On 20 December 2012, the Tribunal considered a case brought against network operator Core Telecom Ltd by PhonepayPlus, which regulates premium rate phone services in the UK.
On 19 July 2012, the Tribunal upheld nine breaches of the PhonepayPlus Code of Practice (12th Edition) (“the Code”) against Daniel Marshall.
Between April and June 2012, PhonepayPlus received complaints regarding four betting tipster service providers. None of these providers were registered with PhonepayPlus. Three of these four had never been registered with Companies House, and the fourth was listed with Companies House as a dormant company.
PhonepayPlus argued that these providers were providing premium rate services, and that Core Telecom had failed to conduct adequate due diligence and risk assessment and control on them. PhonepayPlus cited Core Telecom’s admission of failings of due diligence and risk control in the case against Mr Marshall.
The PhonepayPlus Executive sent a ‘breach letter’ to Core Telecom on 30 November 2012, alleging breaches of three areas of the Code:
• Rule 3.3.1 – Due diligence
• Rule 3.1.3(a) – Risk assessment and control (provision of premium rate service)
• Rule 3.1.3(b) – Risk assessment and control (promotion, marketing and content)
Core Telecom countered by saying that PhonepayPlus had previously advised them that the providers’ phone services did not meet the definition of premium rate services. It acknowledged that it had a revenue share agreement with the four providers, but argued that its end user was the employees and agents of the four providers, and not the providers themselves. The employees and agents would not receive a revenue share. It acknowledged failings in the case of Mr Marshall, but argued that these were due to the actions of a rogue employee, and that it had conducted all necessary risk assessment regarding the tipster services.
Core Telecom replied to the breach letter on 14 December 2012.
Rule 3.3.1 ruling:
The Tribunal ruled that the providers did operate premium rate services, based on the 50 pence per minute cost; and the definition used in section 120 of the Communications Act 2003
Core Telecom was unable to provide any evidence that PhonepayPlus had previously advised them to the contrary.
The Tribunal also ruled that the providers were the end users, as the employees and operators only used the numbers in the course of their regular employment.
The Tribunal then ruled that the limited documentation provided by Core Telecom was insufficient to prove that adequate due diligence had taken place. The Executive’s decision was upheld regarding a breach of this rule
Rule 3.1.3 (a) ruling:
Core Telecom had previously acknowledged failings under Rule 3.1.3 (a) concerning Mr Marshall, and so the Tribunal found against Core Telecom on this point. The Tribunal did not find that there was a breach of Rule 3.1.3 (a) regarding the tipster services, as Core Telecom had reasonably inferred that the services were not premium rate services.
Rule 3.1.3 (b) ruling:
The Tribunal did not uphold a separate breach of Rule 3.1.3 (b) as it ruled that the wording of Rule 3.1.3 (a) was sufficient to cover all the alleged risk assessment and control breaches.
The Tribunal issued a formal reprimand to Core Telecom and imposed a fine of £12,000.