App firm fined for conning users into £10 text

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A games app company has been ordered to pay compensation, after it designed an installation process that automatically sent a premium rate text for £10 when users clicked on it.

It's a great result for users of this particular app, but should be a warning to anyone who downloads games for their phone or tablet.
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The ruling

The company, Connect Ltd, operated an app which enabled users to access popular games through a portal called 7mobi.net. Before the app was installed, users would get to a screen called 'downloader'. Once you clicked 'install' you would see a new page saying "do you agree with the rules of downloading?' You then had a choice of either clicking 'OK' or 'Rules'.

If you clicked OK you would automatically get a £10 text. If you clicked rules you would have ten pages of small print - of which some inaccurate details of the text were on page six. You could then click 'agree' or 'disagree' and if you clicked 'agree you would get the £10 text.

Ten people complained about this apps company and the stealth charging. The watchdog, PhonePayPlus, found a number of very serious breaches of its code. It ordered the company to refund all users every penny within three months - direct to their phone bill - regardless of whether or not they had complained.

It also fined the company £50,000, and forbade it from operating premium phone service for two years - unless it received prior permission for each from the watchdog.

Concerns

It has effectively closed down this breach, but it is far from the only one. In an exploding industry, the watchdog has its work cut out trying to police the many thousands of companies and the many hundreds of thousands of apps.

With such a huge new market, there are still a vast number of risky apps out there. Tony Neate, Chief Executive of Get Safe Online, says: "In the last couple of years, fraudsters have intensified their efforts to target web users via the mobile phones. It's no longer a 'new trend', but a very real threat."

PhonePayPlus has identified the main threats as lack of pricing and misleading promotions, security issues, which could cause premium rate telephone charges to a consumer's mobile without their consent, and consumer confusion about how to stop premium rate charges when they stop using a service or delete an app.

Protect yourself

It has issued new guidance, and continues to take companies to tribunal where they fail to stick to the rules. Where their activities go too far, it has the power to close the businesses down
However, we need to play our part too. There are a number of steps we should take when considering downloading an app:
  • Treat smart mobile devices in the same manner as desktop computers
  • Stick to reputable app stores
  • Be aware of clicking on in-app ads and notification messages
  • Trust your instincts – if the app or offer seems too good to be true, it probably is
  • If you think you may have been charged without consent or you may have downloaded smartphone malware that abuses premium rate services, contact PhonepayPlus on 0800 500 212
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