Watchdog issues record fine for rip-off phone lines

phone boxesAlistair Wilson 50/50/PA Archive/Press Association Images

The watchdog for premium phone numbers has issued a record £800,000 fine for a company running a rip-off premium phone line that targeted vulnerable elderly people.

So what did this company do, and how can people protect themselves?

The scheme

The company, Churchcastle Ltd, ran wordsearch competitions in national newspapers, promising big prizes.

Those who completed entries received letters suggesting that they were close to winning a major prize, and were encouraged to call a premium rate phone line in order to claim it. They were put under real pressure by the company - receiving up to four letters a week.

The cost of entering the competition was up to £1.53 a minute from a BT landline. The length of the calls ranged from three minutes to almost seven minutes. Entrants were also told that they could claim additional prizes if they stayed on the phone for longer.

The regulator said that the details of costs were largely buried in the small print and that when it arrived, the jewellery prizes were very low quality.


Since September last year, the watchdog received 15 complaints about the service. It said that it was particularly concerned that elderly people fell victim to the scheme. In many cases, carers who had been looking after elderly people contacted the watchdog after discovering phone bills that were hundreds of pounds higher than usual.

The watchdog said: "All complaints related to elderly consumers, the majority of whom were over 80 years old, and were made by concerned relatives. The complainants raised a number of concerns regarding the size, visibility and readability of the pricing information, "bill shock", misleading promotions (including the poor quality of jewellery items) and the large volume of highly personalised direct mail marketing promotions. In addition, a number of complainants stated that in their opinion the Service took advantage of elderly people who were vulnerable because of their age. Executive monitoring of the Service supported the concerns raised by complainants."

In addition to the fine, the watchdog ruled that anyone who submitted a valid claim should be refunded within 28 days. So if you have been a victim already, it's essential to put in for your refund as soon as possible.

Protect yourself

If you haven't fallen for this sort of scheme, it's worth being aware of the risks. The watchdog has warned that anyone taking part in any competition which asks for your phone number should take particular care. If you have to call a number to claim your prize, check the small print very carefully and make sure you clearly understand the cost of the call before venturing anywhere near your phone.

This scheme also sent out a large number of highly personalised marketing letters, so it pays to be wary of something that looks like a letter telling you that you've won a prize.

And if in doubt, err on the side of caution. Because while there are people out there winning wonderful prizes, there are many hundreds more being duped into wasting their money.

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Watchdog issues record fine for rip-off phone lines

Using a mobile phone to make and receive calls, send texts and browse the web while abroad can be extremely costly – especially if you are travelling outside the European Union (EU), where calls can cost up to 10 times as much as at home.

To avoid high charges, Carphone Warehouse suggests tourists ensure a data cap is in place, use applications to check data usage, turn off 'data roaming', avoid data-intensive applications such as Google Maps and YouTube and use wi-fi spots to update social networking sites.

Payment Protection Insurance (PPI) is supposed to help people to continue meeting their loan, mortgage or credit card repayments if they fall ill or lose their jobs. However, policies are often over-priced, riddled with exclusions and sold to people who could not make a claim if they needed to.

At one point, sale of this cover - which was often included automatically in loan repayments - was estimated to boost the banks' profits by up to £5 billion a year.
Now, though, consumers who were mis-sold PPI can fight back by complaining to the bank or lender concerned and taking their case to the Financial Ombudsman Service (08000 234567) should the response prove unsatisfactory.

It could be you, but let's face it, it probably won't be. In fact, buying a ticket for the Lotto only gives you a 1 in 13.9 million chance of winning the jackpot.

With odds like that, you would almost certainly be better off hanging on to your cash and saving it in a high-interest account.

No-frills airlines such as EasyJet may promote rock-bottom prices on their websites. But the overall fare you pay can be surprisingly high once extras such as luggage and credit card payment fees have been added - a process known as drip pricing.

Taking one piece of hold baggage on a return EasyJet flight, for example, adds close to £20 to the cost of your flight, while paying by credit card increases the price by a further £10.
It may therefore be worth comparing the total cost with that of a flight with a standard airline such as British Airways.

Cash advances, which include cash withdrawals, are generally charged at a much higher rate of interest than standard purchases.

While the average credit card interest rate is around 17%, a typical cash withdrawal of £500, for example, is charged at more than 26%.
What's more, as the interest accrues from the date of the transaction, rather than the next payment date, costs will mount up even if you clear your balance in full with your next payment.

Supermarkets such as Tesco and Asda often run promotions under which you can, for example, get three products for the price of two.

However, it is only worth taking advantage of these deals if you will actually use the products. Otherwise, you are simply buying for the sake of it, which is a waste of your hard-earned cash.
To avoid paying over the odds, it is also worth checking the price per kilo to ensure that larger 'economy' packs really are cheaper than the smaller versions.

Buy a train ticket at the station on the day of travel and the price is likely to give you a shock - especially if you are travelling a long distance at a busy time of day.

However, you can cut the cost of train travel by 50% or more by going online and making the purchase beforehand - especially if you book 12 weeks in advance, which is when the cheapest tickets are on sale.
Other ways to reduce the price you pay include avoiding peak times and taking advantage of so-called carnet tickets, which allow you to buy, for example, 12 journeys for the price of 10.

Most High Street banks offer packaged accounts that come with monthly fees ranging from £6.50 up to as much as £40, with a typical account charging about £15 per month.

Various benefits, such as travel insurance and mobile phone insurance, are offered in return for this fee. But whether or not it is worth paying for them depends on your individual circumstances.
Before signing up, it is therefore essential to check that you will make use of enough of the benefits, and that you cannot get them for less elsewhere.

Overseas money transfers or travel money purchases attract the same high rate of interest as credit card cash withdrawals.

Worse still, most credit cards – and debit cards – also charge you a foreign loading fee if you use them to make purchases while abroad.
You can, however, avoid these charges by using a Saga Platinum or Nationwide Building Society credit card.

Numbers starting 0871 cost 10p or more from a landline, while those starting 09 can cost more than £1 a minute from a mobile phone.

And the operators of these high-cost phone lines, some of which are banks, often get a cut of the call charges.
Most 09 numbers are linked to scams and should therefore be avoided at all costs, while 0871 numbers can often be bypassed by searching for an alternative local rate numbers on the

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