Bill Shock and Children

January 22, 2013

When it comes to the use of our smartphones, there are few adults who are immune to ‘bill shock’. Those of you who have the good fortune to be responsible for children old enough to use smartphones, but not old enough to pay the bills, may well be even more familiar with the phenomenon. For me, the bill shock was limited to the realisation that a quick check of a web page or six while abroad was a bit more of an indulgence than I had bargained for, but was not ruinous. For some with teenage children (or even younger), the unexpected items can run into hundreds of pounds and the family tension that the bill can generate can be emotionally costly too.

PhonepayPlus, the independent regulator of premium rate services, has given great thought to the problem that parents grapple with: (i) child needs smartphone (assuming it can be afforded), (ii) child might be easy prey for scams and inducements, (iii) parent ends up with unexpected bill. The PhonepayPlus report, {Children as Connected Consumers:}, lays out the regulator’s plans and priorities to tackle the problem and help children and parents understand the potential costs involved in the use of smartphones and other connected devices. Two areas of particular risk are highlighted in the report – risks around free apps and risks around social media linked to smartphones.

PhonepayPlus commissioned research on how children use premium rate services and other micropayments. Of the children surveyed, 66% said that they owned a smartphone (compared to 59% for desktops). Parents usually bought the smartphone and 72% pay all of the bill (and a significant further percentage pay some of the bill).

Complaints to the regulator about children and apps trebled in a year. The report highlights children’s attraction to free apps, with two-thirds of 11-16-year-olds downloading a free app onto their phones. However, as the report also shows, there are risks from apparently free services, with malware and in-app billing being particularly risky for children. In-app billing occurs when an initially free app charges for extras once it is downloaded. Malware contains malicious coding that charges the phone without the user’s knowledge or consent. In one case, children as young as 11 downloaded free versions of popular games from the Android app store such as Angry Birds, Assassin’s Creed and Cut the Rope. These fake apps charged £15 to the user’s phone bill every time the app was opened without the user’s knowledge.

Premium rate services promoted via social media are another area which can lead to bill shock. These services have seen an explosion in recent years, with a 575% increase in users discovering services this way. The report highlights cases where individuals and promoters have taken advantage of children’s trust and naivety on social media platforms (although naivety is by no means the monopoly of children and many minors are more switched on than their parents). In one case a 14-year-old girl was tricked into paying for virtual credits in a game when a social media ‘friend’ said she had no credits to phone her dying grandmother. In another case, children between 12 and 14 were tricked into ‘sharing’ and ‘liking’ a promotion for supermarket vouchers on Facebook, virally spreading the promotion which misled users into taking part in a premium rate competition.
PhonepayPlus took robust action in all of these cases, fining Gangster Paradise £65,000 and Amazecell £300,000, and is working with Facebook to ensure that rogue promotions on Facebook are cut off.

PhonepayPlus deserve a lot of credit for the research and the suggestions they make (see the practical tips below). And prevention is definitely better than cure. But the one thing missing from the PhonepayPlus analysis of the problem is any grappling with the question of whether parents are liable for some of the amounts in question. I am guessing that a good deal more thought will be given to child protection, by each link in the telecoms chain, if it becomes apparent that they will not be paid for ‘services’ supplied to minors.

Of course, parents will have signed up to a contract. That contract will require them to pay the properly incurred debts arising from the smartphone use. Does it involve them in being liable for anything other than properly incurred debts? I think not.

Back in 2005, in an age of ringtones and the like, Robin Bynoe (now of M Law LLP) wrote an article for us, {Minors, Mobiles and the Law:}, which still resonates in the premium rate services context. As he pointed out, very often ‘minors buy the services under contracts that are unenforceable. If that fact ever became critical in practice, many service providers and content providers in this industry would lose nearly all their business overnight.’ I will not repeat his detailed arguments and undoubtedly do him an injustice in summarising them as follows: contracts made by minors that are not for necessaries etc are unenforceable, Angry Birds is not a necessary (at least not in a judicial mind – I accept that you may struggle to communicate the point effectively to the minor). His article caused some controversy. Stephen Deadman, from Vodafone, wrote a {detailed response:}.

In my view, the legal position remains unaltered but the problem may have become more pressing. The phone contract is enforceable against parents but the multiplicity of contracts made via the smartphone (or the Playstation etc) for games extras, for reality show voting or whatever are not enforceable against the child and, once the necessary step is taken to avoid the contract, no debt is incurred. It follows that there is no parental obligation to pay. The practicalities are complicated and the contradictions having been going on for decades but the law on this issue is by no means {i}irrelevant{/i}. PhonepayPlus would do well to add an ‘avoid the silly contract and don’t pay’ tip to its list of practical steps. What’s more, a lot of the febrile debate about children and access to porn might be improved by a concentration on contract law and payment mechanisms (although it won’t help much on sexting).

{b}The PhonepayPlus Tips{/b}

The PhonepayPlus tips for parents to help their children enjoy smartphones and social media while avoiding the pitfalls include:
1. Register the phone as a child’s phone with your mobile network before you give it to them.
2. Talk to your mobile network about the controls available, for example a pay-as-you-go account or blocking certain services, and make sure you are clear and happy about what is being offered – for example ‘unlimited texts’ is highly unlikely to include premium rate texts.
3. Teach your child to stop and think before they input their mobile number online or on a social media site– entering numbers online can give permission to charge that number and can compromise privacy.
4. Know which apps your child is downloading and how much they cost, including the cost of upgrades in free apps.
5. Use – it’s an interactive website about safe and secure phone use for children and young people as well as parents.
6. Contact your mobile network straight away if you get an unexpectedly high bill or if your child is accessing inappropriate services. If you are unsatisfied, contact PhonepayPlus on 0800 500 212.