Comment on PSA Veoo Adjudication

PSA’s so-called protection of consumers can only be described as pathetic. Much was made of the £600,000 fine imposed on a level 1 provider. It is clear from the adjudication that the fraudulent charges made by Veoo Ltd weren’t the result of poor administration or even of negligence. This was a case where the fraud was deliberate.

Fraud on this scale would once have been a matter for a criminal investigation and the criminal courts. It is a sad sign of the times that fraud is no longer considered a criminal activity and is dealt with by toothless “regulators” such as the Phone-paid Services Authority.

The fine imposed will probably never be paid, as the company has filed for insolvency. The persons responsible for this fraud have formed a new company Veoo UK Ltd and will doubtless use this as a vehicle for further fraud.

PSA tell me that Veoo UK Ltd currently operate no Premium Rate Services in the UK, but there is nothing to stop them doing so in the future. Action should have been taken to disqualify the directors from further involvement in Phone-paid Services and the matter should have been referred to the police, as there appears to be evidence that the behaviour of the directors was criminal.

To be fair the PSA sought to ban the directors, but the tribunal refused to do so.  The complacency exhibited by PSA is staggering. PSA are failing to protect consumers in a spectacular manner.

This adjudication raises a number of other serious issues.  It is clear from the adjudication that the directors of this company deliberately allowed level 2 providers to make fraudulent charges to consumers. Companies that behave like this, and the individuals responsible, need to be denied the opportunity commit further fraud. Essentially, a large number of consumers were charged without any verifiable evidence of consent.

The time between the initial investigation and the eventual sanctioning of the company is another cause for concern.  The breaches of the code occurred in late 2014/early 2015. Why has it taken over four years to bring the company responsible to account? The tribunal found, on the balance of probabilities, that this company deliberately applied unfounded charges to a large number of consumers’ phone accounts. The company was allowed to continue its dubious practices throughout the period of the investigation with its directors deriving benefit from these fraudulent charges. Justice delayed in this way is justice denied!

To add insult to injury, the PSA then asked Veoo what level of fine might be “survivable” for the company. What level of fraudulent charge does the PSA think might be “survivable” for a single parent on the National Living Wage? What level of loss might be “survivable” for an elderly fraud victim living on the state pension? I suspect that the majority of consumers would prefer companies like Veoo NOT to survive! The interests of the errant company seem to be being put way above those of protecting consumers and deterrence of further Payforit fraud.

Another feature of this adjudication is that it provides some numbers to help establish the scale of fraud in the industry. Eight Level 2 providers were involved in these fraudulent charges, but full figures are only provided for two. In the case of the first level 2 provider (Rhydel Ltd) it is revealed that of 12,601 numbers charged; only 12 could be verified! On that basis 99.9% of the charges were fraudulent! Most of these consumers will never have had the fraudulent charges refunded.

For Virtual Rainbow Ltd, the corresponding figures are 31,651 numbers charged, of which only 224 were verifiable, making over 99% of the charges fraudulent.

PSA have not revealed full statistics for the other “services” involved, but I would expect them to prove that the vast majority of these charges were fraudulent.

PSA try to give the impression that the majority of these charges are legitimate and that most consumers sign up to these “services” willingly. The high levels of complaint about ‘Payforit’ subscription services is explained by consumers “inadvertently” subscribing. These figures suggest otherwise. Only a tiny percentage of the charges could be justified. Most of these services would not be viable if they couldn’t take money from consumers through fraudulent “subscriptions”.

In May this year BBC Watchdog commissioned a report on Payforit. As well as identifying vulnerabilities in the system which facilitate fraudulent charges, they also concluded, in relation to Payforit:

“Various media outlets have reported on this issue, as well as the BBC Watchdog program investigating the problem. The consensus is that the majority of payments being used by the service have been made fraudulently without the users being aware.”

It is time that PSA took its responsibility to consumers seriously. The consumers affected by these fraudulent charges have been provided with no mechanism to obtain redress and to recover the stolen money. PSA have a duty to provide them with one! MNOs need to be forced to take responsibility for fraud which they facilitate by allowing companies like Veoo to plunder their customers’ accounts.