Premium SMS Scratchcard Vendor Fined for Misleading Promotions

The UK's premium rate telephony regulator, PhonepayPlus has slapped a £100,000 fine on a company that used scratchcards to promote a premium SMS service. Abstract Games (trading as Mediaprom) has also been barred from providing or operating any scratchcard services for six months, except those for which compliance advice has been sought and implemented to PhonepayPlus' satisfaction.

The service in question was promoted by a large number of scratchcards distributed via national magazines and newspapers. Consumers were invited to scratch off a panel to see whether they had won a prize and, if successful (as the vast majority of participants were), they were then required to follow instructions included on the scratchcard which explained how to claim the prize. Those who claimed by sending a text message were also entered into a premium rate subscription quiz service.

PhonepayPlus had received 132 complaints regarding the service by the time of the original adjudication in February, and has received more since then. Most claimed to have been misled and/or complained about the receipt of unsolicited charged texts. The complaints clearly showed that these consumers were unaware of the subscription nature of the service and had simply believed that they were making a one-off payment to claim an award.

The Oral Hearing Tribunal found that the scratchcard designs were misleading and were intended to maximise Abstract Games Limited's revenue. It also found that Abstract Games Limited had been wilful in relation to the design of the scratchcards, which had made it probable that consumers responding to the competition and seeking to claim their awards by text would not realise that they were also subscribing into a quiz service.

The Oral Hearing Tribunal also found (as was admitted by Abstract Games Limited) that some scratchcards had failed to give information which was likely to affect a consumer's decision to participate, and in particular an adequate description of the competition prizes. The scratchcards failed to include the number of low value prizes on offer which could have misled consumers into believing that their chances of winning a high value award were greater than they were.

Simon Bates, PhonepayPlus Director of Standards & Communications commented: "The Tribunal's decision serves as a reminder that misleading promotions and, in particular, subscription services masquerading as one-off payments, are wholly unacceptable and will be met with tough sanctions. Any provider that is in any doubt as to how to promote such services should contact us for compliance advice and guidance."

Posted to the site on 6th August 2009