What is Ofcom doing to stop Premium Rate Services scams?
4 Aug 2004
See letter below from the Chief Executive of Ofcom:

Thank you for your letter of 29th June 2004 on the subject of the regulatory regime for Premium Rate Services (‘PRS’) in the light of your concerns about the current problems caused by dialler services involving apparent abuse of premium rate, international and satellite numbers.

First, I should explain that I fully recognise that there is considerable concern about the potential for abuse in this area, and I share your view that a lack of appropriate regulation would result in public confidence being undermined and consequential damage to the telecommunications industry. The current problems being caused by internet diallers are, without doubt, a matter of serious concern, and you can rest assured that Ofcom is fully engaged in looking at solutions aimed at stopping the dialler problem. There are various strands of ‘ongoing work’ which we are currently engaged in as a response to the current dialler issue, and these include the following:

• Enforcement action under sections 123 and 124 of the Communications Act 2003. Ofcom has asked ICSTIS as a matter of urgency to notify Ofcom of apparent breaches of the PRS Condition by communication providers (i.e. the terminating networks who have contracted with the service providers in order to carry the service). We understand that such notifications are due imminently. We have already notified the industry that we will treat all notifications by ICSTIS extremely seriously, and launch formal investigations, and where there is evidence of network non-compliance with ICSTIS directions, will take firm and decisive enforcement action, including fining providers and/or suspension of service provision, where necessary.

• We wrote to all call terminating networks on 11th July 2003 to express strong concerns at the lack of due diligence demonstrated by certain companies in signing up service providers without audit checks and agreeing early payment terms where revenue is passed on to the service providers very quickly. We explained that we did not believe that such commercial practices were consistent with the responsibilities and obligations of communications providers engaged in the premium rate sector.

• We have worked closely with ICSTIS in relation to discussions between ICSTIS and DTI about the introduction of a prior authorisations regime for dialler services which will provide additional safeguards including, for instance, that network operators would be required to check that approval had been granted as part of their own connection agreements with premium rate service providers. It would also enable ICSTIS to implement consumer protection mechanisms in the case of disputed bills including the possibility of redress being provided, possibly through the implementation of redress mechanisms involving the network operator. You will be interested to know that ICSTIS has recently announced that it intends to introduce prior authorisations requirements imminently. Ofcom will be involved in discussions about the way in which the regime will work.

• Ofcom is part of a working group of key interests, including ICSTIS, DTI and industry members, to bring together the key players and ensure a co-ordinated approach in taking any action forward. The first meeting has already taken place.

• Ofcom is involved in discussion between ICSTIS and the industry about revisions to the ICSTIS code to enforce better commercial practices (including stopping weekly or bi-weekly payments and potentially withholding payment to providers where apparent fraud is suspected).

• Ofcom wrote to call originating networks (BT, ntl and Telewest) on 6 July to clarify the billing policies of those companies where customers are contesting, and withholding, payment for disputed charges where numbers are associated with ‘rogue’ diallers.

• Legal advice is being obtained as to what, if any, legal powers Ofcom might have (or might introduce) to counter the internet dialler problem if the prior permission regime proves ineffective and there are on-going problems that need an urgent resolution.

I trust this is helpful in providing you with reassurance that Ofcom is taking these issues extremely seriously, and is taking appropriate action to stamp out the consumer harm being caused by internet dialler activity.


Stephen A. Carter
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