Caution needed when reviewing SA cellular plans

Von Theo Boshoff

After the recent South African media coverage of Exact Mobile?s complaint to the Advertising Standards Authority (ASA) about Jippii?s false advertising, and the authority ruling in favor of Exact Mobile, Computing SA takes an in-depth look at cellular subscription services.

?Is this a real problem, or just a fight between competitors?? is a question that has been asked by many.

The tactic of misleading users to unwittingly subscribe to a service through advertising is not new, and has resulted in several in-depth investigations and court cases in other parts of the world. It seems that this problem has now reached SA.

Says David Mole, CEO of the Exact Mobile Group: ?Cellular subscription services are becoming more and more of a headache for mobile phone users. Adverts promoting subscription services are misleading, and, once subscribed, it can sometimes be extremely difficult for the user to find out which service they are subscribed to, or how to unsubscribe.?

Fine print

The issue is that users are often not told upfront that they are entering into a contract service. This fact is mentioned only in the fine print at the bottom of an advertisement. Users thus think they are purchasing content, (like the latest ring-tone for their cellular phone), on a case by case basis.

According to Mole, users do not usually read the fine print, and only realize that they are entered into a subscription ?when they see someone sending them content on a regular basis, and billing them for it?. This suggests that users have themselves to blame for being ?tied up?, but it is the fine print which is often confusing and misleading.

Exact Mobile, in trying to combat this kind of false advertising, lodged a complaint with the Advertising Standards Authority (ASA) against cellular subscription services in general. It was told that this was not possible, and it hence filed a specific complaint against an advert by a subscription service called Jippii, run by iTouch.

The ASA ruling, at the end of July, was that the Jippii advert be withdrawn with immediate effect, on the grounds that it was misleading. The ASA also ordered that the advert should not be used again in that format.

The ASA said in its ruling that, while the advert does say in the fine print that by sending an SMS to the premium SMS number, the user is joining a subscription service, the advert gives the impression that content is downloaded one item at a time, and was therefore misleading.

?There are two general types of download services available: those where the consumer downloads and pays for one item at a time, and those where the user pays a subscription. This material difference must be clearly and unambiguously conveyed in all sections of the relevant advertising material,? the ASA statement says.

Says Greg Brophy, CEO of iTouch: ?I have had no customer complaints with regard to this issue, and neither has Vodacom, our network provider. This is clearly only a complaint from our largest competitor.?

Brophy also notes that his company has changed its advertising, and this has been approved by Vodacom, making it clear to users that Jippii is a subscribed service. Brophy says that the company was actually in the process of changing its advertisements before the complaint was lodged with the ASA.

In terms of giving consumers the right to opt out of a subscription contract, Brophy adds: ?We have from the start given customers the ability to unsubscribe. In our welcome SMS message to new subscribers there is a note to say they can unsubscribe by SMS or through calling the customer help line, and we also do a follow-up SMS monthly (comfort message) to inform people again this is a subscription service, and that they have pay R5 (US$0.77) every two weeks, but can unsubscribe when they wish.?

According to Brophy, the unsubscribe SMS cost only 50 cents, and there are no huge costs to get out of contracts.

?Wild West?

Comments CEO of research company, World Wide Worx, Arthur Goldstuck: ?The mobile commerce scene at the moment resembles the Wild West, with an ?anything goes? attitude in the selling of content and services, but little protection for the buyer.

?This ruling underlines the importance of efforts by the Wireless Application Service Providers Association (WASPA) to impose a code of conduct on Wireless Application Service Providers (WASPs). It is long overdue, and should also give sharper teeth to WASPA?s efforts.?

Goldstuck adds that: ?The case also underlines the immaturity of mobile commerce in this country, in that there are few legal barriers to unethical business practices in mobile transactions, if they represent a new form of transaction. It is notable that many of the culprits in such practices are part of major organizations, listed on international stock markets, yet they take the gap where they spot it. While fly-by-nights do have the potential to give the industry a bad name, it is the established players who guarantee that tarnished reputation. They should be setting an example.

?This case shows how important education is in a new industry like mobile commerce. While most of the emphasis on success factors in this environment has been on educating the user in how to use it, in order to grow the industry, equal emphasis should be given to educating users on looking after themselves.?

Code of conduct

According to vice-chairman of WASPA, Pieter de Villiers, the organization has a Code of Conduct, published on its Web site and approved in June, and is in the process of refining a system to lodge complaints. He does, however, admit that the organization is still completing guidelines with regard to advertising, which will be added to the Code of Conduct before the end of this month.

?While adverts like the Jippii advert are already illegal, according to the WASPA code of conduct, WASPA is only accepting complaints from 1 September 2005, which means advertising is unlikely to change before then,? Mole says. According to him, WASPA has said that from 31 July 2005, any user who, wittingly or unwittingly, subscribes to a service (subscription) must be sent an SMS notifying them that it is a subscription service.

De Villiers says that WASPA already accepts complaints.

Mole says Exact Mobile will now be sending the ruling to the cellular networks, asking them to address the issue of cellular subscription services.

?However, neither of these take into account the fact that users who have already unknowingly subscribed to subscription services will still be paying for them. We are therefore asking the cellular networks and WASPA to ban this type of advertising, have all such adverts withdrawn across all media forms immediately, and force subscription services to unsubscribe all users. The companies could then notify users that their service is a subscription service, and ask them whether or not they want to subscribe,? says Mole.

Furthermore, Mole says, Exact Mobile wants WASPA to force all subscription services to send a monthly notice to all their users reminding them that they are subscribed and telling them how they can unsubscribe. ?That way if a user does not realize they have subscribed to a service, they have the option of getting out of it,? he says.

The ASA ruling comes on the back of a wave of international protest against mobile phone subscription services. Jamba, a Verisign-owned ring-tone vendor, is under investigation in the U.K., Holland, Germany and the U.S. for its Crazy Frog ring tone -- a reworking of Harold Faltermeyer?s ?Axel F.?

WASPA is already aware of overseas developments. In a memo sent to all WASPs notifying them about Jamba, Leon Pearlman, WASPA chairperson, reminded all WASPs that if they were aggregating content on behalf of third party companies, the WASPA Code of Conduct makes them liable for the conduct of the third party.

?Accordingly, a local aggregator could be sanctioned by WASPA and the networks if they (or the third party company) are in breach of the code,? Pearlman said.

As it is, mobile commerce is still a very new market, and it will take some time to sort out all legal aspects of the game, but De Villiers concludes: ?This should be an industry-wide collaboration, with the industry regulating itself, as stakeholders understand this industry best.?