SPEECH/08/395

Meglena Kuneva

European Consumer Commissioner




Ringtone scams investigation

Press conference speaking points
Brussels, 17 July 2008

I am delighted to be able to present to you the results of this EU-wide investigation into websites offering mobile phone services such as ring-tones and wallpapers.

This mobile "sweep" brings together for the first time, all 27 EU Member States, as well as Norway and Iceland, in a joint EU enforcement investigation. This is a very positive sign for the future as we know that in the online world enforcement cooperation among national authorities is the only way forward.

It is significant also because it is the first EU joint enforcement action to target m-commerce - in this case the internet sale of mobile phone related services.

The increased interaction between communication platforms such as internet, mobile phone and media devices is creating a new and innovative commercial space. We must ensure that this new environment works for consumers and is compliant with the law.

We have targeted the sales of ringtones and wall papers for investigation because of the large volume of complaints that have come into national enforcement authorities from citizens across the EU.

Consumers of all ages felt they were being ripped off and let down. They were sending a clear signal they wanted something done.

I am very pleased that Europe has been able to respond.

SO WHAT HAVE WE DONE IN THIS INVESTIGATION?

In June this year, enforcement authorities across Europe simultaneously checked hundreds of websites selling mobile phone ring-tones and wallpapers for compliance with EU consumer law.

They targeted three key issues that are letting consumers down:

• (1) Missing or incomplete pricing information. Website must indicate clearly the price of the product – including taxes. All elements of the price must be clear, particularly, information tying the consumer into a long term subscription.
• (2) Contact information about the trader. The consumer must have full details of who the trader is and how to contact him in case of a problem
• (3) Misleading information. Consumers are misled when information is available on a website but is very difficult to find or hidden in small print. The word "free" must not be used to mislead consumers. If a product is advertised as "free" then it must be free with no hidden charges or subscription conditions.

THE RESULTS OF THIS MOBILE SERVICES INVESTIGATION ARE VERY STRIKING

• 1.The first results indicate that 80% of the websites checked seem to be letting consumers down. We checked 558 websites and 466 have been flagged as have "irregularities". They will need to be further investigated for a suspected breach of EU consumer rules.
• This figure is extremely high.
• 2.50% of these sites which show "irregularities" and will need further investigation target children.
• 3.What are the problems we found?

We found that many sites had multiple problems:

• Unclear Pricing: Almost 50% of sites checked had problems with missing or incomplete pricing information (268 sites out of 558).
• Information about the trader: Over 70% of sites checked lacked some part of the basic information needed to contact the trader (399 websites out of 58).
• Misleading Information: Over 60% of sites had problems with misleading information – where information is hard to find or consumers are deliberately misled with the use of the word "free."

WHAT ARE THE NEXT STEPS AND WHAT CONCLUSIONS SHOULD WE DRAW FROM THIS?

The aim of this EU wide enforcement investigation is not fact finding or research.

The aim is to bring unfair practices in line with EU law.

Authorities across the EU will now track down each of the companies responsible for websites flagged as problematic. Companies will be asked to clarify their position or correct the website.

National enforcement authorities can close websites, fine companies or take them to court.

This is slow legal work and it takes time. We will report back on progress in the first half of 2009.

THIS ENFORCEMENT WORK WILL NOT BE EASY

The evidence is that this mobile service market is fragmented with large numbers of small and lesser known companies. The enforcement work may therefore be slow and 100% enforcement may be difficult to achieve.

We could expect difficulties contacting traders, and we have seen in the past small rogue traders closing sites only to open quickly again under another name.

THAT IS WHY INCREASING CONSUMER AWARENESS IS SO IMPORTANT.

Our central message today is that consumers need "watch out" when they buy these services online.

There are many legitimate companies selling mobile services but there are also scammers who will try to rip people off and hide the true cost of taking up any offer

We need particularly to alert teenagers and young children to be on their guard!

They should know that:

• Scammers often try to attract consumers with an offer that is "free" or low cost.
• Scammers don't tell you that your request for a first ring tone is actually a subscription to an expensive service.
• A scammer will make it very difficult for you to stop the service.
• A warning sign is if you can't see the name and full details to contact the company selling the service – always check this before you buy!
• It's all about the fine print. Read terms and conditions of any offer very carefully – claims of free or very cheap offers often have hidden costs.
• Report them! If you have been charged money for a service you did not agree to- report it to your national consumer authority or consumer organisation. And spread the word to friends and family to protect them from this kind of scam.

Thank you for your interest, I will be happy to take your questions.