Rogers Ordered to Pay $500k Administrative Monetary Penalty in Chatr Ads Case

by Istvan Fekete on February 26, 2014

The Ontario Superior Court of Justice has found that Canada’s No. 1 wireless player, Rogers, has failed to conduct adequate tests to back up claims of its Chatr ads, and has been ordered to pay an administrative monetary penalty of $500,000.

The ruling was handed down on Friday and disclosed by Canada’s Competition Bureau on Monday.

Rogers launched Chatr back in 2010 to compete directly with new wireless startups such as Wind Mobile, Public Mobile, and Mobilicity. Shortly after the brand hit the market, it made waves due to its claim of “fewer dropped calls than new wireless carriers” and “no worries about dropped calls”.

The Competition Bureau immediately started investigating the issue, and after two months spent scanning the network, it has begun legal proceedings against Rogers to stop the misleading advertising. The Bureau’s investigation found there was no discernible difference in dropped call rates between Rogers’ Chatr and new wireless startups.

In other words, the Competition Bureau investigation found the ads were misleading.

Three years later, the Court dismissed the misleading ad portion of the Competition Bureau’s deceptive marketing practices case against Rogers, but the Bureau successfully argued that the red carrier had contravened the requirement of conducting adequate and proper testing before making such claims about Chatr’s performance.

The Competition Bureau reacted immediately after the Ontario court issued the ruling: “While we are pleased that the Court recognized that Rogers did not exercise due diligence in making its performance claims, we are examining the modest amount of the penalty imposed and the decision not to issue a prohibition order. The Bureau will take the time necessary to review the Court’s reasons in order to make a determination as to next steps,” said John Pecman, Commissioner of Competition.

As expected, Rogers was surprised to find that it will be required to shell out half a million dollars: “We are pleased that the Court rejected the Competition Bureau’s claims about Chatr advertising. The Court rejected the Competition Bureau’s efforts to obtain a $7 million penalty and also refused to issue a Prohibition Order. The Court found that virtually every allegation made was false and unfounded. We were shocked and surprised the Competition Bureau tried to levy such a significant and unwarranted fine. This was the first time in the world where a regulator applied to fine a company for truthful, factual advertising. […] We remain committed to meeting the highest possible standards of accuracy and clarity in all of our ads.””

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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