The Competition Bureau is suing the telecommunications companies, along with the Canadian Wireless Telecommunications Association (CWTA), in an attempt to make them stop advertising premium texting services and refund consumers who were charged for the messages.
In the suit filed in Ontario Superior Court, the bureau is seeking $10 million each from Bell, Rogers and Telus, and $1 million from the industry group.
Premium texting lets consumers subscribe for ringtones, horoscopes and other services, but can cost up to $10 per transaction, and up to $40 for a monthly subscription. Those costs are on top of standard text messaging plans. It can be difficult to figure out how to unsubscribe and the bureau alleges that ads for the service are misleading about the cost.
Along with the financial penalties, the Competition Bureau wants:
- Full refunds for customers.
- A stop to any representations that do not clearly disclose the price and other terms and conditions applicable to premium-rate digital content.
- A corrective notice from each of Bell, Rogers, Telus and the industry group to inform the general public about the terms and conditions of any order issued against them.
The Competition Bureau has been active recently, taking on the Toronto Real Estate Board, credit card companies, cosmetics companies and gas stations over practices it says are anti-competitive.
Suit could impact e-commerce
A statement by the CWTA says the bureau could disrupt text message services like weather alerts, charitable donations, flight status updates or sports scores.
Those sevices are delivered via a tool known as a "common short code," a number assigned by the CWTA's Short Code Council. The CWTA then leases out the number to a third party for the sale and delivery of digital content.
"It is most unfortunate that the Competition Bureau's actions could potentially impact the ability of Canadian consumers to access the text messaging services they have come to enjoy and rely on," said Bernard Lord, the industry group's president.
In an interview with CBC, Lord says the bureau should be targeting the companies that send and charge for the text messages, rather than the telecommunications companies.
"They're asking for the carriers to take responsibility for third-party representations," he said.
"And we feel this is over-reaching, we don't believe this was not the intent of Parliament and we don't believe that is supported by law."
Lord says selling these services is a form of e-commerce and warns that putting the responsibility on the service providers would put a damper on it.
"If you buy an app for your smart phone, is your carrier responsible for the representation made about that app because it's bought for your mobile phone? There's all sorts of implications for this and that is why we reject the allegations of the bureau."
Suit targets 'misleading representations'
The Competition Bureau says the telecom companies make between 27 and 60 per cent off the transactions, and promote, sell and charge for the content provided by the third parties.
A spokesman for the bureau says today's court action is targeted at "misleading representations."
"That is the only thing we are trying to stop. Consumers were led to believe there was no cost associated with certain products. Unfortunately, in far too many cases, consumers only became aware of charges they had not expected or knowingly authorized when they got their mobile phone bills," Bryan Parker said in an email to CBC News.
The investigation is still going, he added.
A spokeswoman for Rogers says the company allows customers to block their account from premium text programs and offers itemized premium message charges on customer invoices.
"We don't approve any new third party premium SMS program that has a contest or prizing element. If there are problems with a specific short code, we block that program, and if a third party doesn’t abide by the rules, we terminate the relationship," Patricia Trott said in an email to CBC News.
Glenn Thibeault, the NDP's critic for consumer affairs, says he's pleased the Competition Bureau is looking into premium text messaging costs.
"Truth in advertising is to me an important principle to uphold," he said.