Canada - Competition Bureau Sues Bell, Rogers and Telus for Misleading Consumers: Bureau Seeks Customer Refunds and $31 Million In Penalties

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 concluded that Bell, Rogers and Telus, in conjunction with the CWTA, 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. Customers were misled into believing this content was free, when it was not. In fact, in the case of Bell, Rogers and Telus, they pocketed a share of the revenues collected. Aggravating the situation, Bell, Rogers, Telus and the CWTA led customers to believe that measures were in place to prevent these unauthorized charges.

"Our investigation revealed that consumers were under the false impression that certain texts and apps were free," said Melanie Aitken, Commissioner of Competition. "Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills."

The premium-rate digital content in question can cost up to $10 per transaction, and up to $40 for a monthly subscription, rates over and above standard text messaging plans.

The legal proceedings are before the Ontario Superior Court of Justice under the misleading advertising provisions of the Competition Act. The Bureau is seeking:

• full refunds for customers;
• administrative monetary penalties — $10 million each from Bell, Rogers and Telus, and $1 million from the CWTA;
• a stop to any representations that do not clearly disclose the price and other terms and conditions applicable to premium-rate digital content; and
• a corrective notice from each of Bell, Rogers, Telus, and the CWTA, to inform the general public about the terms and conditions of any order issued against them.

"We take misleading advertising very seriously," said Lisa Campbell, Deputy Commissioner, Fair Business Practices Branch. "We want to ensure that consumers are not misled about pricing terms and have greater control over third-party charges on their wireless invoices."

For additional information regarding this investigation, please see the Backgrounder available on the Competition Bureau website.

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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