Two new sets of rules affecting mobile marketing have arrived this summer courtesy of (1) premium rate line regulator ICSTIS (to be renamed “PhonePayPlus” in October 2007) and (2) a consortium of mobile network operators. Anna Montes dials in.
Topic: Mobile marketing
Who: UK mobile operators and ICSTIS
When: 30th and 31st July 2007
Where: United Kingdom
Law stated as at: 23 August 2007
At the end of July 2007, the mobile marketing industry was told to prepare for new codes of practice that could affect two areas of the mobile sector – Anonymous SMS services ("ASMS Services") and the selling and marketing of mobile services on behalf of the mobile operators.
ICSTIS Consultation regarding SMS Services
On 30th July, ICSTIS launched its latest public consultation which addressed ASMS Services and whether it is possible and appropriate to introduce regulatory safeguards to govern how such services are operated. ICSTIS is concerned that if SMS Services are allowed to operate, the public should be able to use and receive such services without undue anxiety or distress and be able to stop such services without "excessive difficulty or cost". ASMS Services are generally accessed via a website where the user enters the content of a text message and the number they wish to send it to. The user then requests a keycode be sent to their mobile phone number in the form of an SMS which carries a reverse Premium Rate charge. This keycode, once entered back into the website, enables the user to send their original message in the form of an anonymous SMS. The recipients of such SMS receive the content of the message but not the number of the sender.
ICSTIS and some mobile operators have been monitoring such services and are concerned that whilst most ASMS Services offer the ability to play practical jokes on friends and indulge in anonymous dating, some uses of ASMS Services breach the ICSTIS Code as they unreasonably invades privacy or induce an unacceptable sense of fear, anxiety or distress to recipients of such messages. ICSTIS is therefore concerned that some ASMS Services are used to send abusive or threatening texts such as for the purposes of bullying and stalking and that recipients of such messages are unable to benefit from complaint procedures.
ICSTIS believes that all providers of ASMS Services should be required to comply with certain conditions which should include the following:
1. Information and complaints
ICSTIS proposes that:
(a) each ASMS Service message contains the statement that it is an Anonymous SMS from a third party and provides a non-Premium Rate number for recipients to call for further information. One alternative approach to this being considered by ICSTIS is that for each ASMS Service message sent, the recipient is also sent a second, free-of-charge message immediately after the original message which states that the original message is an Anonymous SMS from a third party and provides a non-PRS number for recipients to call for further information; and
(b) that recipients who call the non-Premium Rate number provided should get through to some form of an operator or message explaining the name of the service provider, the nature of the service, and the procedure for making a complaint to the service provider and/or ICSTIS upon request.
2. Moderation and monitoring
Whilst some ASMS Service providers state in their website Terms and Conditions that all messages are logged to prevent misuse, ICSTIS believes there is no evidence to support the fact that messages are actively monitored and that offensive messages are blocked. ICSTIS is also concerned that some provides appear to accept no responsibility for the content of messages which carry malicious intent. ICSTIS therefore proposes that service providers:
(a) record the content of all messages they relay and keep records of this content, and the telephone number of the author, in accordance with the Data Protection Act. Such records should then be made available to ICSTIS or other investigation bodies upon request; and
(b) prominently display on their websites a note informing users that they keep records of all the messages they relay and that they will act on all serious complaints and forward details to the police if necessary.
ICSTIS proposes that the appropriate model to regulate ASMS Services would be to use a Prior Permissions Notice so that ASMS Service providers have to submit their ASMS Services to ICSTIS for evaluation and approval prior to operating under a license. This license can then be revoked in the event of serious harm caused by the service. ICSTIS have invited the public to comment on whether this is indeed the best approach to take.
New UK mobile operators code of practice for the sales and marketing of subscriptions to mobile networks
Also at the end of July, the UK mobile operators released their new code of practice which this time focuses on the selling and marketing of subscriptions to mobile networks. Ofcom has welcomed the introduction of this code as Ofcom would like to see the operators stamp out misleading sales and marketing practices in the mobile market but it has also warned that formal intervention will follow if this industry initiative should fail to make any impact and not lead to a decrease in the number of mis-selling complaints Ofcom recieves. Ofcom is currently receiving approximately 400 complaints per month relating to the mis-selling of mobile phone services and is concerned about this significant increase in complaints.
The code of practice sets out principles of best practice for the promotion and sale of mobile airtime subscriptions (including pre-pay) and the handling of any complaints arising from such sales processes. Some of the principles detailed within the code include the following:
1. the representatives of all organisations selling and promoting mobile services should be properly trained and have sufficient understanding of the products and services they are selling and promoting (the code lists topics that need to be covered within such training as a minimum);
2. all approchaes to current and prospective clients must bee made at an appropriate time of day (for instance for telephone cold calling) and all data must be collected in accordance with data protection legislation;
3. sales and marketing campaign records (including recordings of telephone conversations) should be maintained by the organisation conducting the campaign for six months to assist with any subsequent complaint or inquiry;
4. before accepting an order for mobile services, a reseller must take all reasonable steps to ensure that the person wishing to place such an order understands that they are entering into a contract, knows the key features of the contract and the names of the contracting parties; and
5. if any part of an offer to a consumer contains a sales initiative, the consumer must be provided with a clear written statement as to which legal entity is making the offer and is undertaking to meet all applicable obligations.
The mobile operators themselves have also undertaken to carry out due diligence on all organisations with whom they contract and appoint to promote their services and they shall also carry out spot checks during the course of the business relationship to assess whether their due diliegnce information remains up-to-date. They also reserve the right to request copies of retailers' customer terms and conditions to ensure they are compliant with the operators' minimum requirements as set out in the code. The mobile operators will also start to work together more to resolve complaints – if a mobile operator recieves a complaint in relation to the sales and marketing activities of another mobile operator's dealer in contravention of the code, it shall pass the complaint to the mobile operator whose dealer is in breach for them to take appropriate action.
Why this matters:
Ofcom and ICSTIS have shown us that the regulators are now coming down hard on mobile services and practices that do not have consumer's interests in mind. Consumer confidence in mobile services has taken a bit of a battering over recent years due to matters such as unclear advertising for premium rate subscription services, and so the regulators and mobile operators are having to keep a keen eye on the activities of the market to ensure public confidence is maintained.
ICSTIS has now made it clear that as with all Premium Rate Services, ASMS Services need to be compliant with all relevant parts of the 11th ICSTIS Code of Practice. The deadline for comment on the ICSTIS consultation is Friday 7th September for those who want to participate. This is a shorter response period than normal for ICSTIS consultations and ICSTIS have explained that this reflects the concern it has about ASMS Services and the fact it wants to deal with such services with a degree of urgency. We can all therefore expect to see changes very soon which are likely to mean more administrative burdens for the providers of such services. ICSTIS is aware that some ASMS Services are offered by providers at no charge but ICSTIS can only consult on the regulation of ASMS Services charged using Premium Rate so any such other activities would fall outside the remit of any regulatory framework ICSTIS might introduce. We may therefore see providers moving to a more flexible marketplace by offering such services for free and finding alternative revenue streams to replace the use of Premium Rate.
We are yet to see the impact of the new mobile operators' code of practice but there is likely to be a degree of uncertainty in its application. The code states that mobile operators will have "flexibility" as to how they apply its principles to their retail channels and relationships and so the terms they enter into with third party dealers and resellers could vary greatly across the sector. Some mobile operators may be stricter than others. One thing is for sure for their resellers and promoters, the mobile operators will be monitoring compliance carefully to avoid Ofcom taking matters into its own hands and in the event that an operator is forced to terminate a resellers contract for breaches of the code (rather than in the normal course of business) it shall also inform Ofcom and the resellers Trading Standards home authority of the breach so compliance is not something the resellers should take lightly.