Power Report: Cellphone users refunded for illegal SMS opt-out charge

20 September 2015 - 02:00 By Megan Power

Nearly 2000 cellphone users across the country have each been refunded by their mobile networks for an illegal charge. It's a tiny amount - just R3 - but anyone who has ever felt fleeced by network charges will no doubt still celebrate the victory. On principle.But it's about far more than principle. It's about businesses flouting consumer law and mandatory industry rules and then being held accountable - albeit by a lone consumer.If it wasn't for Audrey Price-Dix, 1786 customers of MTN, Vodacom and Cell C would have been illegally charged for opting out of a direct marketing SMS campaign.It is unlawful under the Consumer Protection Act for the person sending direct marketing to charge a fee for opting out. But it's not illegal for the network to charge a consumer the standard SMS fee for sending the opt-out reply.In the case in question, 44230 consumers were sent a marketing message for subscription services between August 28 and September 1 to which they could opt out only by replying to a premium-rated number, known as a short code.mini_story_image_hleft1The spam message sent on behalf of a Pretoria business, Xihari Consulting, read: "You have been recommended to receive funny videos for R50/day. Otherwise Send STOP to 47672 now, Ts&Cs apply."The message, sent by MTN IWS (an MTN-owned wireless application service provider) on behalf of Xihari, bypassed the Consumer Protection Act's (CPA's) ban on negative marketing, and also violated key industry rules that require name of service, contact details and a link to a site detailing the service offering and terms.While Xihari has pleaded ignorance (no excuse), MTN IWS should certainly have known better. As a member of Waspa, the Wireless Application Service Providers' Association of SA, (which represents companies that link mobile content, products and services to cellphone users) it is bound by the association's code. Breaches can incur suspension and fines of up to R1-million.When initially queried, MTN responded by saying Xihari (not a member of Waspa) had broken the rules, had been suspended, and that affected consumers would be refunded. "We would like to reiterate that MTN is in no way the initiator of the campaign and that any steps taken to refund affected customers are in good faith," MTN said.Seriously? As a Waspa member, MTN IWS is possibly as guilty as Xihari, if not more so. As the Wasp that facilitated the campaign, it has a duty under the code to ensure that the campaign is CPA- and Waspa-compliant. Clearly it missed a few things, including the critical fact that Xihari did not have consent to send the misleading messages. Unsolicited direct marketing is forbidden by Waspa.And let's not forget that as Xihari's service provider, MTN IWS would probably have shared in the opt-out revenue generated had the conduct gone undetected.But MTN refuses to accept responsibility. Spokesman Eddie Moyce said: "MTN as an aggregator provider for our Wasp customers requires such customers to adhere to legislative requirements and the Waspa code of conduct."In respect of this particular complaint, MTN has taken decisive action to terminate the contract with the offending customer that has clearly violated the code."story_article_right1MTN, said Moyce, had refunded customers and had not benefited from the opt-out fee charged.Xihari owner Sylvia Shibambo doesn't appear to be shouldering any blame either. She claimed her client, who is running similar campaigns in other African countries, had been unaware of the breaches and had stopped the campaign when it was discovered.The database of numbers had been obtained from "value-added service providers", most of them internationally based.So nobody contacted was a subscriber to the service? No, because there is no service up and running yet.According to Shibambo, the bulk SMSes sent were part of a "pilot project" for the client who wanted to offer video downloads.The website linked to the planned subscription service is still under construction.Which would explain why no consumers were billed the R50 per day for content. Although, in practice, the networks' double opt-in - which ensures a consumer confirms through a network-generated SMS that they have indeed subscribed - would have kicked in had Xihari attempted to bill consumers.Did Xihari do this to make money from opt-outs? No, said Shibambo, the initial messages were a preparation for a "much better campaign".But who knows? It's impossible for a consumer to know when an illegal opt-out fee is being charged, other than checking their monthly bills -- or airtime balance just after opting out, as Price-Dix did.story_article_left2She's since lodged a formal complaint with Waspa.Waspa's GM, Ilonka Badenhorst, said complaints were reviewed by an independent adjudicator and, if Waspa members were found guilty, appropriate sanctions were imposed."Non-members do not fall within the jurisdiction of Waspa," she said."However, if a non-member [customer of a Waspa member] uses the facilities of a Waspa member, that member is required to ensure that their customer is aware of, and provides services in a manner that is consistent with, the requirements of the code."If that customer is found to have breached any provision of the code, the member will be held liable for such breaches resulting from services offered by their customer," she said.Clearly, MTN is not off the hook.Fortunately, although there are companies that bypass the Wasp system by buying unlimited SMS bundles directly from networks and then sending spam from their phones or laptops, many use regular Wasp services. And these providers aren't able to operate outside of Waspa jurisdiction.So there's usually a quick comeback when a Wasp is involved in the chain. But only if no-nonsense consumers insist on holding them to account.Tune in to Power FM 98.7s "Power Breakfast" at 8.50am tomorrow to hear more from Megansub_head_start Contact Megan Power sub_head_endE-mail: consumer@sundaytimes.co.zaFollow Megan on Twitter: @Power_ReportTune in to PowerFM 98.7's 'Power Breakfast' (DStv audio channel 889) at 8.50am on Monday to hear more from MeganPlease note: Other than in exceptional circumstances, readers sending me complaints must be willing to be identified and photographed...

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