European Union Cracks Down On Ring-tone Scams

Consumers: European Union Clampdown On Ring-Tone Scams

EU Consumer Commissioner Meglena Kuneva today announced the results of an EU-wide investigation into websites offering mobile phone services such as ring-tones and wallpapers.

The enquiry, which was carried out on more than 500 websites across the 27 Member States, Norway and Iceland, found that 80% of the sites checked need to be further investigated for suspected breaches of EU consumer rules.

Many of the websites target children and young people. Problems found included: unclear price information where prices are incomplete did not include taxes or customers are unaware that they are signing up to a subscription. Large numbers of websites do not provide some of the required contact information about the trader.

Other problems relate to misleading information where key information is hidden in very small print or hard to find on a website or the word "free" is used to mislead consumers into a long-term contracts. The breaches vary in the degree of seriousness. More than 495 million mobile phones are owned by Europeans. Ring-tones alone were estimated to make up 29% of the overall "mobile content" market in Europe in 2007 (about 10% higher than 2006). The value of European ring-tone sales in 2007 was estimated at €691 million. Seven countries Norway, Finland, Sweden, Latvia, Iceland, Romania, Greece) are publishing the names of the websites which they found to have irregularities (see MEMO/08/516).

"This EU wide action is a direct response to hundreds of complaints from consumers that have come into national authorities. Far too many people are falling victim to costly surprises from mysterious charges, fees and ring-tone subscriptions they learn about for the first time when they see their mobile phone bill. There will be Europe wide enforcement action to track down each of these traders. But we need to get a clear message out particularly to teenagers and children – be on your guard! It's all about the small print! There are many reputable traders out there, but to be safe buying these services, check the fine print every time and make sure you are not signing up for more than you bargained for."

The Sweep

The "Sweep" is a new kind of EU investigation and enforcement action. Member States carry out simultaneous, coordinated checks of webpages for breaches in consumer law in a particular sector. They contact operators with alleged irregularities and ask them to clarify their position and/or taken corrective action.

The mobile services Sweep took place between 2-6 June. Enforcement authorities across Europe checked mobile service websites for suspected violations of EU consumer law - Unfair Commercial Practices Directive (2005/29/EC); Distance Selling Directive (1997/7/EC), E-commerce Directive (2000/31/EC).

The results

The Sweep focused on 3 types of practices in the mobile services sector which compromise consumer rights (unclear information about the offer's price, trader information, misleading advertising).

* 80% of websites checked are being further investigated. The total number of websites checked was 558, the total number of websites that need further investigation is 466. The number of cases potentially requiring cross border co-operation between different national authorities, CPC cases (Consumer Protection Co-operation Network) is 76. See (MEMO/08/516) for breakdown per country.

* 50% of websites checked targeted children (279 websites out of 558). These websites used children's cartoon characters, well known TV characters or required parental consent. The same high level of irregularities (80%) also applied to these sites.
Many websites indicated multiple irregularities. The figures are as follows :

-- Almost 50% of all the sites checked had some irregularity related to the information about the offer's price (268 websites out of 558). On many websites prices and related charges and fees are not clearly indicated or not referred to at all - until the consumer is invoiced via their phone bill. Prices did not include all taxes, in the case of a subscription, the word subscription is not clearly mentioned or the period of a subscription is not clear.

-- Over 70% of all the websites checked lacked some of the information required to contact the trader - the trader name, geographic address or the contact details were incomplete (399 websites out of 558). This is against EU law -the eCommerce Directive 2000/31/EC requires details of the service provider, including an email address, to be displayed.

-- Over 60% of websites checked presented the information in a misleading way (344 out of 558). Information on the contract is available on the site but hidden in small print or hard to find. Goods and services advertised as "free", but the customer is misled and later finds that there are charges or that they are tied into a contract.

What happens next?

Companies will be contacted by the national authorities and asked to clarify or correct problems identified. Failure to do so can result in legal action leading to fines or closure of their websites.

For cross border cases, national authorities will work with colleagues from other EU authorities. Authorities are asked to report back on their progress in the first half of 2009.

ENDS

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