Where: United Kingdom
When: 2 June 2015
Law stated as at: 6 July 2015
The UK’s regulator of premium rate phone number services, PhonepayPlus, launched a compliance update for e-commerce and other online businesses which use premium rate charges to mobile phone accounts as a method of payment.
The update has been occasioned by the coming into force in 2014 of the Consumer Contracts (Information, Cancellation and Miscellaneous Charges) Regulations 2013 (the CCRs) alongside a spike in the number of complaints received by the regulator.
The complaints have mostly been from consumers who claim to have been unaware that they have entered into a service for which payment is required when clicking on active buttons online. The regulator has indicated that particular sources of complaint have been mobile internet services which charge per page or item viewed and subscription-based competitions.
The note reminds providers that they must keep consumers fully and clearly informed of all information likely to influence a decision to purchase before any purchase is made, provide easily accessible, legible and clear written information, make cost information prominent and near any call to action, treat any user fairly and equitably, ensure that they do not mislead in any way and, in the case of a repeating or subscription service, must provide a simple, permanent exit route for the consumer.
Specific areas highlighted
- Information provision. This is a key area under Regulation 13 of the CCRs, and a number of provisions of the PhonepayPlus Code (the Code) (2.2.1, 2.2.2, 2.2.5 and 2.3.2). In addition to the standard pre-contractual information required by the CCRs, the update reminds that it is a Code requirement for subscription information, including price and billing period to be provided, along with method of exit from any subscription. Further, it is explicitly stated that the provider must also provide information as to their identity and relevant contact details for complaints and enquiries.
- Contracts concluded by electronic means. This section considers the specific rules in the CCRs regarding the conclusion of electronic contracts. As those familiar with the CCRs will know, this includes a requirement that the button the customer clicks to place the order being required to be labelled in a way denoting a clear intention to place the order and acquire an obligation to pay the retailer. In helpful guidance for mobile developers, PhonepayPlus’s note specifically clarifies that this requirement will apply not only to a button which is clicked with the pointer, but to any similar function such as an “active field” (a graphic on a mobile site which responds when a consumer presses part of the screen). “Buy now” or “pay now” have been included in BIS guidance as suitable formulations; in its note PhonepayPlus suggests “Buy now”, “Pay £[ ] now” or “Click to buy, and £[ ] will be added to this phone bill”.It appears that PhonepayPlus would also prefer pricing information to appear on the button itself, or if not, “prominent and proximate to” it. The regulator also advocates use of a “confirm payment” screen, allowing reiteration of the consumer being obliged to pay and provision of the required information on cancellation rights.Interestingly, PhonepayPlus also advocates that the screens viewed by the consumer and the positive opt-in to the purchase by the consumer should be “recorded by an independent third party” to create a robust, credible and auditable record of compliance. While keeping transaction records is self-evidently good business practice, providers should of course have an eye to compliance with data protection law and privacy and electronic communications laws if following the regulator’s advice and engaging in any real-time recording of users’ actions.When discussing compliance, PhonepayPlus specifically mentions Payforit, the online payment service operated by 3, EE, O2 and Vodafone, and, while it stops short of saying that use of Payforit will be compliant, it states that use of this service may assist a provider with its responsibilities under parts of the PhonepayPlus Code of Practice, which appears to suggest that the regulator is currently happy with how this service is implementing its compliance obligations.
- Confirmation of distance contract on durable medium. The guidance echoes the requirements of the CCRs that confirmation on a changeable medium such a website is not acceptably durable. However, PhonepayPlus considers that information being placed into a user’s personal account in a format which cannot be changed (citing PDF as an example), or stored with an independent third party and accessible to the consumer for a “reasonable amount of time” may be compliant. It would therefore appear that adopting this approach would be unlikely to raise issues with the premium rate regulator – although it is of course possible that the views of other regulators may differ.
- Multiple small purchases. The guidance suggest that where consumers may make multiple purchases (for example add-ons within an app), they are informed each time they make a purchase and how much they have been charged, either through the app/website or another means. This suggestion applies on top of the basic requirement in the CCRs to supply consumers with confirmation of a contract, as it allows consumers to keep on top of how much they have spent.
The note ends by reminding providers that PhonepayPlus provides a free compliance advice service, through its email address at compliance@PhonepayPlus.org.uk
Why this matters:
The note sets out certain requirements of the CCRs in addition to the requirements of the Code in this area, so will assist e-commerce businesses or apps using direct operator billing, premium SMS or Payforit in complying with the CCRs in addition to the Code. However, as the note mentions, it is the regulator’s interpretation of the CCRs rather than legal advice.
With this caveat in mind, the note should still be a useful piece of guidance for ensuring that such services are dealt with in a responsible manner. In particular the quasi-endorsement of the Payforit service may make this a more attractive option to new entrants to direct operator billing wishing to minimise compliance risk.
The note is available as of the time of writing here. (include link to: http://www.PhonepayPlus.org.uk/~/media/Files/PhonepayPlus/ComplianceUpdates/03-June-2015-Compliance-Update.pdf)