Ukrainians lose hundreds of millions a year due to content service schemes. How to change this situation?
Is money disappearing from your mobile account? Do you receive daily SMS horoscopes or jokes instead?
You’ve probably been the victim of unauthorized content services provided by mobile operators.
For many years, Ukrainian mobile subscribers have been sending mass complaints that their money is disappearing from mobile accounts.
One would think that if you ordered a service, you need to pay, if you didn’t order anything, it is impossible to charge you. However, nothing simple about this situation.
Mobile operators claim that content services are activated on the content provider’s website. Operators may not restrict subscribers from using third-party services, but they should provide content services only with the consumer’s consent. Is that really so?
The scheme works in such a way that it is easier to subscribe to an unnecessary service than to unsubscribe from it. Often, you do not need any services to subscribe, as you either accidentally follow the link, or click the “OK” button in one of the messages, or become a victim of a virus program.
To unsubscribe from the service, you will most likely have to engage in a discussion with representatives of the company providing mobile services. Two years ago, I was a victim of such content services provided by one of the operators. I saw strange daily write-offs in the amount of UAH 4.25 in my account statement.
A cunning trick is that not every Ukrainian mobile subscriber, especially the elderly, can even check the account balance, not to mention receiving the account statement.
We at the Better Regulation Delivery Office (BRDO) have carefully investigated the issue. According to our approximate estimates, the annual volume of the content services market is UAH 0.7-2 billion. About a third of revenues comes from content providers, and operators keep two-thirds of revenues.
The positions of companies providing mobile services are very different from each other. However, they are united by the desire to leave a situation like this. Here are their arguments and my explanations of why they will not work.
Argument 1. Mobile operators claim that the companies comply with the legal requirements and the terms of agreements when providing content services.
Under the law, a content service is a service provided by a telecommunications operator using a telecom network, and the operator provides it to consumers. There are also agreements with content producers, under which the operator charges subscribers.
Even if there is no formal violation of the law (due to its imperfection), or such violation is hard to prove in the case of unauthorized telecom services, this argument does not refute the fact that subscribers often did not order the service but still were charged.
In this case, the law does not provide safeguards for preventing withdrawals from subscribers’ accounts if they mistakenly chose the service or do not want to receive it. Such a legislative gap should be filled in the user’s favor.
Argument 2. Content services are activated exclusively by the subscriber’s choice.
It is not true. Often subscribers do not intend to order content services. However, one awkward click in the SIM card’s promo menu or on a suspicious website’s banner can lead to a subscription to horoscopes or jokes.
It is a common practice to offer subscribers conditionally free services, which become payable in a few weeks if they do not unsubscribe. The media also reports the viruses that activate paid subscriptions.
Argument 3. Users order content with one click in the same way as in Apple or Google online stores, so it is unfair to restrict Ukrainian mobile operators in providing services.
There are many steps you need to take to purchase a product through Apple or Google services, including bank card identification, search for an application, and confirmation of this action with either a password or other means of identification. Moreover, users are informed about potential payments.
In general, there are very few service providers with direct access to customer funds. Usually, financial institutions, in particular banks, have such an opportunity. However, operators are an interesting exception in this case.
Argument 4. No one imposes content services on users.
Unfortunately, that’s not true. Operators often advertise content services, sometimes even when subscribers are checking their phone balances.
There are also cases when operators “sell” and advertise certain content services in the conversation with clients, but do not inform about write-offs and do not provide a mechanism to unsubscribe from them and refund your money.
Argument 5. Operators need to intervene in the billing system and change operating procedures to technically change the principle of providing content services. This can lead to failures and financial losses.
This does not justify charging for services that subscribers unknowingly ordered. It is more expensive for Ukrainian users, who lose hundreds of millions of hryvnias a year due to unauthorized content services, to maintain such an imperfect system with daily losses from mobile accounts.
Argument 6. Such a problem does not exist, because subscribers almost do not complain.
In Ukraine, a complaint mechanism is inefficient and complex. It is difficult for subscribers to prove to the operator or regulator that they did not intend to order the service.
Additionally, mobile accounts of most subscribers cannot be identified as they receive services impersonally. Because of this, subscribers rarely report to the regulator and their numerous complaints are available to the operators or on Facebook.
We asked operators to provide information on complaints they receive about content services from subscribers. They never provided any information.
Argument 7. Changes will lead to financial losses of operators and content providers, and this will lead to tax losses and slow economic growth.
Revenues from content services may indeed decrease due to changes in subscription procedures. However, the total amount of funds available to subscribers will not change: they will spend them on the services they need.
Over the last three and a half years, the National Commission for the State Regulation of Communications and Informatization (NCCIR) alone has received 1,712 complaints of consumer rights violations in the provision of content services. Their number is growing every year. More and more subscribers are complaining about being charged for content services they did not order or use without their knowledge.
The root causes of the problem are the easy write-off schemes and the lack of effective write-off management tools. For example, short text messages are used to confirm payments with a bank card, and cardholders can set limits on certain types of expenses. Such options are not available to mobile subscribers.
To handle this, BRDO experts and NCCIR specialists developed a draft of amendments to the rules for the provision and receipt of telecommunications services.
The draft amendments introduce an ordering mechanism (the so-called double acceptance). It will be required to confirm your intention to receive content twice for a subscription. This will make it impossible to order content services due to an accidental click.
The operator should record the ordering of services and provide this information at the subscriber’s request. That is, if there is a dispute, the operator will be obliged to show how the service was ordered. Currently, this information is not provided, except in court.
Mobile subscribers will also be able to set a limit on expenses for such services.
Subscribers will receive a notification after being charged. Currently, the operator informs users about the write-off only “if technically possible”. This means that they may not do so. According to the proposed amendments, subscribers will be informed immediately after being charged.
As for orders and their confirmation by clicking on the button on the official operator’s website (content service provider) or in a voluntarily downloaded application, the button should contain an eligible text: “Order with a payment obligation”.
We are convinced that the proposed amendments will allow protecting users from sudden write-offs for services they did not order.
This initiative is also supported by the Ministry of Digital Transformation that conducted a survey on its Telegram page. 74% of respondents indicated that they received mobile content they did not order.
The survey results coincide with the results of last year’s BRDO survey. The conclusion is that the problem is not solved and requires immediate actions from authorities.