Aime(NOC): PhonePayPlus fines cause 'reputation damage'

[El Gringo]

http://www.mobile-ent.biz/features/8...content-abuses
Time to address D2C content abuses
Sally Weatherall, chair, AIME
1 July 2008

Regulation targeted at dodgy D2C practices needs a re-think if the industry is to re-build consumer trust.

A few weeks ago ME focused on the problems associated with regional D2C content markets by highlighting the class action settlement against AT&T Wireless in the US for unauthorised charges from third party ringtone providers. It came in the context of rising complaints registered to the UK regulator PhonePayPlus (formerly ICSTIS).

Over the years, PhonePayPlus has levied more and more restrictions on how D2C service providers can reach users – and there could be more on the way. But at the same time many within the industry are pushing for more appropriate forms of self-regulation. These measures would allow the UK market to flourish once again, eliminating dodgy content providers by making them directly accountable to the regulators.

Under the current PhonePayPlus Code of Practice, primary liability rests with the service provider/aggregator rather than the content provider – even though it’s the latter that has control over the marketing of its services. As long as this situation remains, there is no incentive on the content provider to comply with the code. They can simply default on the fine, move to a different aggregator and leave the former UK aggregator to pay the fine, carry the bad debt and suffer reputation damage.

This is not effective regulation, it provides no consumer protection as the service continues and undermines the authority of the regulator. What criminal would worry about being in court if they knew their mate waiting outside would be the one serving the sentence?

Instead, the Association of Interactive Media and Entertainment (AIME) is advocating a content provider’s registration scheme, a review on the ban on third party databases, consistency in the implementation of PayforIt, and more action by publishers to refuse non-compliant advertising

Regulation should bite at the point of sale, not the technology intermediary. Such a scheme of registration could easily be developed to provide a Kite mark of credibility, which would be a guide to both consumers and service providers.

In addition, PhonePayPlus is advocating a total ban on the use of third party databases due to the inability, under Data Protection legislation, of obtaining informed consumer consent by way of pre-ticked consent boxes. In practice, it is difficult to envisage where informed consent can be properly achieved in regard to traded databases. AIME believes it would be fairer to the consumer to use databases where consumers have directly opted in – consumers could be sent a free marketing message providing the new service information and expressly seeking consumer consent to receive such content. If the consumer does not respond to that message then the details should not be used. Such a system would improve transparency and result in direct opt-in information in every case.

Then there’s payment. More and more content services are using PayforIt so all operators need to be consistent if the channel is to be nationally supported and perceived as a genuine tool of consumer protection.

Finally, publishers themselves need to take action by refusing to take non-compliant advertising. Publishers already have a responsibility to ensure advertising complies with relevant laws and regulations. They take the same stance when it does not comply with the PPP Code of Practice.

If these initiatives (or even some of them) were adopted widely by the industry and the regulator, the cycle of ‘growth, regulation and collapse’ of mobile D2C content markets around the world could be prevented and consumer trust in such services restored.

EDIT
Wireless Information Network (WIN) Ltd fines record
http://www.phonepayplus.org.uk/busin...h=Search&cmd=2
05 June 2008
£10,000
£105,000
£15,000
£15,000
£5,000
£1,000
£5,000
£10,000
£5,000
£1,000
£5,000
£5,000
£10,000
£50,000
£10,000
£5,000
£30,000
£20,000
£500
£15,000
£10,000
£7,500
£5,000
£10,000
£5,000
£2,500
14 Jan 2005

Sally Weatherall, chair, AIME and head of WIN's legal department "They can simply default on the fine, move to a different aggregator and leave the former UK aggregator to pay the fine, carry the bad debt and suffer reputation damage"

[mike99]

Author: Sally Weatherall chair of AIME (was NOC) = Wireless Information Network (WIN) ltd - adjudicated against ~30+ times by PhonePayPlus.

Message: PhonePayPlus should allow us poor downtrodden service providers to carry on scamming while shifting the blame onto the out and out crooks we repeatedly choose to team up with.

[mike99]

Mind you, I agree with her on this bit:

This is not effective regulation, it provides no consumer protection as the service continues and undermines the authority of the regulator.

[mike99]

I like this bit too:

AIME believes it would be fairer to the consumer to use databases where consumers have directly opted in

Is this understatement for effect?

IMHO it rather goes without saying that it is "fairer to the consumer" only to charge them for goods or services they have actually asked for and which they have actually received.

The most extraordinary bit is the following however:

Under the current PhonePayPlus Code of Practice, primary liability rests with the service provider/aggregator rather than the content provider – even though it’s the latter that has control over the marketing of its services. As long as this situation remains, there is no incentive on the content provider to comply with the code. They can simply default on the fine, move to a different aggregator and leave the former UK aggregator to pay the fine, carry the bad debt and suffer reputation damage.

In other words, because content providers default on fines passed on to them by service providers who are ("unfairly") fined by PP+, PP+ should, instead, levy its fines directly on the content providers so that PP+ rather than the service providers suffer when the content providers default.

This will lead to a better regulated industry.

Alternatively, aggregators / service providers could exercise due diligence when teaming up with dodgy content providers and take responsibility (just like companies outside PRS have to) when firms they team up with turn out to be crooks. Better still, network providers could exercise due diligence when teaming up with dodgy aggregators / service providers and take responsibility (just like companies outside PRS have to) when firms they team up with turn out to be crooks.

[DavidKnell]

In other words, because content providers default on fines passed on to them by service providers who are ("unfairly") fined by PP+, PP+ should, instead, levy its fines directly on the content providers so that PP+ rather than the service providers suffer when the content providers default.

This will lead to a better regulated industry.

Originally Posted by mike99

I'm going to disagree with you here, Mike. Using the PP+ chain of network->SP/aggregator->IP, the IP is generally responsible for the content of the service and how it is promoted, may well have implemented it technically, and receives the vast bulk of any revenue generated. Yet regulation focuses on, and penalises, the SP. Why? Because it's easier for the regulator, as the SPs tend to be larger entities who've invested enough in their business not to want to leg it overnight. And the regulator has targets to meet on fine collection, and by shifting some of their burden to the SP, they can keep their costs down.

Net results, though, is that IPs who misbehave may well just get away with it, +/- the loss of a month's revenue. Having done so, they're encouraged to become a repeat offender. And they may get away with things for a while.

Alternatively, aggregators / service providers could exercise due diligence when teaming up with dodgy content providers and take responsibility (just like companies outside PRS have to) when firms they team up with turn out to be crooks. Better still, network providers could exercise due diligence when teaming up with dodgy aggregators / service providers and take responsibility (just like companies outside PRS have to) when firms they team up with turn out to be crooks.

Huh? Does anyone seriously suggest that Stanley be held responsible when one of their knives is used to attack someone? Anyone who's not barking mad, that is..!

Due diligence. Quite a lot of this goes on on an informal basis, and, generally, there's no desire within networks or aggregators to deal with the dodgy end of the business: the cost of cleaning up after them (regulatory action, mobile network yellow/red cards, customer service, etc.) far outweighs the benefit of the 5-10% of revenue that's the network/aggregator share.

One solution might be for PP+ to require those providing/advertising PRS services to register, which'd mean central tracking of individuals and companies, and to allow networks/aggregators to query that database (a) as to whether prospective clients are registered and (b) as to their history. But that's more work, expense, and then there's the dreaded Data Protection Act to consider..

--Dave

[mike99]

If Stanley knowingly sold one of its knives to someone with a history of GBH, then yes, they might share some culpability. But this is not a very good analogy on a number of counts.

Another poor analogy is that of the ISP. ISP's are clearly not responsible for online frauds committed over the broadband connections they provide, but they would be if they shared in those frauds (financially) and chose to make contractual arrangements with those committing the frauds, and to help those committing the frauds to collect the money.

WIN do not have to let firms like 2Comm use their platform. They choose to do so and, thereby, must assume the risk that CPs like this will continue to behave as they have done in the past.

Admittedly, if I am misguided enough to believe Sir Ali G's "vision" that we can use PRS with confidence and I respond to a CP's advert for a "free" ringtone myself, then I suppose it could be argued that I share some responsibility for being so gullible and (in this case) it can be argued that I do have a contractual relationship with the crook, but when my family were scammed, we had never had any contact with an CP or SP. Our only contract was with O2. They helped Dialogue Communications and Zamano and Hybyte (who had all teamed up with the CP whose very "address" screamed dishonesty to anyone who knows anything about PRS) to steal from us. I simply do not believe that O2, Dialogue Communications, Zamano, and Hybyte were innocent victims here and I think the it is entirely appropriate that two of these four firms were punished - though not nearly severely enough (IMHO) - and entirely inappropriate that O2 and Dialogue were not - though I'm still working on the Dialogue case.

[El Gringo]

I agree with both of you to some extent but i think you are both missing a point by appearing to point blame in a single direction or at a single party in the revenue chain.

theft from mobile phone accounts using unsolicited reverse billed sms needs the full co-operation of each party in the market place. every body concerned shares the blame.

the government/telecoms/'industry' people that created the market place all share responsibility for this on going theft.

'scam2u' ltd, po box 362 bvi, didn't create this market place.

[mike99]

I agree that responsibility (and thus blame) is diffused throughout Government, the regulators, and the PRS industry. But the specific question here is how a penalty system should work.

As I say, it's slightly less clear cut when PRS victims actually engage directly with the crooked firms themselves, but by and large, I tend to think that the buck should stop with the networks. They have a public reputation to preserve (who in the general public - apart from a few PRS geeks like ourselves - has heard of "mBlox" for instance?).

Remember that the roles of NP/SP/IP (or CP if you prefer) overlap and the same companies often perform all three roles at different times or even at the same time. O2 (for example) has a in-house branch dedicated to PRS services. If they subcontract some such services to Zamano then why is that so different to Marks and Spencer subcontracting home deliveries to ACME Deliveries Ltd and then taking responsibility if ACME Deliveries Ltd go round committing burglaries.

Ditto for Zamano who either provide content themselves or subcontract to content providers scam2u' ltd, po box 362 bvi without it ever occurring to them that scam2u might scam people

My view is that the PRS victim should be able to obtain satisfaction from his or her network and that the network should then "pass the buck" along the value chain. Ditto for PP+fines. That way, everyone in the value chain has a powerful incentive not to subcontract to crooks or to people who deal with crooks.

[thethunder]

"WIN do not have to let firms like 2Comm use their platform"

Mike, I have read the forums for a while now and I think you require to put somthings in perspective. I worked for one year inside the industry on the legislative side. Can I say that there are definitely people out there trying to help and get it to a better stage, above 2comm are definitely one of them. I know for a fact they have done things wrong but they are working with PPP, as per the last adjudication and from what I know to improve there services. Re the inquirer at least they didnt hide.

Your doing a good job routing out problems but dont pick on aggregators and who are easy targets because they are visible and trying to improve. Where this site is excellent is on diallers, missed calls and alike. Trust me guys with BVI address, where you cant get in contact with anyone, is where this site does brilliantly and if you continue to target these guys instead of Dialogue and 2Comm then I believe we will be routing out more of the issues that are real problems.

You are too quick to call people crooks for t's and c's that are maybe not apt. Ryanair have t's and c's that arent apt but they are not crooks. Crooks are the guys who take money from mobile phones for no reason.

Anyway I will continue to enjoy reading your forums.....commenting when I think your a bit out.............keep up the good work

[El Gringo]

You are too quick to call people crooks for t's and c's that are maybe not apt. Ryanair have t's and c's that arent apt but they are not crooks. Crooks are the guys who take money from mobile phones for no reason.

Originally Posted by thethunder

hi thethunderer
i think they are the guys mike is referring to. 'unsolicited reverse billing' has no t's and c's.

[Cormoran]

@Thethunder

Both Dialogue Communications and 2comm been found guilty too many times by the PRS Regulator, PP+, of breach of its reguations by being involved in the distribution of unsolicited reverse bill texts. Which as we all know is the act of removing funds from unsuspecting mobile phone accounts without their consent. In the real world this would be classed as theft and dealt with as such, but sadly not in the PRS Industry. This is the reason companies such as these are 'targeted' (as you have called it) and long may it continue.

[mike99]

"WIN do not have to let firms like 2Comm use their platform"

Mike, I have read the forums for a while now and I think you require to put somthings in perspective. I worked for one year inside the industry on the legislative side. Can I say that there are definitely people out there trying to help and get it to a better stage, above 2comm are definitely one of them. I know for a fact they have done things wrong but they are working with PPP, as per the last adjudication and from what I know to improve there services. Re the inquirer at least they didnt hide.

Your doing a good job routing out problems but dont pick on aggregators and who are easy targets because they are visible and trying to improve. Where this site is excellent is on diallers, missed calls and alike. Trust me guys with BVI address, where you cant get in contact with anyone, is where this site does brilliantly and if you continue to target these guys instead of Dialogue and 2Comm then I believe we will be routing out more of the issues that are real problems.

You are too quick to call people crooks for t's and c's that are maybe not apt. Ryanair have t's and c's that arent apt but they are not crooks. Crooks are the guys who take money from mobile phones for no reason.

Anyway I will continue to enjoy reading your forums.....commenting when I think your a bit out.............keep up the good work

Originally Posted by thethunder

2Comm (the content providers) have not just "done things wrong" i.e. made mistakes, they have deliberately set out to swindle people.

I realize that Dialogue (service providers) aren't in the same league and are almost respectable, but they repeatedly team up with firms who they must know are crooked. This makes them culpable - not just morally, but legally (if the law were actually enforced).

PP+ (the regulators) are culpable in other ways (actually some of them are culpable in the same way, but that's another story).

In other words, it's a complex picture with varying degrees of guilt in different places, but I still say that the whole thing stinks from top to bottom.

[thethunder]

"In other words, it's a complex picture with varying degrees of guilt in different places, but I still say that the whole thing stinks from top to bottom"

Correct - I understand what your saying. What I am saying is you referred to 2comm as an example - who are closer to the top than the bottom - the guys that get fined 50k + for rogue diallers, or sms.ac for taking money when they shouldnt would have been better more relevant examples.

[El Gringo]

13 May 2008
Content and/or promotion provided by...............2 Comm Ltd
Service provider responsible for
compliance under the Code of Practice...............Tanla Mobile Ltd

Number of complaints.......................................1 69

The majority of complaints centred on difficulties users had in using the STOP command and allegations that users never requested, consented or subscribed to the service.

http://www.phonepayplus.org.uk/busin...eywords=&cmd=2
the same allegation from the public is repeated in each case against 2 Comm Ltd
........................................

I worked for one year inside the industry on the legislative side.

Originally Posted by thethunder

which company/part of industry, if you don't mind me asking

[Cormoran]

.....What I am saying is you referred to 2comm as an example - who are closer to the top than the bottom.....

Originally Posted by thethunder

If 2comm are 'closer to the top' and are involved this often in such scams, it also worries me as to what the companies at the 'bottom' are up to!!!!!!