Premium rate scam warning from regulator

Two companies have been fined a total of £450,000 for misleading promotions on social media and networking sites. The fines have been levied by PhonepayPlus, the UK premium rate telephone regulator, who has warned consumers to be on their guard against such deliberately misleading promotions.

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Amazecell Ltd and mBill Pty Ltd employed affiliate marketers to promote their premium rate competitions online. The services took advantage of people's trust in what their social media friends ‘share’ or ‘like’, to spread the promotions virally. In the two cases, the promotions that their friends had shared included the promise of a voucher worth up to £250 for major retailers including Tesco and Asda. In some cases, misleading content was automatically posted onto consumers’ Facebook walls without their knowledge. In other cases, to take part in the competition the consumer was required to also ‘share’ the promotions, meaning that they would appear on their own wall.

After clicking on the promotion, consumers were misled into participating in premium rate competitions, believing that these were stages towards receiving the promoted offer. What they did not realise was that by entering their phone number, they would be charged. At least one affiliate marketer promoted the Amazecell competition by masking the terms and conditions, including pricing, from the actual competition page. In one case, consumers were charged £5 per question sent to their phone, and subsequently for further questions regardless of whether or not they answered them. Over 89,000 consumers entered the service only once but were sent a second question for which they were charged.

Amazecell Ltd was fined £300,000 and mBill Pty Ltd was fined £150,000, and both have been ordered to refund any consumer who requests a refund.

PhonepayPlus’ Chief Executive Paul Whiteing said: "Our Code of Practice is clear about premium rate service providers’ responsibilities and this includes the way in which their services are promoted. These adjudications send a strong message to providers that they need to be sure how their services are promoted online by affiliate marketers. These judgements make clear that misleading behaviours such as this will attract sizeable penalties. We have contacted Facebook about these issues and we want to discuss with them what steps can be taken to prevent such abuse of social media before harm occurs."

Whiteing added "For consumers and social media users who are concerned about such practices, I would give this advice: Treat your phone number like your bank card pin number and before you input it online, be sure how the number will be used and what you are signing up for. My other piece of advice is old-fashioned but still worth remembering – if it looks too good to be true then, unfortunately, it probably is."

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