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THE LITIGATOR

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Not Fully Unlimited Calling and Internet: Comwave Networks agrees to pay $300,000 for making false or misleading representations

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To be used sparingly

Telephone and Internet provider Comwave Networks Inc. of Toronto has agreed to pay an administrative penalty of $300,000 for false or misleading representations. Acting under the civil deceptive marketing practices provisions of the Competition Act, the Competition Bureau investigated Comwave and found that Comwave had misrepresented the charges consumers would face for telecommunications services. It also found that claims of unlimited calling and Internet were not actually true in that those services in fact were subject to usage caps. Comwave and the Bureau agreed to a Consent Agreement, which was filed with the Canadian Competition Tribunal on September 13, 2016.

We previously wrote about Why Car Rentals Cost More Than Advertised: Avis And Budget Taken To Task By Competition Bureau and how Avis And Budget Agree To Pay $3m To Settle Drip Pricing Case. In those cases, the Bureau concluded that, when non-optional fees were added to advertised car rental rates, it was impossible to attain the advertised price when it came time to pay. Avis and Budget agreed to settle on the basis of an administrative monetary penalty and a promise to change their ways.

Comwave’s television advertising is axed on its “Stand Up to the Big Guys” (i.e., Bell and Rogers) and “Fight For Your Right To Save” campaigns. One of its spokespeople is a former National Hockey League player known as a “tough guy” who urges consumers to stand up to the Big Guys by switching to Comwave (just as he stood up to the bigger hockey players during his hockey career). It seems as though the Bureau concluded that some of the representations being made were not entirely accurate.

There were three areas of concern:

  1. Non-Optional Fees: The Bureau concluded that Comwave’s advertisements misrepresented the charges consumers would face for telecommunications services when additional non-optional fees were added to the advertised price. Comwave had in fact disclosed additional fees during the sign-up process, which it believed was adequate disclosure. The Bureau disagreed: the disclaimers during the sign-up process did not alter a consumer’s general impression of what they would pay as conveyed by the advertising.
  2. Not Fully Unlimited Internet: Comwave’s representations about “unlimited” Internet services was also problematic. It offered such things as: ““Unlimited”, “No Caps on Downloads”, “limit free”, “enjoy everything the web has to offer without ever worrying about your data limit”, and “Now watch all the movies you want”. However, once consumers reached a certain amount of data per month, the Bureau concluded that Comwave effectively limited internet usage for consumers by significantly slowing download speeds, which ran against the general impression conveyed by Comwave’s advertising that Internet usage would in fact be unlimited and implicitly, accessible.
  3. Not Fully Unlimited Telephone Calls: The Bureau concluded that Comwave misrepresented its home phone services as “unlimited”, when in fact there were monthly caps on usage.

Although Comwave believed that it was adequately disclosing the above information to its clients, it has since ended the practices with which the Bureau took exception. In addition to the $300,000 penalty mentioned above, it will pay $60,000 towards the costs of the Bureau’s investigation as well as establish a corporate compliance program designed to help it avoid similar issues in the future.

Comwave previously raised the ire of another government agency – the Canadian Radio-television and Telecommunications Commission – for violating National Do Not Call telemarketing rules in 2013. It cooperated with the CRTC in that case just as it has with the Bureau in this case.

Takeaways For Business

Businesses should remember that when they advertise, “What the headline giveth, the fine print cannot taketh away.” The Competition Bureau has a list of Advertising Dos and Don’ts, one of which reads: “Do avoid fine print disclaimers. They often fail to change the general impression conveyed by an advertisement. If you do use them, make sure the overall impression created by the ad and the disclaimer is not misleading.”

Michael Binetti
Affleck Greene McMurtry LLP

Michael Binetti

<p>Michael Binetti, a partner of the firm, brings a proven litigation background plus extensive experience in arguing both trials and appeals. He has demonstrated his strategic legal capability and expertise in wide-ranging areas of litigation, including business and construction disputes, fraud, employment law, competition investigations, private competition actions, elections law and dealing with municipal and government regulators.</p>

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