ComReg has recently issued a press release confirming that it has secured a total of €390,000 worth of refunds to more than 12,000 customers of Dragonfly Mobile Ltd (“Dragonfly”) arising out of Dragonfly’s breach of the Premium Rate Services (“PRS”) Code of Practice.
The service in question comprised a subscription ‘Prize Club’ service offered by Dragonfly, which enabled customers to access mobile content and enter competitions. The service cost between €12 and €12.50 per week - depending upon the specific short code used – and was billed to customers by means of reverse billed SMS messages.
Following numerous complaints about the Prize Club, ComReg commenced an investigation in July 2013 into Dragonfly’s Prize Club service using its powers under the Communications Regulation Acts 2002-2011 (the “Act”) and section 9 of the Communications Regulations (Premium Rate Services and Electronic Communications Infrastructure) Act 2010 (the “PRS Act”).
ComReg also conducted a separate investigation into the use of the Irish premium short code numbers 57090, 57575 and 57741, that had been allocated to Dragonfly; and came to a finding in August 2013 that there had indeed been misuse of these short codes. Using its powers under regulation 23(2) of the Universal Service Regulations 2011, ComReg required all relevant mobile network operators (“MNOs”) and other PRS providers involved in the provision of the Prize Club to block access by Dragonfly to the relevant 57XXX shortcodes and withhold all interconnection payments and other service revenues related to the Prize Club using these numbers.
With respect to the broader PRS investigation, ComReg found that Dragonfly was not in compliance with various provisions of the Code and as a result, Dragonfly was in breach of a condition of its PRS Licence. In particular, Dragonfly breached the Code by:
- sending unsolicited and misleading SMS to customers so as to encourage them to sign-up for the Prize Club PRS - without providing the requisite information to customers about the nature of the service and its cost, and without Dragonfly being able to demonstrate that certain customers had in fact subscribed to the service;
- charging for services not provided (eg, some customers received blank messages without any content);
- failing to provide the requisite regulatory update messages at correct intervals to alert customers to how much they had spent and details of how they could unsubscribe from the service to avoid further charges. Under para 5.20 of the Code, PRS providers of subscription services must send a ‘Regulatory Update Message’ to customers at €20 intervals – but before the customer’s total spend has actually exceeded €20. So for example, if each premium SMS costs €6, then the PRS provider must send the customer the relevant Regulatory Update Message after the third subscription SMS has been sent (ie, total spend of €18). The Code also sets out the minimum information that has to be included in the Regulatory Update Message and its format.
ComReg also found that Dragonfly had failed to provide true and accurate information to ComReg during its investigation.
As part of ComReg’s 16 May 2014 finding of non-compliance, ComReg required Dragonfly to provide a commitment that it would remedy the non-compliance and refund all affected customers by 23 May 2014. Dragonfly failed to comply with the commitment in the specified timeframe. As a result, ComReg revoked Dragonfly’s PRS licences and withdrew the 57741 and 57575 short codes allocated to Dragonfly (see Information Notice ComReg 15/23).
Not wanting to leave consumers out of pocket, ComReg agreed with all the MNOs and intermediaries involved, that the withheld interconnection payments would be used to refund all charges incurred on the Prize Club PRS to all affected subscribers. ComReg expressly acknowledged the cooperation of MNOs Meteor Mobile Communications, Tesco Mobile Ireland Ltd, Three and Vodafone as well as that of aggregator providers Oxygen8 Communications Ireland and Zamano Solutions Ltd in blocking Dragonfly’s access and withholding interconnection payments and other revenue from Dragonfly (ComReg 15/23).
ComReg’s efforts and those of the relevant MNOs and intermediaries involved are to be welcomed. Although it is impossible to guard against similar instances arising in the future, the above case at least provides some reassurance to Irish customers that when things go wrong, ComReg will take every effort to avoid them being out of pocket.