Telus Corp. will rebate a record $7.34 million to wireless customers under an agreement with the Competition Bureau announced Wednesday that settles claims the carrier enabled misleading advertising of premium text messaging services.
Payouts will be issued to “a substantial number” of current and former customers, with the amount the most obtained from any company under a bureau agreement, said a spokesman for the independent law enforcement agency.
The previous record was set in March when Toronto-based Rogers Communications said it would offer rebates or credits of up to $5.42 million to customers who were charged for extra services such as trivia questions that they had been led to believe were free.
Eligible current customers of Telus will automatically receive a rebate, while eligible former customers will be notified by the company with details on how to obtain rebates and will have 120 days to make a claim.
The Competition Bureau in 2012 sued leading wireless carriers Rogers, BCE Inc. and Telus along with the Canadian Wireless Telecommunications Association (CWTA) for allegedly enabling third party providers to trick consumers into paying fees they weren’t expecting.
The third parties who Telus permitted to make misleading representations to customers are Jesta Digital LLC and Mobile Messenger North America Inc., the bureau said, although its case related only to Rogers, Telus, Bell and the CWTA.
Bell, Rogers and Telus “pocketed a share of the revenues collected,” from customers who were charged up to $10 per transaction and up to $40 for a monthly subscription above standard text messaging plans, the bureau said at the time.
It concluded that the carriers in conjunction with the CWTA facilitated the sale to their own customers of premium-rate digital content for fees that had not been adequately disclosed.
“Customers were misled into believing this content was free, when it was not,” the bureau said, while also alleging the CWTA led customers to believe that measures were in place to prevent the 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 Bureau. “Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills.”
The Competition Bureau launching legal proceedings before the Ontario Superior Court of Justice under the misleading advertising provisions of the Competition Act. The actions have now been discontinued against Rogers and B.C.-based Telus but are ongoing against Bell and the CWTA.
The bureau said it was seeking $10 million each from Bell, Rogers and Telus and $1 million from the industry group.
In addition to the rebates, the consent agreement requires Telus to publish a notice to all affected customers and establish a consumer awareness campaign to educate consumers on how to avoid unwanted wireless charges
Telus will also a total of donate $250,000 to the Ryerson University Privacy and Big Data Institute; Éducaloi, a non-profit organization dedicated to helping the public understand their rights and responsibilities under the law, and the Centre de recherche en droit public de l’Université de Montréal.
“Consumers expect and deserve truth in advertising,” said Matthew Boswell, the bureau’s senior deputy commissioner of competition in a statement.
“Allowing a third party to take advantage of consumers through misleading advertising is a violation of the Competition Act. We are pleased that Telus has taken steps to prevent this from happening again.”
Telus, Bell and the CWTA did not immediately respond to a request for comment.