Ofcom to crack down on premium phone line rip-offs

The billion-pound premium-rate phone-line industry faces a "drains-up" investigation by the communications regulator Ofcom after the fleecing of thousands of customers.

The billion-pound premium-rate phone-line industry faces a "drains-up" investigation by the communications regulator Ofcom after the fleecing of thousands of customers.

Fraud through premium phone lines, involving internet hijacking, mobile phone and fax scams, has rocketed in the past year, prompting a review that will aim to drive out the rogue operators.

"We think that there's a big problem," said Matt Peacock, director of communications at Ofcom. "Everything in telecoms changes so quickly that it's hard to keep up with the latest scams." The review, which began yesterday, will last until early September and report in the early autumn.

Thousands of people have complained to Icstis, the body that regulates premium lines, about phone bills, sometimes for hundreds of pounds, caused by "rogue diallers" - software that hijacks their PCs and silently calls high-priced numbers to connect to the internet.

But other scams are also widespread, including texts sent to mobile phones telling people they have won a prize or have an order waiting, and physical break-ins to telephone systems - which recently led to BT refunding more than £10,000 to more than 500 customers in East Anglia. Icstis last year imposed 210 fines totalling £1.2m against 175 companies, but collected only £500,000, a success rate of 40 per cent. Most of the fines were for text-message spam and scams sent to mobile phones.

Mr Peacock said: "The level of consumer trust in these services is in danger of going down. The primary aim of our review is to come up with a way to protect consumers better, but if consumer trust diminishes that will affect the industry."

Among the measures that will be considered will be longer payment delays from phone operators, who connect the premium-rate lines, to companies which offer the services.

The industry earns about £1bn a year from premium-rate calls - those costing more than 10p per minute. Icstis is from today applying rules to regulate software that dials a UK premium rate number. The call will not go through until Icstis has approved the dialler.