Churchcastle fined £800,000 for targeting elderly people with misleading competitions

Pensioners who lost hundreds of pounds in a marketing scheme were "misled" in a "cynical way" and will get their money back, Phonepayplus (PPP) has ruled.

The premium line regulator fined Churchcastle Ltd, the company behind the  scheme, £800,000 and ordered it to refund all justified victims.

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Paul Whiteing, chief executive of PPP, said: "We are saddened that elderly consumers have been misled in this cynical way. Phonepayplus will not tolerate any misleading activity that takes advantage of vulnerable people."

This is not the first time Churchcastle's business practices have been under scrutiny. The Daily Mirror carried out an investigation in 2002 and action was also taken by the Office of Fair Trading in 2006.

The regulator, said "highly personalised" direct mail marketing material sent to "elderly consumers" was "misleading". Recipients who had completed the enclosed word search puzzles were encouraged to call premium-rate numbers to enter a prize draw to win "low-quality jewellery", which the company described as 'strictly limited' and ‘rare'.

If a company uses premium-rate numbers, it must make the cost of calls clear in its marketing material so consumers know what they will be paying. Companies must also not "seek to take advantage of any vulnerable group".

Only last week the regulator issued fines totalling $450,000 to two other companies, Amazecell Ltd and mBill Pty Ltd, for misleading marketing promotions. After receiving a number of complaints about Churchcastle, PPP found that this company had also not complied with these rules.

"Phonepayplus received a number of complaints regarding elderly Churchcastle customers who were very shocked, and some distressed, about the costs that they had incurred. Some of these vulnerable consumers ran up £100s worth of phone bills," the regulator said.

Mr Whiteing added: "In many cases, Phonepayplus was alerted to the consumer harm by relatives or carers who discovered that their loved ones had unexpectedly high phone bills...we encourage anybody who is concerned about an elderly relative's use of premium rate services to contact us or check our website for advice."