UK premium rate services regulator ICSTIS has fined mBlox £40,000 as service provider to Jamba! for misleading ‘Crazy Frog’ ads and ordered it to pay refunds to all those who complained to the regulator.
The sanctions have been imposed after ICSTIS found the promotions for the service to be misleading and not clear enough in terms of the costs involved.
ICSTIS says it received 338 complaints about the service "these clearly showed that the complainants were unaware of the subscription nature of the service and simply believed that they were making a one-off purchase" said an ICSTIS spokesperson. Since the introduction of new licensing conditions in Summer 2005, ICSTIS has seen a 75% fall in complaints about these services.
The Hearing Panel found that the promotions required a lot of interpretation, application and patience from consumers. It observed that a great deal of thought had gone into producing the advertisements but, in contrast, little time appeared to have been spent on the terms and conditions. These omitted significant information and were unclear about what the service actually entailed.
ICSTIS Director George Kidd said: “The Hearing Panel has made clear that consumers should not be made to work to find out what any premium rate service involves or costs. Although the Panel found that there was no fraudulent or malicious intent behind the service, the companies concerned showed a careless disregard and unprofessional attitude to consumers in failing to be clear on the exact nature of the service.”
mBlox is considering requesting a judicial review of the interpretation of the ICSTIS code that has held mBlox responsible for the action of a third party such as Jamba!.
mBlox pointed out that a central part of mBlox’s business strategy has always been to not create or promote content. Under current legislation, Icstis is only able to regulate service providers and mBlox has been trying to persuade ICSTIS that regulations should be changed to make the people who create and promote mobile content accountable for the content sent to consumers and the marketing practices they adopt rather than the delivery services provider.
The full adjudication can be read here: ICSTIS mBlox Oral Hearing December 2005