Watchdog uses new powers after receiving 750 complaints. By Paul Slade
TELEPHONE WATCHDOGS have fined a premium-rate line operator pounds 5,000 over mailings promoting its pounds 1-a-minute service by threatening legal action on what the recipients say are fake debts.

Thousands of people in Devon, Dorset, Sussex, Surrey and Warwickshire were sent official-looking letters headed "Creditors Legal Notification". The letters, carrying the name "Debt Enforcement Agency" claimed each addressee owed pounds 176.52. Recipients were warned to phone an "emergency hotline number" immediately to avoid a court summons being issued against them in the next five days.

The letter failed to make it clear that calls to this line, operated by Intacc Group, were charged at a premium rate of pounds 1 per minute.

Philip Telford of the Consumers' Association, says: "If I got that sort of letter, I'd give them a phone and try to sort it out. Clearly if hundreds, or even thousands, of people did that, you could run up quite a nice profit".

Rob Dwight, a spokesman for ICSTIS, the watchdog which polices premium- rate telephone services says: "The shock effect of being told you owe pounds 176 and that, if you don't take action within five days, you're going to be in serious trouble is very worrying - especially for more vulnerable members of the community."

Intacc claims the alleged debts relate to breaches of a mobile phone contract, but could produce no evidence the debts were real when ICSTIS challenged them. None of the 750 people who complained to ICSTIS about the letters believed they had such a debt.

ICSTIS says the letters also failed to give prominent pricing information and misled recipients into believing live operators were available.

About 500 calls were made to the Intacc line before Telecom One, the network operator supplying Intacc's link, cut off the service on 10 September. These calls would have given Intacc revenue of about pounds 1,300, had Telecom One not frozen its payments. The callers who got through before the service was stopped have all been offered refunds. Most live in Warwickshire, where the letters were sent out first.

In a letter to Telecom One managing director Patrick Naughton, Intacc managing director John Cousins says: "The problems were caused by corrupt data, probably infected by virus, which was provided by the Data Preparation depts of the mobile phone companies who had contracted National Debt Enforcement Agency".

But Dwight says Intacc is the service provider of the premium rate line mentioned in the letters, and so must face the consequences. He says: "When they sign that contract for leasing out premium-rate lines, they know their obligations. Even if they rely on third parties, it's up to them to ensure that anything that goes out on that line is above board."

Intacc Group's problems may not end with the ICSTIS fine. Simon Cripwell of Warwickshire Trading Standards, says: "We are conducting a criminal investigation into a company and individuals we believe are behind a mailshot scam in September".

ICSTIS has barred Cousins and Andrew Banks of Intacc Group from any involvement in running premium rate services for one year. This is the first time ICSTIS has used new powers, agreed in January this year, to bar individuals.

As of 9 December, Intacc had yet to pay the ICSTIS fine. Dwight says the company will not be allowed to operate any premium rate line until six months have passed and the fine is settled.