Regulator clamps down on premium rate scams

A clampdown on misleading and fraudulent premium rate phone services was announced by the telecoms regulator yesterday after a surge in complaints about internet "rogue dialler" swindles and other costly scams ripping off phone and computer users.

Ofcom said action was needed to rein in the excesses of the burgeoning premium rate services industry, which was worth around £850m last year and takes in everything from reality TV show votelines and mobile phone ringtone downloads to online "adult entertainment" services and practical joke phonelines that allow people to trick work colleagues.

The regulator wants higher fines for those that break the rules and to make it easier for people to obtain refunds when they are defrauded.

Britain is the world's leading market for premium rate phone services, and also one of the most deregulated telecoms markets, which may explain why companies running fraudulent "rogue dialler" services have homed in on British internet users in recent months.

Tens of thousands of people have unwittingly run up huge phone bills after falling victim to the scam, which tricks home computers into dialling expensive premium rate lines and is often activated by closing an unwanted pop-up window.

These fraudsters - often based in far-flung locations - have already made millions of pounds from unsuspecting users. One company made more than £3.5m in just over four months.

As many as 80,000 people have complained of being ripped off by rogue diallers since the start of this year. The rogue dialler scam prompted the government to ask Ofcom to review premium rate services, which normally use numbers beginning with 09.

Ofcom said yesterday that there has also been a surge in complaints from people who have been bombarded with recorded messages and texts telling them they have won a prize and inviting them to call a premium rate number to claim it. Often people have called a £1.50-a-minute claim line, only to find their "prize" never materialised or turned out to be vouchers with numerous strings attached.

Ofcom's recommendations include:

· Urging the DTI to consider increasing the £100,000 maximum fine that can be imposed on companies that break industry rules;

· Giving Britain's premium rate watchdog, Icstis, greater powers to fine phone companies as well as service providers;

· Calling for companies offering premium rate services to have a refunds policy in place, plus a UK customer service number that people can call if they have problems.

Ofcom warned that if these measures prove insufficient, it may bring in a scheme where companies have to put up a sum of money in advance before services can operate - or it may take over policing the entire sector itself.