Wouldn’t it be good if you knew the price of a mobile service before you used it?
Simple, clear, pricing structures are the key to ensuring that the premium rate industry is successful and earns the trust of the public. However, it has a poor record in this area.
From ringtone subscriptions to DQ services and chat services, pricing has been a constant source of public anger and mistrust. Much has already been written about these types of services. However, the practice of regularly changing the price of a premium rate service is an area which gets little attention from either the media or the regulator. At first glance this doesn’t appear to be a problem. Often, it is presented as a promotion with the consumers ‘benefiting’ because they are getting discounts on the headline price. In the high street this is a common promotional tool. However, in the mobile world it is not quite so straight forward as it can confuse the customer and hide the true price.
What is changing the price?
There are a number of ways that companies confuse customers by changing the price.
At its simplest level a service is promoted at a reduced price for a period of time and then the price is raised back to the original price. An alternative is to give away free texts on a promotion run over several weeks eg “Your first text is £1, all subsequent texts today are free”
Of course, all companies have the right to change the price of their service. However, in the premium rate mobile industry this causes some unique problems that need to be addressed.
What is the problem with changing the price?
When someone uses their mobile to make a call or text they don’t always have visibility of the price of that service. It is impractical and not technically possible to have prompts on the phone each and every time someone makes a purchase. For that reason it is imperative that the customer has a reasonable expectation of the price of the service before they press the send button or make the call. In these instances the best reasonable estimate is the last price they paid for the service or the price at which they last saw it advertised. If the price changes every few weeks what hope do they have the knowing the price?
Despite the best will in the world it is not possible to inform the customer of the price each and every time they use a premium rate service. Yes, you can advertise prices on the website and marketing literature but, by its very nature, a phone is used at all times not just when you see the advert. Unlike a shop purchase you don’t have a price tag on premium rate calls and customers on a monthly contract don’t see their bill until several weeks later. Therefore, greater regulation is required in the premium rate industry to protect the customer.
This issue of constantly changing the pricing is not addressed within the PhonePayPlus Code of Practice or any of their subsequent help notes. Therefore, a company can quite legitimately change its premium rate pricing on a regular basis and, as long as it is “displayed prominently in their associated promotion and on the website” in accordance with the Code of Practice, each time it is changed then the company has technically done nothing wrong in the eyes of the regulator.
It is never possible to completely solve the problem of notifying the customer of price changes. However, it should be possible to put in place a few more mechanisms to make it easier for the customer. We therefore put forward four proposals for the industry to consider;
1. Reducing the price of a service for short periods should not be allowed. Permanent price reductions can of course still be entertained. However, we suggest that any price promotion for periods less than 3 months should not be allowed.
2. Where the price is going to increase this should be noted on the website in a prominent position at least 2 weeks before the price is increased.
3. The price should always be displayed prominently on the website. This should be clear on the first page of the website of any premium texting service and a change in pricing should be given equal prominence for at least 2 weeks after the price change.
4. PhonePayPlus should have a central database of prices for all services which is made available to the public through its website. It should be the responsibility of each service provider to update the pricing and ensure it is correct. This database could show the history of price changes over the previous 2 years.
We want to stop the price lottery, where a customer dials up a number and suddenly faces a bill of which they had no knowledge or reasonable expectation of receiving. The industry needs to work very hard to regain the trust of the consumer and we believe this could be one step in the right direction.