Operators face legal backlash over direct-to-bill fraud

Operators face legal backlash over direct-to-bill fraud

A landmark legal case against Vodafone relating to direct-to-bill fraud could prompt a major backlash against operators over billing services.

Legal proceedings, brought by businessman Russell Gray against Vodafone, charge the network with equal responsibility for the billing fraud for the first time. Gray fell victim to a scam that exploited the PayForIt direct-to-bill services provided by the major networks to enable customers to pay for goods and services using their mobile phone numbers.

Direct-to-bill scams

As Mobile reported back in August, direct-to-bill scams that exploit this functionality are on the rise. Scams use web links hidden in applications or ad banners to extract money from victims, who are charged using their mobile number.

The market for operator billing services has grown exponentially in recent years – the most recent market review commissioned by premium rate service regulator PhonepayPlus by Mobilesquared found that operator billing revenues went up 86% to just under £70m. The report goes on to suggest that: ‘The industry believes that ‘operator billing has the potential to generate £500m by 2019.’

Complaints about this type of fraud stretch back at least five years, with message boards and websites of a range of providers showing the extent of the problem. However, the exact number of victims is difficult to quantify because the scams work on the basis of high volumes rather than large amounts of money. It means that victims are less likely to report it or pursue complaints for amounts typically in the region of £5 to £100.

Those who attempt to win back their money from either the network or the payment intermediary who has processed the transaction are trapped in a long and complicated process. This was something that Russell Gray experienced: ‘The first line they take is “get lost”, then, to more persistent victims, they deny it with some evasive correspondence, and in most cases that’s probably where it ends. For those who try harder they’ll send another letter in more legalistic language. Finally, though, when I issued proceedings, which is no doubt rare or unknown to them, a refund was offered on the condition that I dropped the case.’

Network responsibility

Gray is willing to take his case as far as it needs to go in order to ensure that the networks eventually take responsibility for fraud that occurs on the direct-to-bill platform as a point of principle: ‘It’s obvious from my case, and the research I’ve conducted, that these applications ensure unknowing subscription. In legal terms, I don’t believe that someone can be contracted if they had no idea what they were doing.

‘I’m willing to take this case all the way through the courts to make Vodafone take responsibility. We are currently at appeal stage on the County Court judgment and we expect to get a date for this in the New Year.’     

A Vodafone spokesperson told Mobile: ‘As the specific case you refer to is currently subject to legal action we’re unable to comment at this stage.’


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