UK Gambling Commission fines Fafabet £170,000 for T&Cs failures
The UK Gambling Commission (UKGC) has issued a £170,000 fine to Taichi Tech Limited, which trades as Fafabet, for regulatory failures, including the use of unfair terms and conditions.
Taichi Tech, which has been licensed by the Commission since February 2021, will also be subject to a third-party audit to check that it is complying with anti-money laundering and safer gambling policies, procedures and controls.
The UKGC investigation once again raises the issue of fair, clear and transparent terms and conditions by operators following the High Court case involving Paddy Power earlier this year.
T&Cs lacked transparency
According to the investigation, the UKGC discovered that Taichi Tech contained the following statement within their bonus terms for new casino promotions:
“Fafabet have the right at their own discretion to close accounts or forfeit winnings.”
The Commission concluded from its investigation that Taichi Tech breached the fair and open licensing condition by “including a discretionary term allowing the operator to close customer accounts or forfeit winnings without clear justification”, adding that these kinds of terms “lack transparency and may lead to unfair outcomes for consumers”.
The UKGC noted that the Licence Conditions and Codes of Practice (LCCP) that operators must abide by refer to the general consumer protection legislation of the Consumer Rights Act 2015 (CRA).
The LCCP states that licensees must ensure their terms and practices are “fair, clear, and do not breach consumer protection law” and so “must therefore have regard to the CRA as part of their overall compliance obligations under the LCCP”.
John Pierce, Director of Enforcement and Intelligence at the Gambling Commission, said: “We expect all operators — regardless of their size or customer base — to comply with consumer protection legislation and ensure their terms and conditions meet regulatory standards.
“Licensed operators must ensure their terms are clear, fair, and transparent, so customers fully understand what to expect.”
AML and social responsibility failures
The UKGC noted that its investigation also discovered AML and social responsibility breaches, including failures to “effectively manage risk and implement adequate consumer protection measures”.
These failures included some customers gambling large sums in a short period despite the operator holding limited customer information, individuals exhibiting potential markers of harm (such as high-velocity spending over short periods) being given “insufficient customer interaction from the operator”.
In addition, the Commission noted that the operator didn’t further follow-up or intervene with customers they had sent safer gambling emails to but who didn’t respond and their concerning behaviour continued.
In response, the UKGC stated that Fafabet “acknowledged that it previously fell short of the standards expected” and has since “taken steps to address these shortcomings”.
Fafabet is required to commission an independent third-party audit to assure ongoing compliance with all relevant regulatory requirements as part of the regulatory outcome.
Operator T&Cs highlighted again
Fafabet’s fine from the UKGC is another reminder that operators must make sure that their terms and conditions are fair, clear and transparent.
Back in March, Paddy Power lost a High Court case and was ordered to pay customer Corrinne Pearl Durber compensation of £1m in relation to a disputed pay-out of a “Monster Jackpot.”
Durber was denied a jackpot of £1.097m that she won on the slot game Wild Hatter with the operator, who opted instead to only initially pay her £20,000 due to what they claimed to be a “software error” which caused an incorrect display.
The court ruled in favour of Durber, stating that the rules advertised to customers should take precedence over the company’s terms and conditions, noting that Paddy Power’s “terms were not clearly signposted”.
The court added that Clause B1 – which stated that, in the event of a discrepancy between the screen display and the server records, the server records would be definitive – was “buried in 44 pages of dense text” and was an unfair contract term that granted absolute power to the defendant to override errors while excluding the customer’s right to challenge them.