Crackdown on premium SMS scams

Companies that offer “premium SMS” services will be closely monitored by the Australian Communications and Media Authority when a new industry code of practice is brought in next year.

The new code includes restrictions including a ban on advertising to children under 15 years of age, requirements that premium messages to be tagged with a $MSG sign in advertising, and forcing companies to send a monthly review to customers of what they have purchased.

Companies must now act within 24 hours after an “unsubscribe” notice is sent by a customer, and stop charging prepaid users after their credit has been used. All companies will also be forced to establish a helpline available during business hours.

Users must be told what type of content they are accessing, and whether it is a one-off message or subscription service.

But mobile phone providers will also be affected under the new code, with new rules forcing companies to provide options for users to ban all types of premium content on any mobile plans.

Providers that fall under the category of “premium services” include those offering ring tones, games, reality television voting, novelties, adult content and chat services.

The services that fail to comply with the new code, which will be introduced from 1 July 2010, could be hit with fines up to $250,000.

The code was developed after the Telecommunications Industry Ombudsman received 3000 complaints last year about premium content providers, with 20% of the complaints about bills of more than $100.

Over 90% of users said they did not know they had subscribed to the services, and 55% said when they tried to cancel their subscriptions they were unsuccessful.

ACMA chairman Chris Chapman said in a statement that the code will be monitored carefully and punishments for those breaking the code will be severe.

“Compliance with the mobile premium services code is not optional,” Chapman said. “A key element of ACMA’s strategy will be a rigorous monitoring regime. ACMA will be taking compliance with the new code rules very seriously, as we have already been doing in relation to spam on mobile phones.”

Communications Minister Stephen Conroy said that the industry needs to be clean of any companies engaging in fraud or misleading practices.

“Providers must ensure better protection and complaint handling procedures for consumers,” Conroy said.

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