Stealing by subscription

Mobile subscription services continue to fleece consumers, sometimes without their even knowing it, but minor changes by network operators could change that. By Craig Wilson.

Each year, tens of thousands of South Africans find themselves signed up for mobile subscription services that deduct funds from their airtime balances or add costs to their monthly bills without their knowledge. One way to limit the impact of this is to make the sign-up process more difficult, but to date only one operator, Vodacom, has done so.

BulkSMS MD Pieter Streicher says that until the end of last year SA’s mobile networks offered an online billing service that allowed wireless application service providers (Wasps) to sell subscription services using only someone’s cellphone number.

“The model was flawed because it offered insufficient controls,” he says. “A network would only know fraud took place once a consumer made it aware of this because there weren’t the necessary controls for the network to pick it up.”

One of the problems operators face is that people occasionally sign up for subscription services without realising they’ve done so, because they think it’s free, or they do so on the spur of the moment only to forget later they’ve done so.

“This makes it difficult for network operators to differentiate between fraud, errors and legitimate sign-ups,” Streicher says.

In order to combat fraudulent sign-ups and reduce the burden on its call centres, Vodacom has changed the way it manages subscription services. The operator now requires users to opt in twice. They are asked whether they want to sign up for a service after a subscription request is sent, and they are then asked if they are aware of how much it will cost.

“Making users say ‘yes’ twice creates an audit trail, which makes it more difficult for Wasps to take consumers money fraudulently and less likely customers will sign up for services by mistake.”

Streicher says the Wireless Application Service Providers’ Association received 150 000 “unsubscribe” requests per month last year on average. “Of those, 70 000 were from Vodacom customers,” he says. “As soon as Vodacom introduced the double opt-in system, this dropped to 20 000/month, of which most subscribed legitimately but subsequently wanted to unsubscribe.”

Vodacom is the only operator demanding a double opt-in for subscription services but Streicher says all of the other networks have said they are working on instituting similar measures but haven’t said when they will do so.

Double opt-in solutions don’t, however, solve all the problems, such as deliberately misleading advertising. “Ads often include a lottery-type competition tie-in that distracts users from the subscription aspect of a service.”

Streicher says online banner ads often include text that reads “play” or “download”, and then directs users to page where “they are told they can win a BlackBerry if they just put in their number and they don’t read the fine print”.

If consumers browse the Web from their mobile phone and click on one of these ads, their number can even be detected automatically, meaning they can be signed up without even clicking on an authorisation button.

“My view is that it we have to move to a situation where people are explicitly asked for consent before a service provider passes a number on to a website owner or other third party.”

Why, then, are operators dragging their heels about putting measures in place to make it more difficult to sign up to subscription services? Perhaps it’s because, according to Streicher, they typically earn 30% on each transaction.  — (c) 2012 NewsCentral Media