on legality, fairness, pricing information and contact information - will be levied on the Jack Barnard firm, not content provider Roger Simmons, trading as Russell Marketing, of Dagenham. The fine is punitive (greater than the profit made) to set an example.

There are few legitimate 070 lines (follow-me technology is largely superseded) so people should treat all such numbers with care. This is expected to be the first of many fines from the regulator in response to similar scams.

Jack Barnard intends appealing against the decision and fine.

Wow! That's a clever new idea from PP+: making fines "punitive".

[Worldlife]

completely agree guys.
The problem is the 'fine' are regulatory fines and subject to the Communications Act 2003. They cannot exceed 10% of the revenue and are capped at £250,000.

Originally Posted by El Gringo

That must be annual turnover surely - 10% of the income from the scam would mean the perpertrator keeping 90% of fraudulent earnings

[El Gringo]

That must be annual turnover surely - 10% of the income from the scam would mean the perpertrator keeping 90% of fraudulent earnings

Originally Posted by Worldlife

Communications Act 2003

http://www.opsi.gov.uk/ACTS/acts2003...20030021_en_11

97 Amount of penalty under s. 96

(1) The amount of a penalty imposed under section 96 is to be such amount not exceeding ten per cent. of the turnover of the notified provider’s relevant business for the relevant period as OFCOM determine to be—

(a) appropriate; and

(b) proportionate to the contravention in respect of which it is imposed.

I'm guessing the '90%' that pp+ didn't collect was the revenue share the mobile/fixed line network operators took. And also the 17.5% Vat Gordon took

[Worldlife]

The fine could be separate from any compensation claimed by consumer or awarded to the consumer by the regulator or through other Courts.

Although 10% seems low (especially those designing their business plans to exploit enforcement delays and weaknesses) I suspect that the fine is separate from any awards for repayment.

In addition to fines or repayment we need to give consideration for compensation for the distress this causes. Particular examples are where pensioners living alone are charged for connections to expensive sex lines!!!!

[mike99]

The fine could be separate from any compensation claimed by consumer or awarded to the consumer by the regulator or through other Courts.

Although 10% seems low (especially those designing their business plans to exploit enforcement delays and weaknesses) I suspect that the fine is separate from any awards for repayment.

In addition to fines or repayment we need to give consideration for compensation for the distress this causes. Particular examples are where pensioners living alone are charged for connections to expensive sex lines!!!!

Originally Posted by Worldlife

Quite right!

If someone were caught leaving my home in the middle of the night with my 43" plasma TV (not that I have a plasma TV or that anyone would steal the TV I have got or that anyone would ever be caught if they did, but let's go with this example) he would be forced to hand back the TV, then he would be punished, then I could sue him for the distress caused to my family (probably not worth it because people who burgle houses tend not have have a great deal of money in the bank, but I could do this):

Restitution, punishment, and compensation - three different things.

In the wacky world of PRS, people who steal from or defraud their victims are allowed to keep the money, pay some of it as a fine, and (if ordered to) provide "refunds" to those victims who request refunds.

[silver]

it's pretty clear to anyone, i.e. it doesn't take a rocket scientist to work out why the scams continue - even when (if) caught the perpetrator is still financially better off after the crime,.

the idea that victims need to work out they have been scammed then work out how to get their money back is another problem,. there should be compulsory logging of all calls and money paid to the owner of the number - whether they request the money or not

[El Gringo]

another one

http://www.phonepayplus.org.uk/news/...r_20080919.asp

19 September 2008
EMERGENCY PROCEDURE INVESTIGATION INTO PremTel Limited

PhonepayPlus, the phone-paid services regulator, has launched an investigation following 31 complaints 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 ‘PremTel Limited.'

The complaints relate to an email which resembles an invoice for computer equipment. The email encourages recipients to call ‘070' prefixed numbers which are charged up to 50p per minute from landlines, and potentially considerably more from mobile phones.

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 numbers associated with the service with immediate effect.

The bar on access applies to all numbers on which the service has been operating. In addition, all revenue payable to the service provider has been withheld by the network operator pending the outcome of the investigation.

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 up to 50 pence per minute from landlines, and potentially considerably more from mobile phones. It is brought to the attention of consumers when they receive an email apparently from ‘Laptops Online Inc' announcing "Order Received, Order Confirmed, Payment Authorised, Goods Dispatched." The email provides an itemised invoice for a laptop costing approximately £500. Complainants consistently say they have not ordered any products or services from this company. The email encourages recipients to contact the "UK office," alternatively described as their "24/7 Tech Support" team, via a ‘070' prefixed number. PhonepayPlus has received 31 complaints regarding this service.

Our concerns

Our investigation initially focuses on the following paragraphs of the PhonepayPlus Code of Practice (11th Edition Amended April 2008):

* Misleading (Paragraph 5.4.1a) - due to the misleading nature of the email.
* Inducement of fear, anxiety or distress (Paragraph 5.3.1b) - due to the nature of the email which appeared to be an invoice for a product that the consumer had seemingly never ordered.
* Pricing Information (Paragraph 5.7.1) - due to the apparent lack of pricing information within the promotion of the service.
* Contact Information (Paragraph 5.8) - due to the apparent lack of non-premium rate contact information within the promotion of the service.

Next steps

We have written to both Switchconnect Ltd (also known as Switch Services Limited), the Network Operator, and PremTel 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. They have until 23rd September 2008 to respond.

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.

this should be interesting
Switchconnect Ltd has a lot of previous form when 070 were 'regulated' by Ofcom
and
PremTel Limited already has form with PhonepayPlus.

[mike99]

Couple of interesting postscripts to this story:

First of all the Mirror has followed it:

Jack Barnard shut down over premium rate scam
By Andrew Penman on Mar 11, 09 12:27 PM in Premium rate phonelines

Looks like the end of the road for premium rate phoneline outfit Jack Barnard Telecom Services.

We wrote here how its lines were used in a "missed call" scam that snared victims into calling a number that cost 50p, or much more from mobiles. Jack Barnard was later fined £200,000 by regulator PhonepayPlus.

Despite exhausted the appeals process, the fine remain unpaid. So the regulator has now barred the company from premium rate services. Which might be an academic point, since the company has gone into voluntary liquidation.

Full details of the adjudication are here, along with other cases (yes, mBlox have been fined yet again).

But for a real laugh, see Jack Barnard's pleadings of innocence here:

21st August 2008

You may have read about the company in the press recently regarding the use of 070 'follow me' numbers. Everything written has been the result of Phonepay Plus contacting journalists about a 'big story', and a very brief account of the results of their investigations.

I fully intend to refute these allegations and prove my innocence in this case. There are a whole range of facts which have not been presented to the media about this case. At this point in time, I am still waiting for the results of the tribunal case to be presented to me so that my team can understand why they have reached their conclusion. Unlike a court of law, the case is held in private, and the first opportunity to defend myself will be at appeal. The fact that Phonepay Plus have chosen to promote this story to the press before my legal team have had an opportunity to review their findings seems a little at odds with natural justice, but that is the way they have chosen to act. You may have a view on this.

They have also chosen to assume that I was the perpetrator of this service. This is not the case and my defence will prove that to be the case.

I cannot say any more at this time, but I will keep this page updated as events unfold.

30th January 2009



As a further update to the above, I can tell you that it is clear that PPP intended to find me guilty regardless of the facts. Let me tell you a few things;

* I closed the service down on 25th May 2008. PPP issued an emergency procedure to have the service closed down on 1st July 2008, almost 5 weeks after I had already acted. The use of the emergency procedure (EP) is to instantly stop harmful services running, and gives them the opportunity to send out a press release. In their press release, it gave no mention that I had acted responsibly in closing the service as soon as I was convinced there was a problem with it. To get an EP, the executive have to get three committee members agreement that it needs to be issued. If the service wasn't running for 4-5 weeks prior to the EP, what did the executive tell the committee? Or did the executive think the service was still running? And if they did, why didn't they check first?
* PPP said they had been monitoring the service since November 2007, but had made no attempt to contact my company to alert it or discuss it's concerns. If is was so serious, why did they do nothing for 7+ months?
* The service was run by a third party, named Russell Marketing. It was clear to me, afterwards, that this was a fabricated company. [is there any other kind in this business?] Nevertheless I had telephone contact numbers, bank account details and company information which I would have been happy to offer for PPP to investigate. They never asked for any of this, appearing content to 'hang the crime' on me.
* At the outset, PPP issued a letter with a series of questons which I answered as best I could. They then asked a number of additional questions, which again were answered as fully as possible. I then heard, via a Press Release (see above), that I had been found guilty and issued with a massive fine. This fine was 10x's the amount that the company had made from carrying the service, whilst Russell Marketing had received a massive sum of money. This was shown in my company accounts, and was queried by a number of journalists at the time. It was clear to me that PPP were looking for a scapegoat.
* The PPP Code lays down a series of processes for appeals, but so far, these have all been denied to the company. The net result is that the company is likely to go bankrupt because it cannot pay the fine.
* Just prior to this case, there were several other, apparently similar cases, and again just recently there were a further series of seemingly similar cases. Fines in almost all the cases were substantially lower than our fine. If my case was to set an example, why not fine every subsequent breach to the same level?
* I offered to pay PPP all the money my company had made from the service but this offer was rejected.
* I am still trying to get some kind of review which might offer some natural justice. So far I have failed. I would have received fairer treatment in a criminal court.
* If you browse the PPP website and look at some of the adjudications, you will see a wealth of 'regular' offenders, mostly with relatively small fines. This is the first time my company has had a breach, and you know the result.
* I am still fighting to get some resolution. I agree that the service was a scam, but I am struggling to get PPP to accept that I acted in good faith in taking Russell Marketing on as a customer, and I acted responsibly in cutting them off when I realised what they were doing. None of that has been recognised in this 'court', where PPP are the prosecutor, judge, jury and sometimes the executioner, with total control over the right to appeal.
* The fact that six months after my case became public there were a further series of cases shows that PPP are not effective in stopping this activity. [he has a point here you know ] I offered to help them but this was ignored.I am running out of options, and my business, and those of my customers who rely on my business, will suffer.
* I will keep you advised of any more progress, and if you are a member of the press, feel free to email any further questions you may have.