I recently wrapped up an appeal against a fine imposed by Phonepay Plus on a network operator using a provision of their code which enables you to more or less negotiate a fine if you give grounds for an appeal. It ended up with a 50% reduction, but that’s mainly because the client had a previously clean record and the fine levied on the network operator was twice that levied on the actual perpetrator of a fraud.
What the case did, however, was to highlight interaction between Ofcom and Phonepay Plus in relation to the allocation of numbers and the consumer protection tests applied on the allocation of numbers particularly for premium rate.
A few weeks after the adjudication had bumped onto the mat and indeed while the appeal process was in train, Ofcom separately wrote asking why both the company and its directors should not be placed on the list of persons under scrutiny about being allocated numbers because they use them or pass them to others to be used for services that have an adverse effect on consumers. In the case of my client, because they were respected telecoms operators with unimpeachable international directors in a case where they had already taken substantial steps to improve their internal procedures and had been caught out by a persistent and one off fraudsman, there wasn’t very much of a question to answer. Operators, however, should be aware of the dangers and of the external impact on the business if you are a network operator not taking appropriate due diligence steps on those you provide numbers to.
For example, I can think of more than one case where a network operator who is allocated a number range knows that the number range is not being used in accordance with the national numbering plan. That might well make you complicit in the use of numbers for which they weren’t intended and which may affect your future allocation of numbers for perhaps any reason.
The twelfth code of guidance from Phonepay Plus reclassified effectively SMS aggregators as Network Operators, so I thought that their position might well be eased. Instead, however, its clear from the first cases coming through the system that anybody involved in SMS aggregation is expected by Phonepay Plus to have a deep understanding of the nastier side of the industry and be aware of all kinds of people’s connections. Those responsible for monitoring services provided through aggregators can be expected to know the up-to-date hit list of who’s a problem in the industry and conduct due diligence scrupulously. It doesn’t matter whether you’ve just got a few big clients in the area and then get taken in by an individual, or if it’s your day-to-day bread and butter, the standards will be much the same as expected by Phonepay Plus.
Moreover, there is the possible ‘double whammy’ of facing number allocation problems.
So the answer is unless you have a very experienced regulatory team internally, you should be seeking some guidance the moment you get into a difficulty and the Phonepay Plus investigations start.
As a matter of proportionality, what Phonepay Plus probably expect of operators is too much, but when they are only being made liable for due diligence and their proper part in the regulatory process, it’s difficult to escape altogether unless you’ve got meaningful due diligence process in place. Moreover, the most likely to be hurt in this process are those who are only occasionally aggregators or provide aggregation services, for example as an additional service simply to retain some clients. In essence, it is all going to be a lot more difficult in future and it is, I think, only a matter of time before Ofcom starts to ask for number ranges back where they are being improperly used, or seeks files for contravention of general conditions, or simply refuses to hand out further numbers.