End of the line for phone scams

BRITAIN'S £1bn-a-year premium rate phone lines industry faces an unprecedented crackdown to fight the fast-growing menace of telephone scams.

Earlier this month, premium-rate services regulator ICSTIS fined 16 companies a record £1.3m for making thousands of 'abusive' pre-recorded automated calls to home numbers that conned people into dialling £1.50-a-minute numbers on the false promise of big prizes.

More than 750 people complained about just one of the services. Zanado, the company behind it, is registered in Mauritius. It was fined £35,000 and barred for a year. Others were fined up to £100,000 and barred for 18 months.

In all, more than half the offenders were registered outside the UK, but ICSTIS used emergency powers to shut them down and to prevent Allied Telecommunications, the Cambridge-based phone company that leased lines to them, from handing over the revenue generated by the scams.

ICSTIS director George Kidd said: 'These services are intrusive, misleading and almost certainly illegal. We have acted fast to stop the harm, but the problem has not gone away.'

Policing premium-rate services has become a major problem. Around 40,000 are in operation at any one time. The money paid by consumers who use them is shared between the phone company carrying the traffic and the businesses providing the content.

Though the majority are legal and may cost as little as 10p a minute, rogue businesses are making large sums by running scams for just a few days, then vanishing. In the past, says ICSTIS, there have been cases where lines were leased over a weekend and the proceeds handed over in cash on the Monday.

Now the regulator is taking its fight to the root of the problem. It is in the process of rushing through a change to its rules that will prevent network operators from handing over revenue for at least 30 days. This is expected to come into effect before the end of the month.

If ICSTIS believes there has been an abuse of the premium-rate service it will be able to freeze payment even longer, until an investigation can be carried out.

Earlier this year, an unnamed operator paid out more than £1.5m to several service providers while the regulator was investigating breaches of the industry code of practice.

A spokesman at ICSTIS said: 'The introduction of a compulsory 30-day 'withhold' period will stop this kind of thing happening. It will give us time to look at complaints and impose a longer withhold period where necessary. If you slow down the revenue generating process you take away a big incentive.'

And he added: 'When we have the new powers we will not hesitate to use them. We will do whatever we can to protect consumers.'

ICSTIS has referred Allied Telecommunications to Ofcom, which regulates the whole communications industry. Allied Telecommunications said in a statement: 'Allied Telecommunications is committed to working with both ICSTIS andOfcom in seeking to ensure that consumers are not exposed to abuse by service providers. It would be inappropriate for Allied to comment onindividual cases.'