The Competition Bureau (the “Bureau”) announced on March 16, 2015, that Rogers Communications Inc. (“Rogers”) has agreed to pay $5.42 million in refunds to consumers in connection with “premium text messaging” charges on their wireless phone bills. This settlement was made in connection with proceedings brought by the Bureau regarding whether the fees for the services in question had been adequately disclosed to consumers.
In September 2012, following a five-month investigation, the Bureau commenced legal proceedings against Bell Canada (“Bell”), Rogers, TELUS Corporation (“Telus”) and the Canadian Wireless Telecommunications Association (“CWTA”), alleging that they had engaged in misleading advertising associated with for fee “premium texting services.” The remedies sought by the Bureau included both full customer refunds and administrative monetary penalties (“AMPs”) of $10 million each from Bell, Rogers and Telus, and $1 million from the CWTA.
According to the Bureau, Bell, Rogers and Telus, in conjunction with the CWTA, facilitated the sale to their own customers of premium-rate digital content (e.g., trivia questions and ringtones) without properly disclosing the fees for these services – specifically that customers were mislead into believing that these services were free (the services at issue cost up to $10 per transaction and up to $40 for a monthly subscription above standard rate plans). As a result, the Bureau alleged that wireless customers had incurred fees for services that they did not intend to purchase and for which they had not agreed to pay. The Bureau also took the view that an aggravating factor was that Bell, Rogers, Telus and the CWTA led customers to believe that measures were in place to prevent these unauthorized charges.
Overview of Settlement
Under the terms of the settlement with Rogers, the Bureau has agreed to discontinue the legal proceedings against Rogers. The proceedings against Bell, Telus and the CWTA remain ongoing.
The $5.42 million in refunds will apply to Rogers and Fido (a discount wireless service operated by Rogers) customers who incurred charges for certain premium text messaging services between January 1, 2011 and August 31, 2013. Further, Rogers has agreed to cease billing for premium text messaging services unless the customer has approved the charges.
Rogers has also agreed to:Create a Consumer Awareness Campaign to educate its customers about how charges can be incurred on their wireless devices and the steps that can be taken to avoid unwanted charges, including safety tips for online purchases; and Strengthen its corporate compliance program with respect to billing customers on behalf of third parties.
This case is noteworthy for several reasons. First, it clearly shows that misleading advertising continues to be a priority enforcement area for the Bureau and comes a week after the Bureau commenced legal proceedings against Aviscar, Budget and their parent company, Avis Budget Group Inc. for allegedly engaging in misleading advertising (click here for our blog post on this topic). Second, as evidenced from the settlement amount agreed to by Rogers, the cost for businesses having engaged in misleading advertising can be significant (in addition to reputational harm). Third, businesses need to ensure that the pricing information disclosed to consumers is clear and accurate, including with respect to any fees charged by third parties through their service. Finally, it signals the Bureau’s ongoing consumer protection focus in the telecommunications sector, and with respect to digital/mobile marketing.
In light of this announcement and recent enforcement action by the Bureau in the area of misleading advertising, businesses should be careful on how they advertise their services and those of any third parties using their service/platform. In particular, it emphasizes the need for companies to properly disclose fees and to ensure that the disclosure is appropriate to the platform on which consumers are likely to make purchases.
For a link of the Bureau’s press release, please click here.