Channel 4 to end use of premium rate competitions for profit-making

1 August 2007

• Broadcaster unveils new policy as premium rate investigation wraps
• Inquiry confirms You Say We Pay problems date from Sept 2004
• Email and phone records make full refund possible
• Channel 4 to donate unrefunded profits to charity

Channel 4 is to stop using phone-in competitions in its programmes for the purposes of profit making as part of a tough new policy on the use of premium rate telephone services (PRTS).

The launch of the new policy coincides with publication of the findings of an internal investigation into the You Say We Pay competition in tea-time magazine strand, Richard & Judy, carried out with the assistance of specialist media law firm, Wiggin LLP. Channel 4 Chief Executive, Andy Duncan, ordered the investigation after problems with the operation of You Say We Pay were revealed in the press in February.

The investigation has confirmed that problems with the competition date back to September 2004, as previously reported. It found no evidence that any member of staff at Channel 4 had any direct involvement in or knowledge of the improper handling of viewer calls.

Under the new policy, Channel 4 has closed down all its PRTS competitions with the exception of Deal or No Deal. However, in line with its new policy of not profiting from PRTS competitions the channel has decided to donate its share of future profits from the Deal or No Deal competition to charity with effect from 13th August when the programme returns for its next run.

The channel has ended phone-in competitions on some of its most popular programmes including The Paul O' Grady Show, which will return on 17th September without a premium rate competition. All other competitions have already been halted.  

In 2006 there were approximately 30 PRTS competitions in and around programmes on Channel 4 and its sister channels; the Channel 4 Group's current forecast profit from PRTS for 2007 is in the region of £3 million.

The channel will continue using phone voting in Big Brother but is only charging viewers sufficient to cover the cost of the call and any charitable donation. Ongoing PRTS activities will be subject to the stringent new monitoring regime introduced by Channel 4 in March, which involves a third party law firm or consultants carrying out live audits of the operation of each service.

The channel will continue to work with its service providers and the telephone networks to improve procedures. The channel has already withdrawn SMS voting from all its programmes, including the current series of Big Brother, because it could not obtain satisfactory guarantees as to the dependability and timing of the delivery of text votes.

Anne Bulford, Channel 4's Group Finance Director, who has overseen the investigation, said: "As a commercially funded public service broadcaster we've previously taken the view that premium rate competitions were a legitimate activity given the demand from viewers to take part. But public trust in these competitions has been severely undermined and we do not want to risk further our relationship with our viewers. The channel's reputation is its most valuable asset and can only be protected by demonstrating that we place the highest priority on safeguarding the interests of our viewers and will take action if we find they have been let down."

You Say We Pay refund offer extended

At the same time as unveiling its new policy on the use of PRTS, Channel 4 has announced it is extending its You Say We Pay refund offer to viewers.

In February this year, shortly after the competition was taken off air, Channel 4 announced an immediate refund offer for viewers covering the last two series of Richard & Judy beginning in June 2006 and promised to extend the refund offer if it was found that the problem originated before that date.

The investigation, carried out with assistance from Wiggin LLP, has now concluded that the problem with the final shortlist of potential winners being submitted before the phone lines closed extends back to September 2004.

As part of the investigation, Wiggin has identified the timings from September 2004 onwards of the shortlists submitted by Eckoh, the company providing phone services to the competition, to Richard & Judy's production company, Cactus TV. These timings have been cross-checked against a database of calls made to the competition to calculate how many callers had no chance of winning and are therefore due a refund.  

Using this data it has been calculated that between September 2004, when Eckoh took over responsibility for You Say We Pay having acquired former service provider Arrow Interactive, and February 2007, when the competition was suspended, 2.9 million calls to the competition had no chance of winning representing 42% of total calls.

Approximately £2.2m revenue was generated from improperly entered calls from September 2004 to February 2007, including the two series for which refunds have already been offered. After prize money and administrative costs have been deducted, Channel 4's share of the profit from these improperly entered calls in that time period was £300,000. Channel 4 will donate any remainder of its profits from improperly entered calls, which is not claimed and refunded, to the Great Ormond Street Hospital Children's Charity.  

In order to claim a refund, viewers are invited to send a copy of any telephone bill to FREEPOST YOU SAY WE PAY, with nothing else written on the envelope and no stamp. Verified phone numbers will then be checked against the database of calls to the competition to ascertain the amount of any refund due. Viewers can also ring the You Say We Pay refund information line on 0800 666 805 for further details. Calls from a landline will be free of charge.

Viewers who claimed a refund earlier this year and have already submitted evidence of their phone numbers need do nothing further as any monies due to them from improperly entered calls dating back to September 2004 will automatically be sent to them by Channel 4.

Bulford added: "The investigation has uncovered no evidence that anyone at Channel 4 had any knowledge of or involvement in the improper handling of viewer calls. From the moment it came to our attention the channel has done everything possible to protect viewers' interests including having all competitions audited on a live and ongoing basis by appropriate third parties. We now recognise that the reliance we placed on Eckoh to carry out their contractual and regulatory duties was misplaced.

"Our priority now is to ensure all affected viewers have the chance to claim a full refund as previously promised. We will donate all our profit from improperly entered calls, which is not claimed and refunded, to charity - we will not profit from mishandled calls."

Findings on other competitions

Channel 4 also instructed Wiggin to conduct a review of all the channel's other PRTS activities. In addition, the law firm and specialist consultants have been carrying out live audits of the operation of all premium rate phone-in competitions and voting on Channel 4 since March.

In March, during a live audit of a phone-in competition in Channel 4's weekly racing show, The Morning Line, a technical problem at the service provider was identified which meant that about 100 calls were received and charged after the phone lines had closed. These callers were logged and reimbursed and the incident was referred to ICSTIS who were satisfied with the steps taken to resolve the matter. The competition will not return.

The strengthened monitoring regime also identified that the method used to compile the final winners' shortlist on Deal or No Deal during a ten month period meant that early entrants had a slightly higher chance of winning than others.

The competition offers free entry via the web alongside a paid-for PRTS route and the majority of contestants enter free of charge. The final shortlist of potential winners is drawn up in proportion to the number of entries received via phone and web. 

Although all entrants to the competition were taken into account in the winner selection process and had a chance of winning the competition and the ultimate winner of the competition was always selected after the competition had closed, the staggered shortlisting procedure meant earlier phone and web entrants had a statistically greater chance of being shortlisted than later entrants.

On Wiggin's advice Channel 4 asked the service provider to change the shortlisting procedure so that the winner selection process did not commence until after the competition had closed. The change was implemented from Monday 14th May 2007 as soon as a technological solution was devised, verified and tested to ensure it worked.  

Channel 4 has written to Ofcom and the service provider has written to ICSTIS regarding this matter and explaining the actions that have been taken.

The review uncovered no issues of concern relating to any other competition.

• Broadcaster unveils new policy as premium rate investigation wraps
• Inquiry confirms You Say We Pay problems date from Sept 2004
• Email and phone records make full refund possible
• Channel 4 to donate unrefunded profits to charity

Channel 4 is to stop using phone-in competitions in its programmes for the purposes of profit making as part of a tough new policy on the use of premium rate telephone services (PRTS).

The launch of the new policy coincides with publication of the findings of an internal investigation into the You Say We Pay competition in tea-time magazine strand, Richard & Judy, carried out with the assistance of specialist media law firm, Wiggin LLP. Channel 4 Chief Executive, Andy Duncan, ordered the investigation after problems with the operation of You Say We Pay were revealed in the press in February.

The investigation has confirmed that problems with the competition date back to September 2004, as previously reported. It found no evidence that any member of staff at Channel 4 had any direct involvement in or knowledge of the improper handling of viewer calls.

Under the new policy, Channel 4 has closed down all its PRTS competitions with the exception of Deal or No Deal. However, in line with its new policy of not profiting from PRTS competitions the channel has decided to donate its share of future profits from the Deal or No Deal competition to charity with effect from 13th August when the programme returns for its next run.

The channel has ended phone-in competitions on some of its most popular programmes including The Paul O' Grady Show, which will return on 17th September without a premium rate competition. All other competitions have already been halted.  

In 2006 there were approximately 30 PRTS competitions in and around programmes on Channel 4 and its sister channels; the Channel 4 Group's current forecast profit from PRTS for 2007 is in the region of £3 million.

The channel will continue using phone voting in Big Brother but is only charging viewers sufficient to cover the cost of the call and any charitable donation. Ongoing PRTS activities will be subject to the stringent new monitoring regime introduced by Channel 4 in March, which involves a third party law firm or consultants carrying out live audits of the operation of each service.

The channel will continue to work with its service providers and the telephone networks to improve procedures. The channel has already withdrawn SMS voting from all its programmes, including the current series of Big Brother, because it could not obtain satisfactory guarantees as to the dependability and timing of the delivery of text votes.

Anne Bulford, Channel 4's Group Finance Director, who has overseen the investigation, said: "As a commercially funded public service broadcaster we've previously taken the view that premium rate competitions were a legitimate activity given the demand from viewers to take part. But public trust in these competitions has been severely undermined and we do not want to risk further our relationship with our viewers. The channel's reputation is its most valuable asset and can only be protected by demonstrating that we place the highest priority on safeguarding the interests of our viewers and will take action if we find they have been let down."

You Say We Pay refund offer extended

At the same time as unveiling its new policy on the use of PRTS, Channel 4 has announced it is extending its You Say We Pay refund offer to viewers.

In February this year, shortly after the competition was taken off air, Channel 4 announced an immediate refund offer for viewers covering the last two series of Richard & Judy beginning in June 2006 and promised to extend the refund offer if it was found that the problem originated before that date.

The investigation, carried out with assistance from Wiggin LLP, has now concluded that the problem with the final shortlist of potential winners being submitted before the phone lines closed extends back to September 2004.

As part of the investigation, Wiggin has identified the timings from September 2004 onwards of the shortlists submitted by Eckoh, the company providing phone services to the competition, to Richard & Judy's production company, Cactus TV. These timings have been cross-checked against a database of calls made to the competition to calculate how many callers had no chance of winning and are therefore due a refund.  

Using this data it has been calculated that between September 2004, when Eckoh took over responsibility for You Say We Pay having acquired former service provider Arrow Interactive, and February 2007, when the competition was suspended, 2.9 million calls to the competition had no chance of winning representing 42% of total calls.

Approximately £2.2m revenue was generated from improperly entered calls from September 2004 to February 2007, including the two series for which refunds have already been offered. After prize money and administrative costs have been deducted, Channel 4's share of the profit from these improperly entered calls in that time period was £300,000. Channel 4 will donate any remainder of its profits from improperly entered calls, which is not claimed and refunded, to the Great Ormond Street Hospital Children's Charity.  

In order to claim a refund, viewers are invited to send a copy of any telephone bill to FREEPOST YOU SAY WE PAY, with nothing else written on the envelope and no stamp. Verified phone numbers will then be checked against the database of calls to the competition to ascertain the amount of any refund due. Viewers can also ring the You Say We Pay refund information line on 0800 666 805 for further details. Calls from a landline will be free of charge.

Viewers who claimed a refund earlier this year and have already submitted evidence of their phone numbers need do nothing further as any monies due to them from improperly entered calls dating back to September 2004 will automatically be sent to them by Channel 4.

Bulford added: "The investigation has uncovered no evidence that anyone at Channel 4 had any knowledge of or involvement in the improper handling of viewer calls. From the moment it came to our attention the channel has done everything possible to protect viewers' interests including having all competitions audited on a live and ongoing basis by appropriate third parties. We now recognise that the reliance we placed on Eckoh to carry out their contractual and regulatory duties was misplaced.

"Our priority now is to ensure all affected viewers have the chance to claim a full refund as previously promised. We will donate all our profit from improperly entered calls, which is not claimed and refunded, to charity - we will not profit from mishandled calls."

Findings on other competitions

Channel 4 also instructed Wiggin to conduct a review of all the channel's other PRTS activities. In addition, the law firm and specialist consultants have been carrying out live audits of the operation of all premium rate phone-in competitions and voting on Channel 4 since March.

In March, during a live audit of a phone-in competition in Channel 4's weekly racing show, The Morning Line, a technical problem at the service provider was identified which meant that about 100 calls were received and charged after the phone lines had closed. These callers were logged and reimbursed and the incident was referred to ICSTIS who were satisfied with the steps taken to resolve the matter. The competition will not return.

The strengthened monitoring regime also identified that the method used to compile the final winners' shortlist on Deal or No Deal during a ten month period meant that early entrants had a slightly higher chance of winning than others.

The competition offers free entry via the web alongside a paid-for PRTS route and the majority of contestants enter free of charge. The final shortlist of potential winners is drawn up in proportion to the number of entries received via phone and web. 

Although all entrants to the competition were taken into account in the winner selection process and had a chance of winning the competition and the ultimate winner of the competition was always selected after the competition had closed, the staggered shortlisting procedure meant earlier phone and web entrants had a statistically greater chance of being shortlisted than later entrants.

On Wiggin's advice Channel 4 asked the service provider to change the shortlisting procedure so that the winner selection process did not commence until after the competition had closed. The change was implemented from Monday 14th May 2007 as soon as a technological solution was devised, verified and tested to ensure it worked.  

Channel 4 has written to Ofcom and the service provider has written to ICSTIS regarding this matter and explaining the actions that have been taken.

The review uncovered no issues of concern relating to any other competition.

• Broadcaster unveils new policy as premium rate investigation wraps
• Inquiry confirms You Say We Pay problems date from Sept 2004
• Email and phone records make full refund possible
• Channel 4 to donate unrefunded profits to charity

Channel 4 is to stop using phone-in competitions in its programmes for the purposes of profit making as part of a tough new policy on the use of premium rate telephone services (PRTS).

The launch of the new policy coincides with publication of the findings of an internal investigation into the You Say We Pay competition in tea-time magazine strand, Richard & Judy, carried out with the assistance of specialist media law firm, Wiggin LLP. Channel 4 Chief Executive, Andy Duncan, ordered the investigation after problems with the operation of You Say We Pay were revealed in the press in February.

The investigation has confirmed that problems with the competition date back to September 2004, as previously reported. It found no evidence that any member of staff at Channel 4 had any direct involvement in or knowledge of the improper handling of viewer calls.

Under the new policy, Channel 4 has closed down all its PRTS competitions with the exception of Deal or No Deal. However, in line with its new policy of not profiting from PRTS competitions the channel has decided to donate its share of future profits from the Deal or No Deal competition to charity with effect from 13th August when the programme returns for its next run.

The channel has ended phone-in competitions on some of its most popular programmes including The Paul O' Grady Show, which will return on 17th September without a premium rate competition. All other competitions have already been halted.  

In 2006 there were approximately 30 PRTS competitions in and around programmes on Channel 4 and its sister channels; the Channel 4 Group's current forecast profit from PRTS for 2007 is in the region of £3 million.

The channel will continue using phone voting in Big Brother but is only charging viewers sufficient to cover the cost of the call and any charitable donation. Ongoing PRTS activities will be subject to the stringent new monitoring regime introduced by Channel 4 in March, which involves a third party law firm or consultants carrying out live audits of the operation of each service.

The channel will continue to work with its service providers and the telephone networks to improve procedures. The channel has already withdrawn SMS voting from all its programmes, including the current series of Big Brother, because it could not obtain satisfactory guarantees as to the dependability and timing of the delivery of text votes.

Anne Bulford, Channel 4's Group Finance Director, who has overseen the investigation, said: "As a commercially funded public service broadcaster we've previously taken the view that premium rate competitions were a legitimate activity given the demand from viewers to take part. But public trust in these competitions has been severely undermined and we do not want to risk further our relationship with our viewers. The channel's reputation is its most valuable asset and can only be protected by demonstrating that we place the highest priority on safeguarding the interests of our viewers and will take action if we find they have been let down."

You Say We Pay refund offer extended

At the same time as unveiling its new policy on the use of PRTS, Channel 4 has announced it is extending its You Say We Pay refund offer to viewers.

In February this year, shortly after the competition was taken off air, Channel 4 announced an immediate refund offer for viewers covering the last two series of Richard & Judy beginning in June 2006 and promised to extend the refund offer if it was found that the problem originated before that date.

The investigation, carried out with assistance from Wiggin LLP, has now concluded that the problem with the final shortlist of potential winners being submitted before the phone lines closed extends back to September 2004.

As part of the investigation, Wiggin has identified the timings from September 2004 onwards of the shortlists submitted by Eckoh, the company providing phone services to the competition, to Richard & Judy's production company, Cactus TV. These timings have been cross-checked against a database of calls made to the competition to calculate how many callers had no chance of winning and are therefore due a refund.  

Using this data it has been calculated that between September 2004, when Eckoh took over responsibility for You Say We Pay having acquired former service provider Arrow Interactive, and February 2007, when the competition was suspended, 2.9 million calls to the competition had no chance of winning representing 42% of total calls.

Approximately £2.2m revenue was generated from improperly entered calls from September 2004 to February 2007, including the two series for which refunds have already been offered. After prize money and administrative costs have been deducted, Channel 4's share of the profit from these improperly entered calls in that time period was £300,000. Channel 4 will donate any remainder of its profits from improperly entered calls, which is not claimed and refunded, to the Great Ormond Street Hospital Children's Charity.  

In order to claim a refund, viewers are invited to send a copy of any telephone bill to FREEPOST YOU SAY WE PAY, with nothing else written on the envelope and no stamp. Verified phone numbers will then be checked against the database of calls to the competition to ascertain the amount of any refund due. Viewers can also ring the You Say We Pay refund information line on 0800 666 805 for further details. Calls from a landline will be free of charge.

Viewers who claimed a refund earlier this year and have already submitted evidence of their phone numbers need do nothing further as any monies due to them from improperly entered calls dating back to September 2004 will automatically be sent to them by Channel 4.

Bulford added: "The investigation has uncovered no evidence that anyone at Channel 4 had any knowledge of or involvement in the improper handling of viewer calls. From the moment it came to our attention the channel has done everything possible to protect viewers' interests including having all competitions audited on a live and ongoing basis by appropriate third parties. We now recognise that the reliance we placed on Eckoh to carry out their contractual and regulatory duties was misplaced.

"Our priority now is to ensure all affected viewers have the chance to claim a full refund as previously promised. We will donate all our profit from improperly entered calls, which is not claimed and refunded, to charity - we will not profit from mishandled calls."

Findings on other competitions

Channel 4 also instructed Wiggin to conduct a review of all the channel's other PRTS activities. In addition, the law firm and specialist consultants have been carrying out live audits of the operation of all premium rate phone-in competitions and voting on Channel 4 since March.

In March, during a live audit of a phone-in competition in Channel 4's weekly racing show, The Morning Line, a technical problem at the service provider was identified which meant that about 100 calls were received and charged after the phone lines had closed. These callers were logged and reimbursed and the incident was referred to ICSTIS who were satisfied with the steps taken to resolve the matter. The competition will not return.

The strengthened monitoring regime also identified that the method used to compile the final winners' shortlist on Deal or No Deal during a ten month period meant that early entrants had a slightly higher chance of winning than others.

The competition offers free entry via the web alongside a paid-for PRTS route and the majority of contestants enter free of charge. The final shortlist of potential winners is drawn up in proportion to the number of entries received via phone and web. 

Although all entrants to the competition were taken into account in the winner selection process and had a chance of winning the competition and the ultimate winner of the competition was always selected after the competition had closed, the staggered shortlisting procedure meant earlier phone and web entrants had a statistically greater chance of being shortlisted than later entrants.

On Wiggin's advice Channel 4 asked the service provider to change the shortlisting procedure so that the winner selection process did not commence until after the competition had closed. The change was implemented from Monday 14th May 2007 as soon as a technological solution was devised, verified and tested to ensure it worked.  

Channel 4 has written to Ofcom and the service provider has written to ICSTIS regarding this matter and explaining the actions that have been taken.

The review uncovered no issues of concern relating to any other competition.