Canada’s Competition Bureau launched a lawsuit against the Big Three – Telus, Rogers and BCE Inc. – on Friday, alleging the use of “misleading advertising” for text services that fool customers with hidden fees. Also included in the suit is the Canadian Wireless Telecommunications Association.
The watchdog is seeking refunds for customers and will hope to implement $31 million in fines. The penalties amount to $10 million each to the carriers and $1 million to the association.
The Competition Bureau notes that it is targeting the Big Three because they control roughly 93 percent of Canada’s wireless market, but the watchdog ensured that the other seven percent got the message.
The watchdog says that the core of their suit lies with the fact that the Big Three and the association enabled the sale of text and data-based content, like ringtones and trivia questions, that were presented as free but wound up costing money.
The Competition Bureau is zeroing in on so-called “premium texting services,” which account for about one fifth of the 700 text message-based services in the country. In defining services as “premium,” the watchdog says the fees that are above and beyond the standard service plan. Premium text-based services can cost up to $10 per transaction.
What’s more, the carriers have pocketed between 27 and 60 percent of the charges. Consumers are signing up without even being aware of it, sometimes while merely entering contests or playing games.
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.
Many services were targeted at children and the ease with which youngsters were able to “tap in” to pricey agreements was startling, as we’ve discussed here before.
The allegations will have to be proven in a court of law and the carriers will certainly defend themselves thoroughly.
The first shots have already been fired, with the ploy of threatening to take away all the toys already floated by Telus. Says spokesman Shawn Hall: ““Due to the Competition Bureau’s actions today [Friday], we may have no choice but to cancel premium text message services in Canada altogether.”
The other argument suggests the lawsuit is misdirected. “We sent them thousands and thousands of files and documents and they never came back with one supplementary question or clarification or anything. And then they gave us ultimatums and ultimately, they filed this action today [Friday]. But what is surprising is that they don’t go after those that they claim that make the direct false representations,” said CWTA president Bernard Lord.