PPP fines firms £100,000 for misleading competitions

February 16, 2012

Two Dutch companies have been fined £100,000 each by PhonepayPlus, the UK regulator of premium rate telephone services, for using misleading competition websites which fooled consumers into paying for premium rate phone services.

Paul Whiteing, PhonepayPlus’ chief executive, says: “These judgements send a clear message to providers that they cannot play on the public’s trust in well-known websites to promote services. We want consumers to continue to have confidence in the digital market place and we will do everything we can to ensure that they do. Most providers support us in this area as they recognise that this market will only grow if consumers have such trust.”

The two companies, R&D Media Europe and Unavalley BV, were both fined £100,000 and ordered to refund consumers.

Both firms are understood to have used affiliate marketing to promote their competitions on sites with addresses that were very similar to real ones such as Twitter, YouTube and Wikipedia, relying on the fact that many consumers mis-spell or mis-type URLs (a practice known as ‘typosquatting’). Competitions for iPads and Mac Books were promoted on websites with addresses such as wikapedia.com and twtter.com.

Landing pages for the ‘squatted’ sites were designed to look like the genuine sites the consumer was searching for, using the same logos, colouring and fonts. These ‘squatted’ sites informed consumers that they had won or could claim a prize, such as an iPad.

Consumers were given the impression that to enter or claim, they simply had to enter their contact details, including their mobile phone number, and answer some questions. Consumers then received a PIN number on their mobile phones to use for the website competitions. Consumers also began to receive texts to their mobile phones asking them quiz/survey questions, which they could text back to answer.

Many consumers failed to realise that they were being charged £1.50 for each question received on their mobile phones, plus £1.50 to answer each question. One complainant to PPP said that his fiancée was out of £63.

PhonepayPlus' Tribunal found that that the providers had breached the Code of Practice as a result of promotions that had misled consumers and that had not provided clear information about pricing.

PPP has also published clear guidance to premium rate providers about how services should be marketed online and digitally.

This guidance reminds premium rate services providers that they are responsible for all their digital promotions and, if they use marketing firms that mislead consumers through typosquatting, they will be in breach of the Code of Practice.

The watchdog also issued a step-by-step guide for consumers about ‘typosquatting’ and what to look out for when they are searching online.

PhonepayPlus regulates all premium-rate telephone service providers who operate in the UK market. All providers are obliged to register with the organisation and abide by their code of practice over fair use.