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Watchdog hits out at malware racking up premium-rate charges

Regulator horrified permission isn't being sought

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The premium rate phone regulator says it might disregard evidence of consumer consent from paid-for mobile applications if those apps turn out to contain malicious code.

Under PhonepayPlus' Code of Practice, premium-rate service (PRS) providers are prohibited from charging without consumers' consent. Certain PRS providers must hold evidence that consent has been obtained.

Under new guidance (11-page/155KB PDF) issued by the regulator it said the malware contained in mobile apps had been used to send text messages containing keywords that result in consumers being charged for using PRS "shortcodes" without their knowledge or consent.

There have also been other instances of malware on mobile apps causing PRS numbers to be dialled without consumers knowing about it or authorising it.

Malware has also caused the "illicit access" of consumer contact lists, such as phone numbers or social networking contacts, which have been relayed to others without consent in order to "build up unauthorised marketing lists," PhonepayPlus said. In all those circumstances consent to charging may not be said to have been obtained, it said.

"Providers are asked to note that, where such malicious software (‘malware’) is found, then a Tribunal may not be likely to consider any proof of consent (including Mobile Origination messages or records of calls) to be robust enough," the regulator said.

PhonepayPlus issued the comments as part of wider guidance to PRS providers on "application-based payments". Some consumers use premium rate services to pay to download apps, or additional content contained in apps, and add the cost onto their existing phone bill.

The guidance included advice on how PRS providers can obtain "robust" consent to charging from consumers. The regulator also said that PRS providers must ensure that they clearly signpost prices for mobile apps they allow consumers to buy at the point of sale.

"Where consumers make payment before they access an application, either as a one-off payment or a subscription, then it is important that they are given all information, including the price, which is likely to influence their decision to purchase before they consent to purchase," the guidance said.

"Pricing information will need to be easy to locate within a promotion – ie close (proximate) to the access code or link to purchase a service. Where a promotion is contained within a website or a mobile website, it should not be necessary to scroll down (or ‘zoom in’ on a smartphone touchscreen) beyond the initially presented screen in order to discover the price, unless the access code or link to purchase a service is also in the same area. The price should also be easy to read once it is located, and easy to understand for the reader (i.e. be unlikely to cause confusion) and expressed in UK sterling. Loose or unclear descriptions of price are not acceptable," it said.

However, in some cases it is acceptable for this general rule to be broken if the details about price are positioned prominently enough, PhonepayPlus said.

The PhonepayPlus Code requires that "consumers of premium rate services ... [are] fully and clearly informed of all information likely to influence the decision to purchase, including the cost, before any purchase is made".

The regulators' guidance contains advice on the kind of information it would consider acceptable to provide when PRS providers deliver services that allow extra content within apps to be purchased. The providers can choose to inform consumers of the price of purchase as and when the option arises, or clearly inform them about the extra purchase prices prior to them interacting with the service, it said.

The regulator also strongly recommended that consumers be able to send 'stop' messages to providers in order to stop being charged and said that consumers should be made "fully aware" of circumstances where applications need to be uninstalled in order that charging stops.

PRS providers that allow consumers to pay for apps using "virtual currency" are also issued with guidance on how to comply with PhonepayPlus' Code. Those providers should take measures such as ensuring consumers know what the "exchange rate" of the virtual currency is in relation to UK pound sterling, and clearly informing those consumers whether there is an expiry date for such currency to be used and circumstances in which the unused currency cannot be "redeemed," the guidance said.

PhonepayPlus also said that consumers should not be allowed to buy services that would not work on their device.

"All providers of services offered via a mobile-based payment mechanic should ensure their services are compatible with each technical network platform and/ or handset on which they are promoted. Where this is not possible, consumers with incompatible devices should be prevented from purchasing the service in question," it said.

When proposing the draft guidance in September last year, PhonepayPlus chief executive Paul Whiteing said that the regulator would "not hesitate to use [its] robust sanctioning powers to drive out rogue providers who could damage a vital part of the UK’s growing and innovative digital and creative economies".

Copyright © 2012, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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