The distributors behind the "Crazy Frog" ringtone service has been fined £40,000 because for misleading customers about the real cost of the service.

Service provider mBlox was also ordered to refund all 338 people who complained to premium rate services (PRS) regulator ICSTIS.

Many customers were unaware that when they bought the ringtone it was for a subscription service rather than a one-off payment.

The ICSTIS' adjudication follows a lengthy investigation and subsequent Oral Hearing with mBlox, its information provider, Jamba, and their legal representatives.

The panel in a statement said: “The Hearing Panel found that the promotions required a lot of interpretation, application and patience from consumers. It observed that a great deal of thought had gone into producing the advertisements but, in contrast, little time appeared to have been spent on the terms and conditions. These omitted significant information and were unclear about what the service actually entailed”.

ICSTIS Director George Kidd said: “The Hearing Panel has made clear that consumers should not be made to work to find out what any premium rate service involves or costs. Although the Panel found that there was no fraudulent or malicious intent behind the service, the companies concerned showed a careless disregard and unprofessional attitude to consumers in failing to be clear on the exact nature of the service”.

In a statement mBlox has said it "fully accepts ICSTIS' adjudication on the appropriateness of the Crazy Frog promotion”.