Despite PhonepayPlus’s (PPP) best efforts to remove the charlatans form the premium rate SMS industry, a quick glance at their recent adjudications shows there are still organisations willing to flout the rules, and there are still suppliers that support them.
So why does this still happen, why is our industry still blighted by these people?
Let’s take a look at the most recent adjudication, case reference 773809.
PPP received 127 complaints for a service run across 2 shortcodes. They investigate, deem it as a very serious case, uphold breached of fairness and legality, issue fines and ban the information provider from operating premium rate services for 12 months.
Excellent, it would appear job well done.
Now let’s take a look at the financials involved. The information I use here is taken directly from the adjudication itself.
Revenues generated by the combined service fell in the bracket of £350,000 to £750,000.
The combined fines imposed amount to £305,000.
So a very rough calculation shows that profit after fines falls in the bracket of £45,000 to £445,000.
And here lies the very reason the industry still suffers from the scammers.
It would appear PPP need to be able to fine the total value of revenue received on a service, what do you think, how else do we clean the premium rate industry?
I couldn’t agree more. We have been blogging on this for a few months. http://www.aqa.63336.com/blog/category/mobile-regulation/
I am coming round to the view that PhonePayPlus should be adopting a zero tolerance strategy and imposing appropriately tough sanctions on all parts of the supply chain.
Another question is how effective PhonePayPlus fines are in preventing undesired behaviour. In many cases the recipient of a fine that makes a habit of breaking the rules can just quietly fold up their company, not pay the fine and come back to life again as a new entity and carry on behaving badly. This is often alluded to in PhonePyPlus rulings and is evidenced by the lack of collection of fines.
We too have discussed similar issues. In theory the fines should be a deterrent. Clearly they are not.
This could either be because, as you say Gary, they still don’t take all all the available profit. Alternatively they may not be collected. I’d be interested to hear whether anyone has any information on outstanding PPP fines – I’ve been unable to source the information directly.
A quick look at PPP’s acccounts shows trunover (fines) of £4.7m to March 09.
Bad debts (I think it fair to assume these are unpaid fines) of £585k.
So circa 12% of fines don’t get paid. Given outpayments should be held back when a service is being investigated 12% doesn’t look good.
They also had debtors of £880k at 31st March 09. Lets hope this lot gets paid.