No more "unlimited" calling and Internet services: Comwave resolves misleading telecom service and price representations
On September 13, 2016, the Competition Bureau reached a consent agreement with Comwave Network Inc., which resolved the Bureau’s concerns over allegations of false or misleading advertising by Comwave in respect of representations made to public on its telecommunication services and prices. The Bureau had three sets of concerns:
1. Comwave allegedly made representations to the public about the prices of the telecommunications services it provided, and then allegedly charged consumers additional fees that were only disclosed to consumers in fine print disclaimers and during its telephone sales intake process. The Bureau concluded that the disclaimers and the intake process were insufficient to alter the misleading general impression created by the prices advertised by Comwave, which were in fact not attainable due to the additional fees;
2. Comwave had allegedly been making representations regarding unlimited local calling and unlimited Internet usage through a number of advertising media since about 2011. Disclaimers allegedly contained terms and conditions that limited residential phone service to 3000 minutes per month and effectively limited Internet usage by significantly slowing download speeds when consumers reached a certain amount of data per month. The Bureau concluded that the disclaimers were insufficient to alter the general impressions created by the advertising that consumers could get unlimited local calling home phone service and unlimited Internet usage; and
3. Comwave allegedly made representations regarding special offers such as “free services for six months”, with additional terms and conditions that were not disclosed to consumers until the telephone sales intake process. The Bureau concluded that these subsequent disclosures were insufficient to alter the misleading general impression that consumers could receive free phone service for a specified period of time.
Under the consent agreement, Comwave agreed to bring its advertising practice into compliance with the misleading advertising provisions of the Competition Act, to publish a corrective notice, and to pay a $300,000 administrative monetary penalty and $60,000 towards the Bureau’s investigative costs over a three-year payment schedule. Comwave also agreed to implement a corporate compliance program to comply with the Competition Act in general and the misleading advertising provisions in particular.
This case demonstrates the Bureau’s continued focus on false or misleading representations and businesses’ need to ensure that material information is clearly and promptly disclosed so as to ensure that the representations do not convey to consumers any misleading impressions that are contradicted in the fine print. It should be noted that the Bureau has agreed to more favourable terms than usual in this consent agreement due to Comwave’s prompt and full cooperation in the investigation.