The telephone service provider behind a television phone in competition which "seriously misled" viewers by its "fundamental failings" has been fined a record £150,000, the largest fine ever imposed by the premium rate phone regulator.
The Independent Committee for the Supervision of Standards of the Telephone Information Services (ICSTIS) has handed out the fine to service provider Eckoh UK Ltd for the 'You say we pay' competition on Channel 4 teatime television programme Richard and Judy.
It has also ordered that all quiz entrants be refunded, but has suspended this order to determine whether or not the refund programme already put in place by the broadcaster and production companies involved is in line with ICSTIS's standards.
Viewers of the television programme were encouraged to phone the premium rate phone number for entry to the competition at a cost of £1 a minute even when the finalists had already been chosen. Subsequent callers had no chance of winning the competition.
“The size of the fine reflects the very serious nature of the breach of our Code of Practice," said ICSTIS chairman Sir Alistair Graham. "The Hearing Panel found clear evidence of fundamental failings in the winner selection process. Winners were being chosen before the competition closing deadline, whilst millions of additional viewers were still encouraged to phone in and pay to enter competition but were denied the opportunity of fair consideration."
"Such reckless disregard for viewers is unacceptable. In this case, viewers were not only ‘paying competition entrants’ but also consumers who enjoy a high degree of consumer protection already provided by ICSTIS," said Graham.
The ICSTIS investigation discovered that the competition generated revenue of £1.9 million in 2005 and £1.1 million in 2006. In the period between 29th January and 15th February the competition generated £176, 536. ICSTIS said that in that period 47% of the calls were taken after the final shortlist had been drawn up.
"Consumer protection should be at the heart of television rather than a broadcasting philosophy of 'the show must go on'," said Graham. "The public should be able to use these services with absolute confidence. Consumers must get a fair deal."
ICSTIS can only fine the service provider registered with it as being behind the competition, so it has fined Eckoh but not Channel 4 or the television production company behind the Richard and Judy programme, Cactus TV. Ofcom is conducting an investigation under its Broadcast Code which could affect the broadcaster and production company.
ICSTIS's ruling said that the competition was not a conscious decision to defraud the public, but was nonetheless a serious issue involving significant sums of money.
"There has been a reckless disregard of the public interest in this case," said its ruling. "The circumstances of the breach are so stark and so blatant that the situation should have been immediately clear and should have been avoided from the outset."
As well as imposing the fine, ICSTIS has ordered that all competitions entrants be refunded. It noted that a refund programme was already in place but expressed reservations about that scheme.
"The panel note that a refund scheme, operated by Channel 4, is in place already. However, the panel was told that this scheme requires consumers to provide evidence of their having telephoned the relevant premium rate line before a refund will be made. The scheme may thus not be compliant with paragraph 8.7.2(h) of the Code which provides that where refunds are ordered they should be made 'unless there is good cause to believe that such claims are not valid'," said the ruling.
"In the circumstances, the panel agree with the Executive’s suggestion that the payment of refunds be ordered, but that this sanction be suspended generally to come into effect only in the event that the current refund scheme does not comply with the Code. This sanction will lapse after the period of one year," it said.