Phonepayplus consumer complaints: Icstis say 80,000, OFT say 400,000

[El Gringo]

I was talking to a member of my immediate family just before Christmas and discovered they had also been a victim of an 'rogue' internet dialler in 2004. There were only six fixed line bill payers in our family in 2004 so what were the chances of that? 33% !
Icstis said they had recieved 'up to 80,000 complaints' concerning internet diallers in 2004.
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http://www.ofcom.org.uk/consult/cond...ope/annex5.pdf

Figure 5.2 The scale of consumer harm from major breaches of the Code
The Rogue dialer case (2004)

The rogue dialer scam involved the installation of dialer software on a consumer’s PC without the knowledge of the consumer. The dialer software then made repeated calls to a PRS number at £1.50 per minute. Customers were unaware of what was taking place until they received a phone bill. ICSTIS received up to 80,000 complaints about the rogue dialer scam and estimated losses at £10 million per annum at the height of the scam. In the 2005/06 the number of complaints fell sharply - ICSTIS received 2727 complaints in relation to internet dialers.
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2005/06 - the number of complaints fell sharply - ICSTIS received 2727 complaints in relation to internet dialers.

Adjudications from the 2005/06 Icstis cases appear to relate to 2880 complaints, so it appears Icstis reported complaint levels and consumer harm only relate to adjudicated cases.
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2004/05 - ICSTIS received up to 80,000 complaints about the rogue dialer scam and estimated losses at £10 million per annum at the height of the scam.

So do these figures relate to the real number of people complaining and the real ammount of consumer harm?

OFT estimates
The OFT estimated losses from mass market scams in a recent study. It sought to estimate losses from a range of scams using consumer surveys conducted in early 2006, which included estimates of the annual losses from PRS prize draw scams and PRS rogue diallers. The study estimated that PRS prize scams costs the UK public £80m per annum, with around 1 million victims annually. It estimated that internet dialler scams cost the UK public around £60m per annum, with around 400,000 victims annually. However, it is not clear how the OFT estimated annual losses from the survey data. The survey questions asked victims whether they have been the victim of a scam, rather than whether they have been a victim of a scam in the past year. It is not clear if or how this number was adjusted to estimate the annual number of victims. So the study may overstate the losses and be an inaccurate guide to the scale of current scams.
There is also another problems in using the OFT estimates. The rogue dialler scam was at its height in 2004, these numbers will be reflected in the OFT report. However, this is unlikely to be a good estimate of the expected number of victims in 2006 or 2007, due to stricter ICSTIS regulation and the diminishing number of dial up internet access customers. This means that the OFT estimates are unlikely to be a reliable guide to expected consumer harm from PRS scams over the next 5 years.

ICSTIS fines
A second approach to estimating losses is to consider the evidence from the ICSTIS adjudication process. The adjudication process records the fines levied each year and it is possible to estimate the relationship between consumer harm and the size of the fine by examining the records for selected individual cases. The size of the fine depends on a number of factors including the level of consumer harm and mitigating or aggravating factors. Based on examining the records of 10 cases, we estimated a ratio of £1 of fine for every £2 of consumer harm, with a significant degree of variability between cases. One problem with this measure is that it is limited to breaches of the code which lead to adjudications resulting in fines. Evidence from the OFT study is that many scams are unreported, for example, 2% of respondents with experience of prize scams reported them to BT and 1% to the Police and other agencies. However we note that one complaint may be sufficient for ICSTIS to investigate and take action against a scam which targets many other victims. We also note that scams which affect many people or which take large sums of money are more likely to result in complaints.
ICSTIS imposed fines of £4.7m in 2004/05, £4.5m in 2005/06 and £1.1m in 2006/07. This suggests consumer harm of between £2.2m and £9.4m per annum.

Recent major code breaches
A third approach is to consider the major Code breaches that have taken place over the last few years and estimate the consumer harm from these breaches. Figure 5.2 presents a summary for three major types of breaches. In each case the scale of the harm is measured in tens of millions of pounds.
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So it appears Icstis had been using the 'third approach' which explains why their 'received' level of complaint and 'estimated' consumer harm is considerably less than the OFT estimate.

internet dialler scams:

Icstis 2004/05 - 80,000 complaints and £10 million consumer harm.

OFT Annual Estimate - 400,000 victims and £60m consumer harm.

'There is also another problems in using the OFT estimates. The rogue dialler scam was at its height in 2004, these numbers will be reflected in the OFT report.'
Yes so the OFT figure as it relates to 2004 would be even far greater if they adjusted to mirror the Icstis figures - Icstis 'received' 2004/05 80,000 complaints - 2005/06 2727 complaints.
OFT 'estimate' 2004/05 400,000 victims - 2005/06 400,000 victims.

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The above Icstis method of recording and reporting consumer complaints also (I believe) explains why their figures are considerably lower than the estimate using data I supplied the BBC and the information in this Gaurdian article.
In 2005 the BBC were sent 3,500 premium rate numbers (09099) to use in . They had all been allocated by Telecom One to a group of compnanies registered in Majorca. The BBC told me of the first forty people who had contacted them eight concerned the Telecom One numbers.
That represented twenty percent of all dialler related complaints to Icstis. Icstis did not disagree with this BBC researched figure.

http://www.guardian.co.uk/money/2004...d.jobsandmoney
3 July 2004

'I then went to Icstis. I gave them the two 09099 numbers on my bill and they revealed there had been 25 or more complaints about each since the end of May. They were able to disclose the name and address of the people behind one of the numbers - a company based in a European holiday hotspot.

Much as I would like to name and shame these scumbags, Icstis begged me to keep schtum because it is still investigating. Identifying the company could jeopardise the chances of nabbing them. I wasn't impressed to learn that my tormentors lease their line from a leading UK telecommunications firm.'

I contacted the author of this article and they confirmed the 'UK telecommunications firm' wasTelecom One and the 'European holiday hotspot' was Majorca.

The article was published at the beginning of July. So from the end of May to the beginning of July is a period of at least four weeks (June).

Assuming all the 3,500 premium rate numbers had been programmed into comparable dialler software and each generating a similar number of complaints

so

my estimate for June 2004 - The Telecom One numbers generated 25 x 3,500 = 87,500 complaints

Icstis 2004/05 - 80,000 complaints and £10 million consumer harm.

OFT Annual Estimate - 400,000 victims and £60m consumer harm.

and this also suggests the OFT estimate to be nearer the true figure

http://www.theregister.co.uk/2004/07...is_mps_debate/
1st July 2004

'While MPs called for the industry to put its own house in order, they also recognised that the regulator was struggling to keep up with complaints. With ICSTIS handling some 2,000 calls a day at the moment with many more not getting through, Conservative MP Sir George Young, described the regulator as being in "meltdown".

"On the current scam involving rogue diallers, the regulatory system seems to be in meltdown. Many have tried to complain to ICSTIS, but the line has been constantly engaged. The helpdesk is in meltdown because of a record volume of complaints," he said.'

so did Icstis manipulate complaints figures and how do Phonepayplus report them today.