ICSTIS has launched a consultation on plans to slow down the flow
of money to companies running premium-rate services in breach of
the premium rate regulator's rules, in order to reduce the profits
earned by fraudsters.
In an emergency amendment to its Code of Practice,
ICSTIS
proposes to oblige phone networks not to make
payments to their premium-rate service providers for at least 30
days after calls have been made.
This will give the watchdog time to identify breaches of its
Code and, where appropriate, to direct phone networks to withhold
funds pending the outcome of investigations. These funds may, in
some circumstances, be used in payment of fines later imposed on
the offending service provider.
The payment system is complicated, with customers paying bills
to their telecoms providers for calls, including those to premium
rate services, and the telecoms providers then paying the relevant
network providers' charges for connecting the calls.
But according to
ICSTIS
, these payments can be
made as frequently as every few days, or on a weekly basis, with
the result that when a consumer complains there is little that can
be done, as the funds have already been sent to the premium rate
services provider.
Often the premium rate provider then disappears, without
ICSTIS
being able to apply the key deterrent of
holding monies gained, pending completion of its investigation and
the imposition of sanctions.
The proposals follow one of the recommendations in the Ofcom
Review of the Regulation of Premium Rate Services. The Review,
conducted by Ofcom with
ICSTIS
, was carried out at the
Department of Trade and Industry's request, and secured Ministerial
approval in December 2004.
"So far, in 2005 alone and after Ofcom's Review, we have seen
17 occurrences of service providers being paid so rapidly that
practically no monies were held by the phone networks despite the
services being subject to ICSTIS investigations," said George Kidd,
ICSTIS
' Director. "In one case alone, the phone
network paid out over £1.5 million to various service providers
while we were investigating breaches of our Code."
"We are determined to act swiftly to protect consumers – and
to ensure that the relatively small number of rogues out there do
not continue to damage trust and confidence in the entire premium
rate industry," he added.
ICSTIS
is consulting on the proposals, and seeks
comments by 29th April.
