The Competition Bureau is suing Canada's three biggest wireless carriers and an industry association for allegedly enabling providers of premium texting services to trick consumers into paying fees they weren't expecting.
The watchdog is seeking $10 million each from Bell, Rogers and Telus and $1 million from the Canadian Wireless Telecommunications Association.
The industry, for its part, says the bureau is going after the wrong target and that its suit could have a chilling effect on e-commerce.
The so-called short-codes enable users to do anything from making charitable donations, to paying for parking or to voting for contestants on So You Think You Can Dance from their phones. There are some 700 such codes in use in Canada.
The bureau says premium services - it cites trivia questions and ringtones as examples - can cost up to $10 per transaction and up to $40 for a monthly subscription over and above standard texting plans.
"Our investigation revealed that consumers were under the false impression that certain texts and apps were free," said bureau commissioner Melanie Aitken. "Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills."
In addition to the financial penalties, the Competition Bureau also wants full refunds for customers, a stop to advertisements that don't clearly disclose the price of the premiumrate digital content and a "corrective notice" informing the public about any order issued against them.
The suit, which follows a five-month investigation, is before the Ontario Superior Court of Justice. The allegations have yet to be proven in court.
While the case currently names the three companies and the CWTA, bureau spokesman Bryan Parker said the investigation is ongoing.
