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Your Phone costs you more than your wallet = Did you know?

Written By Real Kevin Jay on Tuesday, April 30, 2013 | 10:42 AM


The regulator is concerned about customer's unlimited liability for the cost of fraud on mobile phones
Losing your phone – or having it stolen – is stressful enough in its own right. But it can also come with a four-figure bill, one that you alone may have to pay back.

Why? Because there’s a lot less protection against fraud on your phone than on your wallet. When your bank notices an unusual purchase, such as spending abroad, it immediately cuts off the card.

Yet this doesn’t happen when a mobile phone is stolen and unusual or expensive calls are made.

The knee-jerk reaction of banks can frustrate holidaying customers or those making expensive purchases (especially for electronics), but it stops fraudsters in their tracks.

The same can’t be said for mobile phone users. Richard Rigby learnt this lesson the hard way when his phone was stolen and used to make more than £1,300 worth of fraudulent calls.

As he primarily used his work phone, Richard didn’t immediately realise his personal phone was missing.

In the mean time 19 hours worth of calls were made to Ghana, racking up a bill of £1,313.

As the loss hadn’t been reported within the first 24 hours, Richard was held fully responsible for covering the cost of the calls. After complaining to provider Orange, now part of the EE brand, it agreed to waive half of the costs ‘as a gesture of goodwill’ and replace the phone.

But he is now lumbered with a £50 a month repayment of the debt and wondering why his network didn’t pick up on the unusual calls earlier. He had never phoned abroad before.

Communications watchdog Ofcom said it was “extremely concerned” to hear of Mr Rigby’s case and is looking at ways to better protect customers from unexpectedly high bills.

A spokeswoman said: “We have concerns about the unlimited liability that consumers face in the event of unauthorised use of a lost or stolen phone.  We have therefore raised this issue with government to consider if the introduction of primary legislation could be appropriate to address this problem.”

The regulator is also encouraging mobile phone providers to take a more proactive approach to pick up fraud.

“If a phone has been lost or stolen it is very important we are informed as soon as possible as it is only then we can prevent calls or data use being charged to their account,” an EE spokeswoman told Yahoo! Finance.

“In this instance, however, Mr Rigby did not inform us about his lost phone for a few weeks, which resulted in more than £1,300 of fraudulent calls. As a gesture of goodwill, we were able to waive 50% of the customer’s balance and put a payment plan in place.”

EE insisted that it has systems in place to detect potential fraudulent usage. But the costs remain firmly a customer’s problem until the phone is reported lost or stolen - no matter how unusual the usage is.

In contrast, credit card providers are responsible for reimbursing customers who are victims of fraud - customers can only be liable for up to £50 of fraudulent transactions.

This could go some way to explain why your bank cuts off suspicious transactions far earlier.

“The sad fact is that mobile networks are not under any obligation to cover the costs of fraudulent calls, so you could well end up footing the bill. Where premium rate numbers are concerned, you could be talking hundreds or even thousands of pounds,” Ernest Doku, telecoms expert foruSwitch.com, told Yahoo! Finance.

"More needs to be done to protect people against mobile fraud but, for now, if your mobile phone is stolen, the best thing you can do is call your network as quickly as possible and block both the handset and the SIM."

Some mobile phone insurance policies will cover you for unauthorised calls. For instance, policies from Protect Your Bubble will cover calls made from the time the phone was lost or stolen to the time it was blacklisted by your airtime provider up to £100.

As smart phones now carry more personal date and information, including access to emails, than ever before it’s important to take extra care. 

It can often be a number of hours before a person realises their phone has been stolen, which is why it’s important to put a phone PIN in place to be entered each time the handset is used. This will act as an extra hurdle for a thief to jump before using a phone and help protect personal information.

Thieves use mobile phones and SIMs to carry out a number of different frauds and rinse money from victims. Some of the most common, according to Action Fraud, are:

The ‘missed call’ scams 
Many people will automatically call back a number they don’t recognise if they have a missed called from it. But you should be wary of doing this. You could be redirected to a premium rate service which can cost up to £15 per call.

Recorded message scams
Alternatively a missed call number could lead to a recorded message telling you that you’ve won a prize, with another number to call to ‘claim’ it. But again this second number could be a premium rate that will rack up a hefty bill.

Text message scams
This happens when you’re sent a friendly text from a number you don’t recognise. But if you text back you could be engaged in a long text conversation. And then find out that you’ve been charged a high rate for texts you’ve sent - and sometimes those you’ve received too.

Ring tone scams
These scams offer a ‘free’ or low cost ring tone. However, if you accept you will actually be subscribed to a service that will keep sending you ring tones – and charge a premium rate for the service.

Phone insurance scams
Fraudsters operate bogus mobile phone insurance policies. The scammers often target after you’ve just bought a phone. They call pretending to be from your mobile phone network or the place where you bought your phone, but if you hand over money you’re likely to lose it and be left with no cover at all.

PhonepayPlus regulates premium numbers and has the power to stop mobile phone frauds and fine the offenders. But users can take a number of steps to avoid falling victim of scams, such as not responding to unknown numbers and not storing PINS in texts or emails on phones.

If you sell your phone or give it away, make sure you complete a factory reset to clear all of your personal information.

Many apps will now track lost and stolen phones 

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