Competition Bureau Sues 3 of Canada’s Largest Telecommunications companies for $31 million for Misleading Advertising Promoting Premium Texting Services
December 4, 2012
On September 14, 2012, the Competition Bureau announced it had launched legal proceedings before the Ontario Superior Court of Justice against three of Canada’s largest telecommunications companies (Bell Canada, Rogers Communications, and Telus Corporation) and a wireless industry association (Canadian Wireless Telecommunications Association – CWTA) for misleading advertising under the Competition Act (the Act).
After conducting a five-month investigation, the Competition Bureau has alleged that the parties sold premium-rate digital content (e.g., ringtones, trivia questions, etc.) to their customers without adequately disclosing the fees. In particular, the Competition Bureau has alleged that customers were misled into believing the content was free, when it was not. The fees associated with premium content are outside standard text messaging plans. The Competition Bureau also states Bell, Rogers, and Telus each took a share of the revenues collected from these services.
The CWTA issued a statement in response to the Competition Bureau’s announcement, stating wireless carriers have no control over the services at issue and only manage the billing on behalf of the third-party companies. The CWTA maintained that providing consumers with clear information to text messaging services is essential, which is why it implemented the requirement that these third-party companies use a “double opt-in” procedure to obtain consent from each customer before they receive premium text messages. Double opt-in procedures apply the first time a consumer subscribes to a premium service on a short code and require companies to “double check” that the consumer in fact ordered the service, for example, by confirming their subscription through their device before text messages are sent.
The Competition Bureau is seeking:
- Full customer refunds,
- $10 million from each of Bell, Rogers, and Telus in administrative monetary penalties, and a $1 million administrative monetary penalty from CWTA (total: $31 million),
- a stop to any representations that do not clearly disclose the price and other terms applicable to premium-rate digital content, and
- corrective notices to be issued from each of Bell, Rogers, Telus, and the CWTA, informing the public about any order issued against them.
Under the Act, $10 million is the maximum administrative monetary penalty for a corporation.
Tamarah Luk, B.Sc. (Anatomy & Cell Bio.), M.Sc. (Neuro. Sci.), LL.B., is an associate lawyer with Bereskin & Parr LLP's Regulatory, Advertising & Marketing practice group.
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