Lawyer Andrey Mikonin makes comments on the sensational judgment delivered by the Magadan area arbitration court pertaining to illegal actions of Mobilnye telesystemy OJSC (MTS) aimed to collect payment for supplementary mobile communication services.

17 March 2010

Services are rendered by “Pervy alternativniy” content provider.

Silence doesn’t imply consent

The Magadan area arbitration court delivered sensational judgment on a case of illegal actions of Mobilnye telesystemy OJSC (MTS) aimed to collect payment for supplementary mobile communication services rendered by content provider “Pervy Alternativny”. The court has fined MTS for 30 000 roubles, notwithstanding that prior to court hearings the operator has compensated all the money for imposed supplementary services to the subscriber.

As appears from case materials, in the end of 2009 Anton С has lodged a complaint to regional office of the Russian Agency for Health and Consumer Rights against the MTS company, which provided him supplementary communication services without his consent. In September, 2009 Anton С decided to download video content from the website “99 terabait filmov”. Subject to code of service, when the number was entered into a specific form, a free sms-message from the service number 770781 is delivered to the subscriber, it contains an access code. To start using a service, the subscriber should enter this promo-code on the web site, he should also confirm his consent to use the service. Should the subscriber fail to decline the service within a day from the moment of service activation, the service shall be provided for a fee.

In the process of service rendering the subscriber is notified of the service status (name, cost, way to decline a service) via a free sms-message delivered from service number 770781 one day prior to the next tariffing after each 300 roubles spent by the subscriber, but is not less than once in a month.

The consumer stated that mobile operator didn’t enable him to “timely decline the imposed paid services on short number 770781”. According to Anton С, by doing so the mobile operator failed to meet the license requirements.

Proceeding from this statement, the office of the Russian Agency for Health and Consumer Rights in the Magadan area carried out an inspection, and based on results of the latter they made a report on administrative offence. The administrative agency decided that MTS actually infringed licence conditions, which “resulted in rendering additional mobile services to the subscriber without his content and for an extra fee, and in delivering sms-messages in Latin letters”.

In the course of hearing representatives of the mobile operator tried to shift all the responsibility on Kontent provaider Pervy Alternativny OJSC which rendered services on service number 770781.

“Since the subscriber denies that he made subscription to a paid content, it means that there is no fault of MTS as a mobile operator, because it is a matter of illegal actions carried out by the content provider,” argued a representative of the mobile operator. “The sms-message was delivered from numbers 770507 and 770781; the said messages were delivered by the content provider which is separately liable for their actions. As to MTS, it didn’t commit any infringements, since MTS did not impose any supplementary communication service for an additional fee.”

Upon the first appeal to mobile operator made by the subscriber, the latter ceased to receive the paid content service, “which became known to mobile operator only from the subscriber’s communication”, declared a representative of MTS.

According to him, the content provider confirmed the fact that he subscribed to a video content resource. Later on the MTS company carried out an official investigation, “which led to blocking of number 770507, adjustement of subscriber’s balance and complete refund of the written off money paid for mobile terminated SMS from number 770507”.

According to the itemized subscriber’s account, Anton С has received nine mobile terminated SMS from the short number 770507, every SMS cost him 136 roubles 33 copeck (exclusive of VAT). This being said, the subscriber received neither the free SMS-message with promo-code, nor the SMS with rules concerning the use and decline of service.

The case materials contain a statement as follows, “Over the whole period when the paid SMS-messages were delivered to the subscriber, not a single message was delivered from the short number 770781 containing information about the possibility to decline the paid service imposed to the subscriber by the operator.”

MTS concluded that illegal actions were actually carried out by content provider, and not by mobile operator, however these conclusions were found erroneous by the court. The court documents lay emphasis on the fact that “An offer made by mobile operator should contain the essence of contract, including provision on decline of additional services. The silence of the subscriber does not imply his consent to obtain additional services of mobile communication at extra charge”.

The court didn’t take into consideration the argument that additional service was offered to the subscriber by content provider and not by the MTS company, “since the service was offered and rendered on behalf of MTS, and not of another person, the subscriber entered into the contract with MTS, and the operator didn’t produce evidence of otherwise”. The contract with the content provider to which referred mobile operator to substantiate their arguments, was concluded between MTS and the Kontent provider Pervy Aternativny OJSC. “The subscriber wasn’t informed about making of the said contract in popularity, and is not a party to the contract made between MTS and the content-provider,” summarized the court.

The Magadan area arbitration court delivered the following judgment: to bring the Mobilnye telesystemy OJSC to administrative responsibility, and to impose administrative penalty on the MTS company at a rate of 30 000 roubles.

Comments made by Andrey Mikonin, a lawyer of the S&K Vertikal law firm to an article titled “Silence doesn’t imply consent”.

It should be noted that the judgment was delivered by court in the course of one session, however, the respondent (MTS) referred to absence of proof of their position This being said, the functions of a court duty includes definition of subject of proving, sufficiency of proofs, offering a party to produce additional proofs, therefore, to make unequivocal conclusions it is necessary to wait until the judgment is approved by the court of appeal, where MTS is entitled to extend its proofs within.

In this instance, the case was examined in an arbitration court, as the subscriber (consumer) chose to protect his rights in administrative proceedings— via the Russian Agency for Health and Consumer Rights, which, by the way, has already essentially corrected the operator in its relations with subscribers in the Magadan area (see the judgment delivered on case А37-1973/09 __ id=F08AF451-395B-4B40-81F1-087E3AE22BA4). The case was quite naturally initiated by the Russian Agency for Health and Consumer Rights, as financial requirements of the subscriber could be satisfied by the mobile operator (as usually occurs) and it makes the subscriber to seek judicial knowledge of violations of their rights by back-ways, rather than in the context of a claim for recovery.

The code of mobile communication service as well as other special provisions establishing rules as to mobile operators’ service, stipulate loads of diverse conditions, rules, limitations in an operator’s work and represent an infinite process: on the one hand – the search of unregulated relations (deficiencies of law) allowing to derive super profit without additional expenses pertaining to service rendering, but only using terminological inexactitude, carried out by a private person (mobile operator), on the other hand – establishment of the true essence of norms carried out by executive agencies (in this case by the Russian Agency for Health and Consumer Rights) and their development (improvement, amendment) in cases when they are actually unable to protect subscribers.

Should the operator standard rules and the standard form contract made between the operator and the consumer be recognised as illegal by the court by, the operator shall correct them without changing the essence, until the next proceeding. It would be useless to go deep in formalities and to make an in-deep study of the contract invented by the operator.

In this case, the Russian Agency for Health and Consumer Rights has proved that the mobile operator interpreted the Rule incorrectly, but for a subscriber, wishing to know and to protect his rights, is much more important to be guided by principles basically established by the Consumer Protection Law and are based on general principles of civil law reflected in the Civil code of the Russian Federation.

For instance, under any circumstances and regardless of any rules wording, an organization which provides services to customers shall be liable to:

1. Supply customers with necessary information on the essence and cost of the service PRIOR to deriving profit (from this service);

2. Obtain an unambiguous consent of the customer to order the respective service and to pay for it a PRELIMINARY APPROVED amount;

3. Take PERSONAL responsibility for the quality of service.

4. Do nothing to impose services, LET ALONE imposing services using methods expressly forbidden by subordinate acts.

By applying the above principles it is easy enough to understand a contentious situation with an operator:

If you foreknew the cost of the service rendered, this service cost you this amount of money, and you got what was promised to you, then it is quite lawful.

In this particular case, should we translate the judgment awarded by the court to the readable language of principles, the following shall stand out:

1. The court had two options: either to recognise the content provider as an agent of the operator engaged in customer acquisition and technical reception of content by customers, or to recognise the operator as a paying agent of the content-provider.

2. In this particular case the court has logically chosen the first option:

2.1. A mobile operator is not a bank, it does not possess or control subscribers’ money, and all they have is an obligation to render prepaid communication services, where the subscriber is informed on the prepaid amount via maintenance of his account.

2.2. For an operator such terms as to “write off the account”, “restore the account” etc. shall mean to pay their money to a third party (content provider), and then to offset with the subscriber (money paid for the subscriber against advance payment made by the subscriber);

2.3. The subscriber didn’t granted his approval of such offsetting, he also didn’t

count on it, and didn’t instructed the mobile operator to make payment in his stead; the mobile operator has, for its own benefit, initiated some additional relations (furthermore, the subscriber didn’t contact the operator), and consequently, imposed a service in its own name.

3.In this case it would be easy to establish a fact of hard selling (imposing), as it wasn’t proved that the subscriber contacted the operator which they usually do by sending sms messages to order a service. However, one should take into account that it’s not a matter of legal control, but an estimation of cumulative evidence according to judges’ belief, which allowed to establish the fact of imposing that is clearly visible from the judgment awarded.

4. In the other case an operator is not debarred from proving that by subscriber’s request and to make his settlements easier the operator just paid in subscriber’ stead to content provider, which acted in its own right and without any help on the part of the operator.

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