Telus (TSX:T) has agreed to pay out $7.34 million in rebates to customers after the Competition Bureau determined the Vancouver-based telecom giant made or permitted misleading ads.
The Ottawa-based law enforcement agency began investigating Telus, Rogers Communications (TSX:RCI.B), Bell (TSX:BCE) and the Canadian Wireless Telecommunications Association (CWTA) in 2012 over concerns they were helping third parties charge customers for premium services of which they were unaware of being charged.
A five-month investigation helped the Competition Bureau determine Telus made misleading ads for premium text messages in pop-up ads, apps and social media.
The Bureau said many customers believed trivia questions and ringtones advertised by Telus were free when in fact they could cost up to $10 per transaction and up to $40 for a monthly subscription.
"Consumers expect and deserve truth in advertising. Allowing a third party to take advantage of consumers through misleading advertising is a violation of the Competition Act,” Matthew Boswell, the Bureau’s senior deputy commissioner of competition, said in a December 30 statement.
“We are pleased that Telus has taken steps to prevent this from happening again, as we continue our work to ensure that consumers benefit from accurate information in the digital economy."
A Telus spokesman declined to comment.
While the $7.34 million sum is the largest amount ever agreed upon in a Competition Bureau settlement, the agency originally sought fines and penalties of $10 million from each of the big three carriers and $1 million from the CWTA.
The Bureau previously reached a $5.42-million settlement with Rogers in March 2015, while legal proceedings against Bell and the CWTA are ongoing.
As part of the agreement, the Competition Bureau has dropped legal proceedings against Telus.
Payments will apply to customers of Telus, Telus Mobility and subsidiary Koodo who were charged for certain premium text messaging services between January 1, 2011, and August 16, 2013.
Current customers affected by the misleading ads will automatically receive their rebates while eligible former customers have 120 days to make a claim after being notified by Telus.
The wireless provider is also donating $250,000 to Ryerson University Privacy and Big Data Institute, which specializes in research on consumer issues.
