One of Canada's largest telcos, Rogers Communications Inc. ("Rogers"), has reached a settlement with the Commissioner of Competition ("Commissioner") whereby it has agreed to pay over $5 million in refunds to consumers for "premium text messaging" charges to its wireless customers.
Following a five month investigation at the Competition Bureau in 2012, the Commissioner started legal proceedings before the Ontario Superior Court of Justice against three Canadian telcos, including Rogers, and the Canadian Wireless Telecommunications Association (the "CWTA") concerning "Call to Action Representations", which gave the general impression to consumers that they were able to receive digital content such as ringtones, the chance to win prizes, news, advice, alerts, trivia questions and horoscopes for free when, in fact, they were charged more than standard text messaging plans.
In the Statement of Claim, the Commissioner alleged that the "common short code", which is a four to six digit number assigned and leased by the CWTA's Short Code Council to third parties for the sale and delivery of digital content, is at the "heart of the issue". The three telcos are part of the Short Code Council. Text messaging and digital content can be delivered through common short codes for free or at standard text messaging rates, however, they can also be used to impose higher charges. In this case, those who used the codes were charged up to $10 per transaction, and up to $40 for a monthly subscription, for the digital content promoted through online advertising that did not adequately disclose the charges. The Commissioner's investigation concluded that in consideration for allowing third parties to sell and charge premium digital products to their respective customers, the three telcos and CWTA shared between 27-60% of the revenue earned by the third parties. By virtue of the agreements the three telcos and CWTA had in place with the third party content providers, the Commissioner alleged the participation of the three telcos and CWTA was integral to the Call to Action Representations and the collection of revenue from customers. They were more than "passive conduits" for the distribution of the Call to Action Representations, providing third party content providers access to their networks and infrastructure.
Due to the three telcos active participation in these Call to Action Representations, in the proceedings, the Commissioner is seeking, among other things, full refunds for customers and administrative monetary penalties in the amount of $10 million against each telco and $1 million from the CWTA.
In March 2015, Rogers agreed to settle the proceedings with the Commissioner, with the payment of over $5 million in refunds to customers, as well as create a Consumer Awareness Campaign to educate consumers about how charges can be incurred and unwanted charges avoided, among other things. The action will be discontinued against Rogers, but will continue against the two other telcos and the CWTA.
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