A premium-rate service prize draw operator has been fined £120,000 and told to give refunds to consumers by the organisation that regulates phone-paid services in the UK.
PhonepayPlus has ordered Wye Valley Promotions Ltd, of Herefordshire, to refund all complainants within 28 days of their claim, and provide evidence to the regulator that this has been done.
Misleading letters sent to consumers led them to believe they had won prizes such as £20,000 cash, £250 of shopping vouchers, HD-ready TVs and makeovers but in reality it was encouragement to enter a prize draw.
Doing so cost people £1.53 per minute to call from a BT landline (with a minimum five minutes and 35 seconds charge) or six text messages at a cost of £1.50 per message, plus any network charges, and it could also be entered by post.
The regulator's independent tribunal ruled that the case was very serious.
People who complained included the relatives of a 93-year-old Alzheimer's sufferer, a 75-year-old woman, and a couple both aged over 80.
One person who complained told PhonepayPlus: "I received a letter stating that I had won a prize and to text the given number in the letter to the number. I did this and I was then sent three premium rate texts costing me £9. There was no prize to be claimed."
Another said: "These promise huge cash prizes which do not materialise and lure the elderly and vulnerable into using premium-rate services which cost an exorbitant amount, and which many of said 'victims' neither realise nor understand."
A third said: "I received a letter in the post, stating that I had won a free trip for myself and my family. I was given the code for the prize, and told to send a text message, to receive the free code. What resulted was that I never received the prize."
Jo Prowse, acting chief executive of PhonepayPlus, said: "Wye Valley Promotions Ltd misled consumers with personal letters and 'claim forms' that led them to believe they had won big prizes, but in reality the letters were little more than adverts for a prize draw. PhonepayPlus's tribunal has ruled that it was a very serious case and ordered that Wye Valley Promotions must give a refund to consumers who request one."
Some 36 complaints were received between November 2012 and March this year.
In a statement, Wye Valley Promotions said: "We are surprised this investigation took place because we have shown PhonepayPlus copies of our promotions on 32 previous occasions over the previous two years, and not once were concerns raised or changes requested.
"Over a 13-month period, 36 consumers contacted PhonepayPlus but, on the evidence of its own research, the average proportion of participants who complain to PhonepayPlus about their experience in our sector is 200 times higher than this. In accordance with our refund policy we asked PhonepayPlus for the consumers’ contact details in order that we could refund them in full for telephone charges incurred. However, PhonepayPlus failed to respond, even when permission for disclosure had been given.
"We were eventually able to find the necessary details and refund the consumers. We can’t understand why PhonepayPlus should wish to prevent us from making refunds.
"We are disappointed by PhonepayPlus’ decision and by the disproportionate sanction levied which is not remotely related to any consumer harm. We will review the full decision carefully with a view to appealing to an independent body.”