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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