ICSTIS, the phone-paid services regulator, has today imposed its maximum fine of £250,000 on GMTV competition phone service provider Opera Telecom Ltd for selecting potential winners before the competition had closed. ICSTIS found that all correct entries submitted after a certain time each day had no chance of winning, despite consumers being charged for entering. The fine is the highest ever imposed by ICSTIS in its 21-year history.

In what it described as the “the worst case which ICSTIS had come across in terms of the numbers of consumers affected and the amount of money at stake”, ICSTIS found that, by picking potential winners early, in almost four years at least 18 million callers had been charged for entering the competition but had no chance of winning. With the average cost of a call being over £1, the revenue generated by callers with no hope of winning appeared to be in excess of £20 million.

ICSTIS has also imposed additional sanctions on Opera Telecom:

– A bar on running competition services for 12 months. This has been suspended subject to Opera Telecom undergoing, and implementing the recommendations of, an independent evaluation of its procedures and management structure to address “systemic failures within the company”.

– An order to pay full refunds to complainants. This has been suspended for three months pending a review by ICSTIS of the success of the current refunds scheme.

– A formal reprimand.

Announcing the adjudication, ICSTIS Chief Executive George Kidd said: “Our Hearing Panel found clear evidence of fundamental failings within Opera Telecom. The company showed a reckless disregard for the interests of callers, with scant evidence of any attention being given to compliance with our Code of Practice. We have ordered Opera Telecom to bring in outside consultants to sort out their business. If they don’t do this to our satisfaction, the bar on them running competition services will come into effect immediately.

“The size of the fine we’ve imposed reflects the very serious nature of the breach of our rules. The consumer harm caused was aggravated by the sheer number of callers who paid to enter the competition but had no chance of winning, the huge amount of revenue that was unfairly generated from these callers, the length of time over which the practice had been going on and the extensive damage caused to public trust in phone-in competitions.

The decisions we’ve announced today are part of a wider examination of events. Ofcom has also been investigating GMTV’s role and responsibilities, and will report on its findings in due course.

“Today’s adjudication sends a clear message to any company offering phone-paid services: your absolute responsibility is to the public who use your services. Cutting corners for the sake of convenience or to boost revenues is simply unacceptable and has serious consequences. The interests of consumers and compliance with our rules, and those of other regulators, should be at the heart of services, not an afterthought.

Since problems with phone-in competitions came to light earlier this year, we’ve been working hard with Ofcom, phone companies and broadcasters to ensure that services are run in a thoroughly professional and responsible way. We’re confident that this particular market today is certainly not the flawed place it was a year ago. But we’re certainly not being complacent. We want to engender an industry-wide culture of compliance, and preempting and preventing problems across all services will be a major focus of our work when we become PhonepayPlus next month.”

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