Game over for cellphone scratchcard culprits

There’s been a rather satisfying conclusion to the story of the scratchcard competitions, which were really just a means of hooking people up to a cellphone content subscription service.

To recap briefly: In July, Waspa - the Wireless Applications Service Providers Association, which regulates the industry - held an emergency meeting about a scratchcard competition which was inserted into several high profile magazines - some seven million of them in all.

By entering the competition in the hope of winning a holiday, a car or cash, many people unwittingly subscribed to a mobile content service which would add R210 to their cellphone bills every month.

Waspa ruled that the promotional material fell short of the requirement to “prominently and explicitly” identify the service as a subscription service.

“Consumers are unlikely to be making a request with the specific intention of subscribing to a service, but will most likely be intending merely to claim a prize or enter a competition,” the panellists said.

They also found the pricing information was not clearly and accurately conveyed and was thus “likely to mislead”.

The Wasp in question - Opera Interactive, delivering services such as ringtones, games, music and wallpaper supplied by Clarion Marketing - was ordered to stop the competition immediately; to stop charging those who were being billed for the subscription service after entering the competition, pending the formal review of the complaints, and to inform all “entrants” of the ruling and offer them a refund.

Waspa has since held formal adjudications about two Opera Interactive scratchcard insert campaigns, run in conjunction with different content providers, Clarion Marketing and Oxygen Marketing.

Despite protestations from the companies that there was no intention to deceive consumers or trick them into subscribing to their services, Waspa found they had transgressed the code in terms of transparency in several respects.

And because Opera Interactive has fallen foul of the code several times in the past, and been given lenient sanctions, this time the sanctions were tough.

In respect of the first complaint, Opera Interactive is to forfeit to Waspa R200 000, or all its revenue share relating to the subscriptions, less VAT and any refunds paid after the competition was stopped, which-ever is the greater.

Plus, Opera Interactive is to pay a fine of R400 000 to be collected from Clarion, or all of Clarion’s remaining profit share generated by the service, again minus VAT and any refunds, whichever is the greater.

In the second case, Opera Interactive was ordered to forfeit to Waspa R100 000; or all its after-deductions revenue share from the campaign, whichever is greater, plus the content provider is to pay Waspa a R200 000 fine or all its after deduction revenue share, whichever is greater.

The adjudication documents provide an intriguing insight how lucrative these cellphone content services are.

In response to Waspa’s emergency panel ruling in early July, Clarion Marketing states: “The current subscribers in respect of which Clarion has ceased billing constitutes 80 000 subscribers; the total loss of revenue to date as a result thereof being in excess of R1 000 000 …”

The final adjudications effectively wipe out all the profits all the players derived from these scratchcard inserts.