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40/08 27 March 2008
Micro Bill Systems Ltd and directors Ashley Bateup and Mark Webb have given undertakings to the OFT following numerous complaints about the appearance of 'pop-up' notices demanding payment for membership of adult content web sites on consumers' computers.
The company supplies subscription-based access to web site content that enables consumers to sign up without providing personal or payment card details. By signing up, consumers agree to download software onto their computer that produces 'pop-ups' if the consumer does not cancel their membership within the first three days. The 'pop-ups' cover a substantial area of the computer screen and are often locked open, preventing the computer user from using the computer for any other purpose. The number and frequency of the 'pop-ups' increases over time, and to stop them consumers have to pay or contact the company. Many consumers are unaware that they have agreed to the software download onto their computers.
Micro Bill Systems co-operated with OFT requests to review the clarity of the sign up process consumers go through to access its website content, the fairness of its terms and conditions of use, and its automated billing process. As a result, Micro Billing has undertaken not to:
The company has also undertaken that it will not rely on unfair terms in its contracts with consumers.
If Micro Bill Systems Ltd, Mr Bateup or Mr Webb breach the undertakings, the OFT could seek a court injunction against them.
Mike Haley, OFT Head of Consumer Protection , said:
'These undertakings are the result of detailed negotiations between OFT and Micro Bill Systems Ltd. We believe that they achieve the right balance between protecting consumer interests without stifling innovation in the 'on-line' market place.'
1. Undertakings were also given to the OFT by Platte International Limited, which the OFT understands will be taking over Micro Bill Systems Ltd operations.
2. Part 8 of the Enterprise Act 2002 improves consumer protection by giving enforcers such as the OFT strengthened powers to obtain court orders against traders that breach a range of consumer protection laws to harm the collective interests of consumers.
3. The 'pop-up' billing system used by Micro Bill Systems Ltd is supported by the company's terms and conditions of use. OFT assessed these terms and conditions against the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).
4. Under the UTCCRs, a term is unfair in a contract and on the consumer if, contrary to the requirement of 'good faith', it causes a significant imbalance in the rights and obligations under the contract, to the detriment of consumers.
5. Consumer protection laws do not prohibit the use of automated 'pop-ups'. The main issue considered by the OFT was the fairness of the process by which consumers were signed up to the contract and the effects of billing system and automated 'pop-ups'.
6. OFT is aware that a number of consumers have stated that the software generating the 'pop-ups' has been downloaded onto their computers when the computer has not been used to access an MBS web site. OFT has no legal remit to deal with the issue of software being downloaded without consent. We are aware that many consumers have had their computer usage disrupted by MBS 'pop-ups' in circumstances where the use of the computer to access MBS websites is confirmed. OFT has acted to protect the interests of consumers in these circumstances.
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