Italy - News - Cramming
On 13 January 2015 the AGCM - Italian Competition Authority closed four investigations on commercial practices in the mobile phone business. The practices, often called “cramming”, refer to conducts consisting in charging mobile phone users for unsolicited services, usually provided by third parties. With its decisions, the Authority fined Italy’s four major mobile phone operators (Telecom Italia – TIM, Vodafone, Wind, H3G) and three content service providers (Vetrya, Emcube, Acotel) for a total amount of 5.5 million euros.
The value-added services (or premium services) consist of services of various nature and content, provided by operators (content service providers – CPS) through mobile phones, especially smartphones. They are advertised through pop-ups, banners, links, landing pages which users encounter while surfing on the web and can be activated through a simple click: they will be then automatically charged on the user’s telephone credit. Mobile phone operators act as platforms for these services, by connecting CSPs’ services with users and by charging them for the services used. By surfing through smartphones, the consumer is identified by the mobile phone operator that can disclose the identity to the CSP through a system of crypting and de-crypting the information, called “enrichment”, and based on a commercial agreement between the mobile phone operator and the CSP.
According to complaints also coming from consumer associations, many consumers were billed for premium services they never agreed to activate nor had they been made aware of.
The Authority identified an unfair commercial practice by mobile phone operators, consisting in multiple conducts: a) omitting relevant information for the consumer about the fact that in the mobile phone contract the user by default gave authorization for receiving premium services through banners and links and for being charged for them; nor was the consumer clearly informed the he could deactivate the service through a blocking option, as the information given in the T&C on the website were insufficient; b) adopting an automatic system of user’s data transfer (“enrichment”) that cannot stop unwanted service activations by consumers (users can unwillingly activate the services just by touching lightly the screen during a web search). The Authority also assessed another infringement for Telecom Italia and H3G, as well as for the CSPs, consisting in the omission, in the landing pages and other ads of premium services, of relevant information concerning the trader’s identity and the geographical address, the methods of payment and the existence of the right of withdrawal. For those reasons, the practice was assessed as misleading and aggressive and contrary to professional diligence, thus infringing articles 5, 7, 8 and 9 of the Unfair Commercial Practice Directive (2005/29), as transposed into articles 20, 22, 24 and 25 of the Italian Consumer Code. Moreover, the same practice was assessed as an infringement of article 26 (f) of the Consumer Code (practice nr. 29 in Annex I of the UCPD) for charging consumers for an unsolicited service. The liability for mobile phone operators was determined on the fact that they earn a large share of the revenue generated by premium services, by passing to CSPs only a part of it: moreover, they were found to be fully conscious of the activation and the charging of unsolicited services for consumers. Telecom Italia and H3G were also found liable for omitting relevant information on the CSP’s ads, due to the fact that both mobile phone operators reviewed and approved the content of those ads.
Taking into account the gravity and the length of the practice (from 3 to 9 months, sometimes still ongoing) and each trader’s specific liability, the Authority fined Telecom Italia and H3G for 1,750,000 € each, Vodafone and Wind for 800,000 € each, and the companies Vetrya for, 150,000 €, Emcube for 125,000 € and Acotel for 100,000 €. Traders have been given 60 days to inform the Authority about the measures taken to comply with the decision. H3G was also ordered to publish on its homepage for 30 days a summary of the Authority’s decision, to inform its customers.
The Italian version of the full text of the Authority’s four decisions can be found at AGCM’s webpage: http://www.agcm.it/stampa/news/7411-multe-a-telecom-wind-vodafone-e-h3g-per-i-servizi-premium-a-sovrapprezzo.html.