Consumer Education on Premium Rate Services Provided by Telecommunications Companies

Mr Lim Biow Chuan asked the Minister for Communications and Information whether IDA will take action against telecommunication companies which allow third party content providers to mislead consumers into taking part in expensive quizzes and contests without adequate notification about the costs of participation.

Madam, Premium Rate Services (PRS) are value-added services which are typically provided over mobile telecommunication networks via SMS messages. These SMS messages cost more than a typical SMS as they include the provision of chargeable content, such as news alerts, weather or traffic

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updates or information, ringtone downloads, game credits, quizzes, contests, chat services and fund-raising services. The charges may be applied on a subscription basis, weekly or monthly recurring charges, or for each SMS message sent by the PRS operator or by the subscriber.

Madam, IDA will take enforcement action against telecommunication operators or PRS providers, which we call "licensees", where rules on the provision of PRS services are flouted.

Since 2007, IDA has put in place a Code of Practice for the Provision of PRS. The Code sets out the duties for PRS providers and their billing network operators to prevent accidental subscriptions and wrongful charges for unsolicited service. For example, PRS providers must clearly publish the prices, terms and conditions of their services. This information is displayed upfront within their advertisements. Before the PRS providers charge end users for the services, PRS providers must ensure that consumers take explicit steps to subscribe to the service, such as sending a purchase confirmation to the PRS provider via a distinctive prefix number "1460". This is to help consumers easily identify these providers to be offering chargeable services. Only upon receiving such confirmation will PRS providers activate the service.

Licensees can be fined up to $1 million or 10% of annual gross turnover, whichever is higher, per contravention. Repeat offenders could also have their licences suspended or cancelled. To-date, Madam, IDA has taken enforcement action in 26 PRS cases. Such action ranged from the issuance of warnings to the imposition of financial penalties commensurate to the degree of contravention. For five cases, warnings were issued without financial penalties, whereas financial penalties were imposed for the remaining cases, with the highest being $100,000.

IDA has implemented additional measures to further protect consumers' interest. Since February 2012, IDA has required mobile operators to offer consumers the option of barring PRS and not be billed even if they may have accidentally subscribed to them. Consumers need to activate the barring service if they do not wish to receive PRS.

Madam, aside from these regulations, we would also advise consumers to remain alert and vigilant. For the more vulnerable groups like young children and the elderly who may use mobile phones, parents or caretakers could choose to activate the PRS barring service for these users or educate the users

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to be more careful when subscribing to such services.