Competition Bureau Sues Bell/Rogers/TELUS

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Competition Bureau Sues Bell/Rogers/TELUS

Postby jon » Fri Sep 14, 2012 8:50 am

Competition Bureau Sues Bell, Rogers and Telus for Misleading Consumers: Bureau Seeks Customer Refunds and $31 Million In Penalties
OTTAWA, September 14, 2012 — Following a five-month investigation, the Competition Bureau has begun legal proceedings against Bell Canada (Bell), Rogers Communications, Inc. (Rogers), TELUS Corporation (Telus) and the Canadian Wireless Telecommunications Association (CWTA), requiring them to stop misleading advertising that promotes costly "premium texting services", and to compensate consumers. The Bureau is seeking full customer refunds and administrative monetary penalties — $10 million each from Bell, Rogers and Telus, and $1 million from the CWTA.

The Bureau's investigation concluded that Bell, Rogers and Telus, in conjunction with the CWTA, facilitated the sale to their own customers of premium-rate digital content (such as trivia questions and ringtones) for fees that had not been adequately disclosed. Customers were misled into believing this content was free, when it was not. In fact, in the case of Bell, Rogers and Telus, they pocketed a share of the revenues collected. Aggravating the situation, Bell, Rogers, Telus and the CWTA led customers to believe that measures were in place to prevent these unauthorized charges.

"Our investigation revealed that consumers were under the false impression that certain texts and apps were free," said Melanie Aitken, Commissioner of Competition. "Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills."

The premium-rate digital content in question can cost up to $10 per transaction, and up to $40 for a monthly subscription, rates over and above standard text messaging plans.

The legal proceedings are before the Ontario Superior Court of Justice under the misleading advertising provisions of the Competition Act. The Bureau is seeking:
  • full refunds for customers;
  • administrative monetary penalties — $10 million each from Bell, Rogers and Telus, and $1 million from the CWTA;
  • a stop to any representations that do not clearly disclose the price and other terms and conditions applicable to premium-rate digital content; and
  • a corrective notice from each of Bell, Rogers, Telus, and the CWTA, to inform the general public about the terms and conditions of any order issued against them.
"We take misleading advertising very seriously," said Lisa Campbell, Deputy Commissioner, Fair Business Practices Branch. "We want to ensure that consumers are not misled about pricing terms and have greater control over third-party charges on their wireless invoices."

For additional information regarding this investigation, please see the Backgrounder available on the Competition Bureau website (see below).

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

Competition Bureau Sues Bell, Rogers and Telus for Misleading Consumers: Bureau Seeks Refunds and $31 Million in Penalties
Backgrounder
September 14, 2012

OTTAWA, September 14, 2012 — Following a five-month investigation, the Competition Bureau has begun legal proceedings against Bell Canada (Bell), Rogers Communications, Inc. (Rogers), TELUS Corporation (Telus) and the Canadian Wireless Telecommunications Association (CWTA), requiring them to stop misleading advertising that promotes costly "premium texting services", and to compensate consumers. The Bureau is seeking full customer refunds and administrative monetary penalties — $10 million each from Bell, Rogers and Telus, and $1 million from the CWTA.

The Bureau's investigation has concluded that Bell, Rogers, Telus and the CWTA, through an integrated business model, gave third parties access to their customers, to promote, sell and charge for the third parties' products, all the while misleading customers to believe the content (such as ringtones) was free. Bell, Rogers and Telus billed their own customers and pocketed a share of the revenues, typically between 27-60 percent.

A tool known a "common short code" is at the heart of the issue. It is a number assigned by the CWTA's Short Code Council — a group that includes Bell, Rogers and Telus. The CWTA then leases out the number to a third party for the sale and delivery of digital content.

While text messaging and digital content delivered through common short code can be free to a wireless customer or billed at standard text messaging rates, these codes can also be used to impose charges at higher rates. Premium-rate digital content, including things like trivia questions and ringtones, can cost up to $10 per transaction, and up to $40 for a monthly subscription. The digital content at issue was offered through advertisements in popular free apps on wireless devices, as well as online, and consumers were led to believe that these products were free, when they were not. The key is that users need to understand and knowingly accept these charges. To date, the disclosure has been wholly inadequate, and Bell, Rogers and Telus profited from these charges, at their own customers' expense.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
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