The Complaint:
The complainant’s daughter incurred in excess of $7,000 in 188 premium-rate SMS charges over a period of about four weeks. She had responded to an advertisement in a popular young women’s magazine for “Hot Text Chat”. The advertisement in question contained small print advising “Max Cost $2.20 per pair”.

The complainant claims that his daughter did not notice this wording and believed that the normal SMS charge of 15c per message applied. It also became apparent that the service operated so that the complainant’s daughter was charged for incoming messages, the volume of which appeared to be uncontrollable. (The bills in question show messages coming in every few minutes over the four-week period.)

The complainant contacted the TIO because he wanted the telephone company to rerate the SMS charges to 15c each and wished to enter into a payment plan. He claimed that the company had refused to do this and, further, that it had terminated the mobile service in question and added an early termination fee of
$500.

The complainant’s daughter had had the mobile service for a number of years and all previous bills had been paid on time.

TIO Response:
The TIO referred the complainant to the TIO liaison area of the telephone company but the complainant returned advising that while the telephone company had now agreed to accept a payment arrangement of $100 a week, it would not reduce the charges or investigate the SMS service in question.

The TIO raised a formal Level 2 investigation, in which it asked the telephone company to respond to the issue of unlimited credit/overcommitment, in line with the TIO’s position statement.

View the Credit Management position statements

The company responded by advising that it had no system in place to monitor unexpectedly high bills and that the responsibility for investigating and monitoring charges rested with the customer. The company further noted that there was no legislation or industry code that related to credit limits on telephone services and, accordingly, maintained that the charges were to stand. It disputed the complainant’s contention that he and his daughter were unaware of the higher charges for the incoming SMS messages. The company said that the complainant must have been aware of the premium rate charges as it had received of copy of the advertisement for the premium-rate service from him.

The Outcome:
The TIO formed the view that the telephone company had an obligation to monitor the complainant’s daughter’s usage and alert her to unexpectedly high bills. The TIO was also concerned about the way in which the charges were presented on the daughter’s bill. Both incoming and outgoing calls were listed as “SMS third party”. The TIO felt that this description did not provide the customer with enough information to verify whether the charges were correct and that, as such, might constitute a breach of the industry billing code.

The company subsequently acknowledged that it did have a credit policy in regard to high tolling accounts, but in this instance the complainant’s account had failed to appear on its high spenders report. It said that as a result it had failed to contact the complainant to stop the charges from accruing.

It also agreed with the TIO’s assertion that as it could not be determined who the incoming premium-rate SMS calls were coming from, it had breached the industry billing code.

As a consequence, the company waived the entire bill.