Competition Bureau seeks $30 million in fines from incumbent telcos

Canada’s incumbent telecommunications carriers are facing legal action from the Competition Bureau for misleading advertising, the Ottawa-based consumer protections body announced today.

The legal action in the Ontario Superior Court of Justice follows a five month-long investigation into Bell Canada, Rogers Communications Inc., Telus Corp., and the Canadian Wireless Telecommunications Association (CWTA). That investigation concluded that the firms “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,” states the announcement.

The premium content can cost up to $10 per transaction and up to $40 for a monthly subscription, it adds. The Competition Bureau is seeking full refunds for affected customers; fines in the amount of $10 million each from Bell, Rogers, and Telus, and $1 million from the CWTA; and a notice issued by the carriers to customers informing of any order issued against them.

A graph shows the number of texts sent by Canadians monthly. (Credit: CWTA)

So-called “short code” text messages are the crux of the problem, according to a backgrounder issued by the Competition Bureau. These numbers are assigned by CWTA’s short code council and then leased out to a third party for the sale and delivery of content. From a consumer perspective, those short codes often carry charges at higher rates than usual. Typical content delivered are trivia questions and ringtones.

“The digital content at issue was offered through advertisements in popular free apps on wireless devices, as well as online, and consumers led to believe that these products were free, when they were not,” the backgrounder states.

The CWTA has responded to the Competition Bureau by saying its actions could disrupt text message services that include severe weather alerts, charitable donations, flight status updates, or sports scores. “Equally as alarming, the Bureau’s demands could significantly slow down – or even reverse – the deployment of e-commerce in Canada,” a statement says.

Canadians sent and received 2.3 billion short code messages in 2010, according to the CWTA. The Public Interest Advocacy Centre has previously reported that Canadians are being surprised by fees related to short codes and called for more regulation.

Source | Competition Bureau

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