Industry News

FCA to take control over consumer credit, requires re-registration of firms

Posted on by Andrea Putnam-Moorcroft

On 1 April, the Financial Conduct Authority takes over regulation of consumer credit from the OFT. If you have an OFT licence then the FCA will have written to you to tell you to register with them before 31 March. If you want to carry on offering credit to your customers and haven’t registered with the FCA for ‘interim permission’ you may be acting illegally.

What’s happening?

The Financial Conduct Authority (FCA) takes over regulation of consumer credit from the OFT from 1 April, this year.

Which firms need to take action?

All firms with an OFT licence must contact the FCA to register for ‘interim permission’. This allows firms to continue providing credit to customers. If your business sells goods or services on credit, you almost certainly need to be licensed by the OFT.

What do firms need to do?

Consumer credit – three step plan for firms with up-to-date OFT licences
Register for interim permission – click here www.fca.org.uk/clicked
Pay the online fee – £350 for most firms and £150 for sole traders
Wait until the FCA contacts you to apply for full authorisation.
The FCA will be publishing its final rules on how it intends to regulate consumer credit before April. You can sign up for emails to get the latest news from the regulator here.

What happens if you don’t do anything?

If you have an OFT licence and don’t register with the FCA by 31 March 2014, you cannot legally continue with consumer credit related activities in April.

If you haven’t got an OFT licence but think you should have one.
You should apply to the OFT. After 1 April, you will have to register with the FCA.

What are the consequences of providing credit without an OFT licence or authorisation from the FCA in the future?

This is likely to be a criminal offence and it may mean that agreements you make are unenforceable.

What about if you introduce customers to lenders?

This is one of the areas that is likely to change when the FCA takes over. If you introduce individual customers to businesses that are lenders – credit brokering – you will have to be authorised by the FCA in the future.

PhonepayPlus releases Understanding Consumer Journeys research

Posted on by Andrea Putnam-Moorcroft

PhonepayPlus, the regulator of premium rate services (PRS) in the UK, has today published a research paper focusing on the consumer experience of PRS and other micropayments called Understanding Consumer Journeys: Premium rate service and micropayment markets.

A full copy of the research can be found on the PhonepayPlus website.

PhonepayPlus stated that the aim of the research was to gather feedback from consumers who had used premium rate services, about their experiences in obtaining information about the services they had used and in resolving any issues that they had with their bill containing PRS.

The findings from Understanding Consumer Journeys aim to identify and quantify any issues and allow PhonepayPlus to assist the PRS industry to improve the consumers experience.

 

Highlights from the study, conducted by Jigsaw Research, found that:

– Over a quarter (26%) of those who contact PhonepayPlus make seven or more contacts about their issue with organisations without resolution, and another 37% have made contact between three and six times.

– On average, complainants to PhonepayPlus have been charged £32.14 by the PRS they complain about.

– 62% of PhonepayPlus complainants held the company behind the service responsible for their issue, a further 33% consider that their phone provider is responsible.

– A mystery shopping exercise revealed that many users would have difficulty getting through to the provider of the service.

– The mystery shopping exercise also showed that users contacting their phone network would not be put at ease by that contact.

 

The research also found several positives:

– The number of unnecessary complaint journeys have reduced and become somewhat more straightforward since the previous research in 2009.

– 59% were satisfied with PhonepayPlus handling of their complaint

– There were examples of good practice amongst the industry’s own customer services

In a statement released today by PhonepayPlus, they encouraged a joint approach throughout the market towards improving the consumer experience when using premium rate services.

AIME will provide a briefing document for Members summarising the research.

 

OFT’s principles for in-app purchasing published

Posted on by Andrea Putnam-Moorcroft

The OFT has published its finalised Principles for online and app-based games.

In April 2013, the OFT announced the launch of an investigation into the ways in which online and app-based games encourage children to make purchases. The OFT investigated whether there was general market compliance with consumer protection law, in particular the Consumer Protection (from Unfair Trading) Regulations 2008 (‘CPRs’), the Unfair Terms in Consumer Contracts Regulations 1999 (‘the UTCCRs’) and the Electronic Commerce (EC Directive) Regulations 2002 (‘the ECRs’). The OFT explored whether online and app-based games included commercial practices that may be considered misleading, aggressive or otherwise unfair under that legislation.

The OFT considered that a set of Principles would be the most helpful and proportionate approach to address the concerns the OFT identified during their consultation because they clarify their view of the entire industry’s obligations under consumer protection law. The concerns OFT has articulated are:

– a lack of transparent, accurate and clear up-front information relating, for example, to costs, and other information material to a consumer’s decision about whether to play, download or sign up to a game
– misleading commercial practices, including failing to differentiate clearly between commercial messages and gameplay
– exploiting children’s inexperience, vulnerability and credulity, including by aggressive commercial practices
– including direct exhortations to children to buy advertised products or persuade their parents or other adults to buy advertised products for them
– payments taken from account holders without their knowledge, express authorisation or informed consent.

The Competition and Markets Authority will, once it acquires its powers in April 2014, pick up from where the OFT has left off in respect of children’s online games.

Payforit releases the latest update to its scheme rules to include the In-App billing checkout flow

Posted on by Andrea Putnam-Moorcroft

Payforit – the mobile micropayment scheme backed by all four UK mobile network operators – is to launch an update of its scheme rules on 21st November 2013 to reflect new and emerging ways to use Payforit to make mobile payments, including in-app billing. The Payforit scheme has periodically been developed and revised since it was first launched to ensure that it keeps pace with changes in the Charge to Mobile payments arena, while continuing to provide a consistent and transparent standard that allows consumers to buy with confidence. The Payforit scheme provides a standardised set of payment/check-out screens that deliver clear pricing, after sales contact points, Terms & Conditions and an SMS receipt to ensure every consumer knows what, when and from whom they purchased digital products and services.

The latest version of the Scheme Rules – Payforit 4.1 – reflects all of the new flows that have been accepted by the cross-network Payforit Management Group, and in particular the In-App billing flow has been introduced following the development of Games and Apps that enable a consumer to purchase further services/content while using their App. The In-App payment flow has undergone significant trials and testing with the cross-network Approved Payment Intermediary Syniverse. Global Charge has been accepted as the first ( of several ) secure mobile payment libraries that can be incorporated into Apps to deliver this style of Payforit flow. Other significant revisions in this version include:

• Enhanced Single Click; a payment flow to allow consumers to buy multiple items, typically music tracks or videos and to receive a single SMS receipt to list all purchases covering a short period
• Taking on industry feedback to improve some payment screens.

The In-App payment capability, Enhanced Single Click, Document authoring and updating and other improvements were co-ordinated by the Payforit Working Group run by the micropayment trade association, AIME ( www.aimm.co ). The AIME Working Group brings together mobile network operators, their Payment Intermediaries, the premium rate regulator and online mobile merchants to discuss and agree how the Payforit scheme can be continuously evolved to provide services for mobile consumers in line with advancements in mobile technologies.

A Member of the Payforit Management Group said, “We’re delighted to be able to launch the revised Scheme Rules today and they will play an important role in ensuring that consumers are able to charge digital goods and services to their mobile account simply and easily, and this will help promote Payforit to merchants as an exciting and effective payment solution.”

Payforit In-App Billing Set to Launch at AIME’s Summit

Posted on by Andrea Putnam-Moorcroft

AIME today announced that details of the new In-App billing function will be broadcast to all merchants attending this summer’s Payforit Summit. Whilst trials of the new billing mechanism on Android devices are still underway, the In-App billing capabilities are set to revolutionise the way customers purchase upgrades and add-ons whilst re-defining digital revenue streams for operators.

The Payforit Summit ( www.payforitsummit.com ), which takes place on June 26th at 10-11 Carlton House Terrace in Central London, will see the results of current In-App billing trials revealed. During the Summit announcement current and prospective Payforit merchants will learn more about the availability of the new function and how it will be rolled out across the mobile entertainment marketplace to capitalise on a new consumer audience.

Businesses, developers and app publishers will now be able to profit from app development and usage long after the initial download and sell their goods and services to consumers through the ease of micro payments.

Consumers will also benefit from the friction-free and secure checkout mobile payment system already offered by Payforit, with app users being able to purchase upgrades such as new lives and power ups without prolonged interruption to game play or app usage. The payment for upgrades will be deducted from their mobile phone’s prepaid balance or added to their monthly bill to ensure a smooth and seamless transaction without leaving the app and without the hassle and additional time spent inputting their credit or debit card details.

“In-app billing is the next stage in the continued development of Payforit,” said Toby Padgham, Director of AIME. “As an industry we are striving to make mobile payments through Payforit the best possible and smoothest payment mechanism for consumers, which will in turn increase the revenues of those merchants using Payforit and increase consumer choice. In-app billing is the next step for us.”

Following recent headlines regarding unauthorised in-app purchases on mobile devices, In-App billing using Payforit will enable operators and consumers to avoid premium pitfalls with a service that was designed with consumer protection at the fore. Payforit can apply a daily billing limit of £30, while for all apps defined as targeted at children, Payforit can help the developer or publisher avoid unwanted headlines by creating a children’s limit of £3 per month. To offer further security benefits Payforit’s In-App billing uses third party Accredited Payment Intermediaries ( APIs ) to take payment and provide a smooth and simple transaction between merchant and consumer.

Details regarding the launch of the In-App system and how the direct operator billing will affect mCommerce strategy for operators, developers and app publishers will be announced at AIME’s Payforit Summit. The event will take place on June 26th at 10-11 Carlton House Terrace in Central London.