New mobile phone scam promises prizes but could cost a small fortune

[gem]

From Media Guardian

New mobile phone scam promises prizes but could cost a small fortune

Watchdog acts after Guardian investigation exposes calls con

Audrey Gillan
Wednesday February 18, 2004
The Guardian

Mobile phone users are facing the biggest spam nuisance to date as computers bombard thousands of phones with a new scam called "missed call marketing", the Guardian can reveal.

Companies operating the scheme are facing a crackdown by the government regulator, the Independent Committee for the Supervision of Telephone Information Services (ICSTIS), which said missed call marketing was, in its view, "completely illegal". It has now suspended the numbers operated by one company and launched an investigation after the Guardian passed on details of the ruse.

Experts predict that the con could surpass the cost and inconvenience caused by conventional spam text messages, which have doubled to 2bn in two years, but which have now become too widely known by the public after a previous crackdown by the regulator.

The latest scheme promises a cash prize of £1,000 which rarely materialises but costs each unwitting victim about £15 in premium rate phone bills

It uses computer-generated calls to ring target phones just once so that a number is left behind as a missed call. When users ring the number to find out who has been calling them, they are answered by someone saying "customer care" then the voice goes into the "congratulations" spiel. The caller is then referred to a premium rate number where they can find out more details of their "fantastic prize". At no time are they voluntarily told how much this will cost them but a call to the number given to the Guardian lasted 11 minutes at a cost of £1.50 a minute.

Last year, the Advertising Standards Authority ruled that telephone companies must seek the permission of the phone user before bombarding them with marketing material. Under a European commission directive brought into force last year, unsolicited marketing material can only be sent electronically if the receiver has previously notified their consent.

One of the companies we spoke to claimed that they were using numbers of people who had opted in but our investigations suggested that in the majority of cases no consent had been given.

In spite of the regulations, such illegal marketing continues to spiral. Within the last six months, ICSTIS has received more than 7,000 complaints about spam text messages alone. It has cracked down on dozens of companies, fining them thousands of pounds for infringements.

Many of the scams are being perpetrated by one company, registered in Tortola in the Virgin Islands.

ICSTIS spokesman Rob Dwight said: "We suspect that it is just one or two companies behind all this. It cannot be coincidence that these companies are offering identical services, promoted in a unique way. Someone, somewhere must be coordinating it all."

One outfit, called Prize Line Promotions and offering an "amazing cash prize of £1,000 or a £2,000 equivalent in prizes", appears to be connected to BPQ, which had been responsible for bombarding thousands of British mobile phones with spam text messages offering similar prizes. Regulators believe both are related to another operation called Quartel 3 and that all can be linked back to Greenbay Ltd, registered in Tortola. All have the same postal and email address. An ICSTIS investigation has discovered that these companies get their numbers from Intelliplus, a network which supplies premium phone lines.

Several of the companies fined for the abuse of premium phone lines were found to be using numbers supplied by Intelliplus. In July last year, company chairman Mike Neville said Intelliplus had doubled its turnover.

It is not suggested Intelliplus is party to the premium line prize cons. However, ICSTIS said Intelliplus had not been cooperating fully with its inquiries. Mr Dwight said: "It's fair to say that we still have a number of outstanding requests with them. They must have the names and bank account details for these people in order for the revenue to go to them."

But in a statement, the company said it had complied fully with the regulators and that it took its legal obligations seriously. It has now terminated its service with Prize Line.

There are multiple numbers connected to Prize Line Promotions and its associated outfits. All of them appear to lead to an address at Finchley Road in north-west London. The Guardian discovered that the address is a mail box that is visited twice a week by a man who picks up hundreds of stamped addressed envelopes sent by people who have been sucked in by the scam. All of them expect a cash prize of £1,000 but in most, if not all, cases, all they receive is an envelope from a marketing company containing some discount vouchers, according to some of the victims.

The UK consumer complaints website, Grumbletext.co.uk is inundated with complaints from people duped by the scams. The majority of them sent their SAE to the Finchley Road address. One writes: "The cheeky ******** have given my SAE to another "promotions" company and today I received - no, don't hold your breath, no prize money - a brochure of discount vouchers from another company."

Challenged over the methods used, Ricardo Dyson, a manager at the Prize Line Promotions call centre, claimed that what the company was doing was a "brand new and legal way of marketing".

But ICSTIS said: "It's completely illegal in our view, inappropriate, unsolicited and unethical and we will take action against it".

Mr Dyson claimed that every return caller won a prize. Asked where he had obtained a Guardian mobile number, he claimed the owner had opted in and agreed for the number to be used. But one of the other call centre workers said the numbers had been "bought from the networks".

The majority of call centre staff, all with South African accents, said they were based in Cheshire but refused to say where. One, at the same number, said the centre was in Basingstoke.

After the Guardian reported its experience, ICSTIS invoked its emergency procedure, suspending the numbers we provided and demanded that Intelliplus withhold any revenue generated on those numbers. They must now cooperate with the investigation. Mail Boxes Etc is reviewing the situation with regard to the box marked Suite 155.

How they get our numbers

Buy them
List brokers buy and sell lists of mobile phone numbers. Also, some unscrupulous vendors of mobile ringtones, games, and logos are suspected of selling lists of valid mobile numbers since the threat of detection and penalty is low.

Tease them out of consumers
When a caller phones a scam premium rate line they are often required to punch in their mobile number and also someone else's. Many put in a real number, either because they do not suspect the promotion is a sham or because they have spent time on a premium rate line, and do not want to risk things going wrong.

Generate them randomly
In many cases the scam outfit will use computers which send out text messages and make calls in their tens and hundreds of thousands to sequentially generated numbers which are random suffixes to any known mobile number stem.

Numbers to look out for: anything beginning 0871 costs 10p per minute, however any 090 numbers are likely to cost £1.50 a minute.

[DaveL]

What a great invention text messages are! But it appears that for every good invention, there's always some dodgy individual(s) that like to use it to make their money by 'robbing' others.



Check out 07TEXT0SPAM.com and Grumbletext for more information. I emailed Intelliplus a while ago about this and they couldn't even be bothered to reply. I have also notified Redstone Communications who operate 0871 210 numbers. They didn't reply either.

Orange users can forward spam free of charge to 7726 (spells SPAM). Look here for more info.

07TEXT0SPAM.com also collect these messages to send them to the regulators.

[gem]

I've registered both our home phone and our mobiles. As an Orange user I've made a note of that number, thanks DaveL.

[Adrian at Grumbletext]

Hi from Grumbletext and thanks for the recommendation from DaveL - I just wanted to add a couple of points:

1) Grumbletext now also enables consumers to report SMS text spams and scams not just onto the Grumbletext board but also simultaneously to ICSTIS, the premium rate regulator, via a pre-filled in duplicate of ICSTIS's official complaint submission form

2) The advantage of using Grumbletext to report SMS spams to ICSTIS is that we have modified the form validation to allow consumers to report scams operating on numbers which the ICSTIS form does not allow - the reality is that most scams these days are '2 parters' where the initial response call is to a non-premium rate number, and only during that call are you sent to call a premium rate number. ICSTIS either is a slow-mover or is wilfully ignoring this issue - so we are making sure they get to hear about it whether they want to or not!

3) Contacting Intelliplus is a waste of time I'm afraid - of all the companies who lease premium rate lines to the scammers, they are the worst. A few stats - with regard to fines levied in 2003 by ICSTIS on service providers involved in the promotion of inappropriate premium rate services via unsolicited text message:

- 26% (15 out of 58) of the service providers fined by ICSTIS were clients of Intelliplus

- By value of fines levied, 69% (£166,000 out of £240,000) was accounted for by clients of Intelliplus

- Of the £166,000 of fines against Intelliplus clients, at least 28% (£46,000) remain unpaid (I am awaiting to hear from ICSTIS on the status of an additional £65,000 of such fines)

I am currently exploring the idea of using Grumbletext as a way to corral and manage victims of Intelliplus end client text scams to launch a group legal action against Intelliplus and have just posted a letter to a UK specialist class action law firm to that effect.

Anyhow, sorry to drone on a bit, and thanks for listening...

regards, Adrian at Grumbletext

ps nice smilies on this board..

[P.C.Dunderhead]

Cool.Can I report those boring,unsolicited Football score messages,too?

[Adrian at Grumbletext]

Originally posted by P.C.Dunderhead
Cool.Can I report those boring,unsolicited Football score messages,too?

In theory, if they were unsolicited you could - but they are usually one of those services that you probably 'opted into' once upon a time and then they just send you them for ever (at about 25p per text typically).

If you want to stop them, the best thing is to do is to reply to one of them and simply write STOP - you will probably be texting to a 4 or 5 digit number.

If that fails to stop them, then yes by all means use Grumbletext to report them on the board and to ICSTIS at the same time.

If you are sure you never actually opted in to receive them, then unsolicited texts are illegal since Dec 2003 and you can report them immediately.

[Zer02004]

Vodaphone has recently introduced it's own spam reporting service. It seems to be very effective too.

[Adrian at Grumbletext]

Originally posted by Zer0 2004
Vodaphone has recently introduced it's own spam reporting service. It seems to be very effective too.

I saw it in the news last July - it's called VSPAM - but I have to say I've heard nothing further about it since it was first announced. I did a comprehensive search of Vodafone's site and couldn't find any mention of it at all. My suspicion is that it might have been window dressing for media/PR purposes, but if you have any info about it, I'd be very interested, especially if it's very effective. Thanks

[Zer02004]

The system is in place and it works very well indeed. After reporting about twenty spams, I'm lucky (Unlucky?) if I see a single spam message in three or four months. It's been about four months now since I was last spammed.

It's simple to use as well - Just forward the offending mesage to VSpam.

[Adrian at Grumbletext]

Hi - Thanks to Gem for posting the Guardian article about "missed called marketing" - the problem, as the article touches on, is the uk telecoms operators who lease the premium rate lines to these con artists. I thought I'd post out this press release that I put out about a week ago, which sets out exactly how these large UK companies get away with it.

Stamping out premium rate cons –
Grumbletext points the finger at big UK telecoms companies

‘Missed call marketing’ is the latest premium rate scam to be afflicting consumers. Widely reported in the press, it is just the latest in a long line of premium rate scams which do a great deal of consumer harm, but which apparently can’t be stopped by the authorities.

Not true, says Grumbletext, a UK consumer complaints website which hears from a lot of consumers duped by these cons – the scammers could be put out of business practically overnight, but to do so requires a crackdown on a small handful of big UK telecoms companies who provide them with the premium rate lines.

Premium rate scams are all designed for one purpose – to get consumers to call 090 premium rate lines typically at a cost of £1.50 per minute. Consumers are usually told that they have ‘won the £2,000 prize’ or similar and that in order to claim it they need to call the 090 number supplied. The result is typically £15-20 on your phone bill with nothing to show for it – there is no £2,000, it’s a straightforward scam.

The companies behind these scams are employing increasingly cunning methods to get you to fall for their con. With ‘missed call marketing’ marketing for example, a scammer’s computer calls your phone, immediately hangs up, leaving a missed call message which of course contains the number to call back. If you do so, you are back into the £2,000 prize scenario and are asked to call an 090 number to claim it.

Missed call marketing is, in the words of ICSTIS, the premium rate regulator, ‘completely illegal’, so how is it that it, and premium rate scams like it, are able to continue?

Here’s the problem; ICSTIS only directly regulates ‘service providers’ as it calls them. The ‘service providers’ are the companies who market the scams, often via text message or missed call marketing, and who lease the 090 premium rate lines from UK telecoms network operators from whence they make their money.

These companies almost invariably follow the same model; they are usually very recently set up, often for the purposes of the specific scam they are perpetrating. There is the minimum of statutory information filed at Companies House and if they get into trouble they just dissolve and disappear. The same director names will often appear in association with a myriad of such companies. It is quite usual also for these companies to be offshore and thus realistically even further out of reach.

Trying to beat these companies with the rod of regulation is ICSTIS’s thankless task. ICSTIS will typically fine those service providers who break its code of conduct and request that the network operator bars the service. The fines are collected by having the network operator retain sufficient of the service provider’s revenues to pay the fine. However, ICSTIS does not have the power to fine network operators themselves, nor to restrict their ability to do business in any way.

And what if the network operator doesn’t play ball? What happens if the network operator fails to collect the fine for ICSTIS, or it chooses not to bar the service? Unfortunately there’s not much that ICSTIS can directly do about it. It is supposed to be able to then approach Ofcom, which regulates the network operators, and attempt to get them to intervene. Ofcom has the power to suspend or revoke the network operator’s license, the ultimate sanction, so one suspects that if Ofcom chose to deal with the offending network operators, it would be straightforward.

For whatever reason, that appears not to be happening. ICSTIS is well aware of the network operator problem, as demonstrated in the forthright industry open letter written by the chairman Sir Peter North in September 2003 in which he lambasted the handful of networks who ‘continued to contract with service providers they know are intending to run this type of service’.

Grumbletext’s analysis of information on both the ICSTIS and Grumbletext websites has revealed that it is indeed only a handful of network operators actively engaged in this grubby business. At the time of writing, 85% of all premium rate landline-based complaints on Grumbletext are accounted for by clients of the following five companies:

• Redstone PLC 27.9%
• Intelliplus Group PLC 22.2%
• Opera Telecom 13.1%
• Switch Call Limited 11.9%
• Tiscali UK Limited 10.6%

Redstone has so far made few appearances in ICSTIS’s monthly list of adjudications; its high showing on Grumbletext is mainly as a result of its operating the lines for the well-known ‘BPQ voicemail’ scam, which is sufficiently recent that its investigation is believed to be still in progress.

However, second on the list, and well known to ICSTIS, is AIM-quoted Intelliplus Group PLC, recently acquired by Eckoh Technologies. The traditional argument which Intelliplus and the similar network operators make when confronted on these issues is that they have many, many clients, running thousands and thousands of lines, and it is simply not possible to police what is on them, especially since they do not know how the promotion was promoted in the first place.

In Grumbletext’s view, that is a very convenient argument which simply does not stack up. In reality, the actual structure and phrasing of these scams on the recorded telephone lines makes them stand out a mile. It is technologically fairly trivial to set up computerised monitoring of line content to alert for some of the wording these scams all employ.

In any case, they make enough money from these lines to simply employ people to spot check the content. What is not always clearly understood is that the network operators like Intelliplus who lease these lines to the scammers aren’t just making nice bit of line rental – they are typically taking about 50% in shared revenues of everything the scammers earn.

So Intelliplus make a pile of money enabling the premium rate scammers to operate whilst themselves remaining outside of the reach of the one regulator in the sector which has some appetite to take action. No wonder they are not falling over themselves to comply with ICSTIS’s requests with alacrity and timeliness.

ICSTIS has said in the Guardian, February 18th 2004, that “Intelliplus had not been co-operating fully with its inquiries". That's a reasonably strong statement for a regulator. However, it appears to be somewhat of an understatement when considered alongside the following facts, culled from ICSTIS’s own website and from correspondence between ICSTIS and Grumbletext.

With regard to fines levied in 2003 by ICSTIS on service providers involved in the promotion of inappropriate premium rate services via unsolicited text message:

• 26% (15 out of 58) of the service providers fined by ICSTIS were clients of Intelliplus

• By value of fines levied, 69% (£166,000 out of £240,000) was accounted for by clients of Intelliplus

• Of the £166,000 of fines against Intelliplus clients, at least 28% (£46,000) remain unpaid (Grumbletext is awaiting to hear from ICSTIS on the status of an additional £65,000 of such fines, a proportion of which may well also remain unpaid)


It is Grumbletext’s view that the continued widespread existence of premium rate scams suggests that ICSTIS fines, even when paid, are not big enough to make the promotion of these scams uneconomical; it is quite possible that the scammers merely view a potential ICSTIS fine as a marginal cost of doing business, and for the Intelliplus’s of this world, there is no downside.

What can be done? In theory, it's really very simple; Ofcom needs to semi-formally devolve its regulatory power to ICSTIS in this specific area of premium rate line leasing, to enable ICSTIS to bring sanctions against network operators with the full power of the law and statute behind it.

ICSTIS after all is an industry self-regulating body, and on this basis only semi-formal, in that it is non-statutory - even today, ICSTIS has no regulatory power which Ofcom has not directly sanctioned. There seems no good reason as to why ICSTIS's powers should merely be to regulate and fine ‘service providers’ involved in the inappropriate promotion of premium rate services. It seems a short step to extend that existing power to bring the likes of Intelliplus, the network operators, within its reach.

And if Intelliplus were not then to accord ICSTIS, as Ofcom’s agent, the same authority as Ofcom, then Ofcom has the power to suspend or revoke Intelliplus's network operating license, i.e. its ability to do any telecoms business of any type at all.

However, as we all know, expecting a ‘super-regulator’ to do anything quickly is a vain hope. With that in mind, Grumbletext is currently exploring the viability of using the Grumbletext website as a means to organise scammed consumers to launch a class legal action against Intelliplus and its ilk. The odd lawyer posting on the site has bandied around phrases such as ‘obtaining goods by deception’.

The idea is simple; to use technology to help eradicate these scams, which are themselves enabled by technology. They all rely on the idea that they can get away with taking a little bit of money from a great many people, none of whom individually would consider legal action to recover it. All communication with class action co-plaintiffs will be effected via the Grumbletext website, email and text message.

Indeed, to register for the class action, consumers will send a text message to Grumbletext for which they will be charged £1.50; this covers the cost of the insurance necessary to pay for legal costs should the case be unsuccessful – using premium rate to beat premium rate; it’s kind of ironic really…

In order to assess consumer appetite, Grumbletext has set up a special page on the website (www.grumbletext.co.uk) where you can find out more about the proposed class action and request to be contacted when the lines open for registering as a plaintiff.

Enquiries
Contact: Adrian Harris at Grumbletext
Tel: 020 7244 9099
Email: adrian.NOSPAMharris@grumbletext.co.uk

(Please remove the 'NOSPAM' to email me - thx)