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
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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