Consumer Authority again fines provider of SMS services

The Consumer Authority is imposing fines upon Smart Media Services B.V. amounting to a total of EUR 118,750. Their website, skilled2win.com, enticed consumers with games, suggesting that by participating in the games, large (cash) prizes could be won. However, in order to be eligible for a prize, it turned out that it was necessary to take out an SMS subscription for a word game. Participation in the word game was not a one-off event, but continued until the consumer signed out of the game. Marije Hulshof, Director of the Consumer Authority, explains: "Tackling misleading SMS services forms part of our Agenda once again in 2009, because despite the new code of conduct, a great deal is still going wrong. In this case, the service is 'packaged' as a game, whilst in reality, you are taking out a subscription. On its website, the company says that it abides by the SMS Code of Conduct, but this definitely doesn't appear to be the case."

Background to the decision

The Consumer Authority initiated this investigation following a preliminary investigation that was carried out on the internet. The investigation revealed that on the website skilled2win.com, consumers were able to play games in order win large cash prizes. However, these prizes appeared to be unrelated to the games that appeared on the website. The sole purpose of the games was to get consumers to take out an SMS subscription.

After playing a game on the website, which turned out to be impossible to lose, the prize appeared to have been won. Consumers were then asked to provide their mobile phone number and send their 'OK' by text message. By doing so, however, they were unknowingly agreeing to a continuous SMS subscription for a word game. The consumer would only have the chance to win a prize if the word game was played by text message. Consumers received six unsolicited text messages as part of the game, each costing them EUR 1,50. No explicit consent was granted before these text messages were sent, and the text messages only ceased if the consumer cancelled them, using short code 2200. As the costs only became clear afterwards, consumers were conned considerably.

Before providing services, such as SMS services, via the internet, companies are obliged to comply with particular obligations to provide information to protect the consumer. The provider of the service must state clearly the type of service and which company is providing the service, including details of its business address. The provider must also give details of the costs and how the consumer is able to cancel the service. In view of the fact that the company has violated a large number of these regulations, fines totalling EUR 118,750 have been imposed. An order for incremental penalty payments has also been imposed in order to ensure that the company amends the information it provides and ceases sending unsolicited text messages. The company is entitled to submit an objection and an appeal against the decision of the Consumer Authority.

Previous actions against SMS services

This is the third time that the Consumer Authority has fined a provider of SMS services. In addition, the Consumer Authority has so far submitted nine complaints to the Advertising Code Committee, all of which were upheld. An appeal is now underway in one of these cases. The Consumer Authority is closely monitoring the effectiveness of the SMS Code of Conduct and the SMS Code of Conduct Foundation, including by means of the reports made to ConsuWijzer. So far, the Consumer Authority has, in twelve instances, sent messages to operators which, according to the terms of the code of conduct, must ensure that the violation is permanently discontinued within a few days.