Phonepay Plus has lost its case with German PRS quiz company Ordanduu over affiliate marketing, having all charges brought against the regulator upheld by the Mr Justice Supperstone at the High Court in London this morning.
Mr Justice Supperstone said: “”In my judgment… the actions of the Defendant [PPP] were unlawful”. Supperstone also accepts there have been damages and is referring the case to the Queen’s Bench Division for determination on these damages.
In a short statement, PPP’s acting chief executive Jo Prowse, said: “PhonepayPlus has received Mr Justice Supperstone’s ruling and will be considering its detail and implications with our legal advisers. As a regulator PhonepayPlus has a responsibility to protect consumers and promote a healthy market, and we recognise that where there are any failings properly identified in this case it is important for PhonepayPlus to take appropriate steps to address them.”
The case centred around Ordanduu’s adverts being hijacked by a rogue affiliate marketer and being pointed at illegal malware downloads without the company’s knowledge. One of PPP’s own staff stumbled upon it and punitive measures were swiftly brought against Ordanduu.
Ordanduu argued that it had no knowledge that this had happened and that it only had to be told and it would have taken the ad down. Instead, PPP used its emergency powers to shut down Ordanduu and level a hefty fine.
It also came to light in the case that much of the decision was based on there having been 146 complains about unrelated other matters involving Ordanduu – all of which had been resolved many months previously.
The whole court case has brought both the regulator and affiliate marketing into the spotlight. The power to control affiliate marketing clearly needed to be addressed and has been.
More troubling is the regulator’s response to this incident. It claims to be looking at how to tackle rogue affiliate marketing – which is to be commended – but in this instance its first port of call was to cogitate and analyse rather than simply informing the unsuspecting company that its ad had been hijacked. It also seemed to have let its previous encounters with Ordanduu cloud its judgement.
The move also calls into question the level of expertise and competency of the people it employs to sit on its emergency tribunal panels – In this instance and retired judge and two freelance consumer journalist: none of whom had any telecoms experience at all.
If these panelists were involved in any other emergency procedures, the floodgates could be opened for legal action.
It also brings into sharp relief PPP’s insistence on following this process right through judicial review. This will have cost a huge price – which PPP, and ultimately the whole industry, will be footing – and has drawn out the process no end.
As the judge mentioned, stopping the problem straight away and dealing with it quickly would have been the best thing to protect consumers from potential harm – a key PPP remit and central to its case – rather than a protracted period of analysis then a kneejerk reaction and a lengthy case. All this time and money could have been better employed creating an industry consensus on policing affiliate marketing.
In its defence, PPP says: “Over the last year, PhonepayPlus has engaged in an open dialogue on affiliate marketing with the industry we regulate and we will continue to work with PRS providers and industry bodies on these issues as we consider the implications of this judgement”. But where do we go from here?