Sask. court certifies class-action cellphone suit

Sask. court certifies class-action cellphone suit

CTV.ca News Staff
Wed. Sep. 19 2007

The lawyer at the head of a massive class-action lawsuit against Canadian cellphone companies said the service providers have become "addicted" to collecting unnecessary fees from customers.

Tony Merchant (CTV photo)

"When the companies first had cellular service you had to have a wireless fee, and the companies got into the habit of charging this," Tony Merchant, the lawyer who initiated the suit, told CTV Regina.

"When they weren't required to pay the wireless fee, it was sort of like a crack cocaine that they were used to," he said. "They just kept charging, taking the money and mis-describing the money they were receiving."

A Saskatchewan court certified the lawsuit against Canada's cellphone providers on Tuesday.

The suit, first launched in 2004, alleges Canada's cellphone users are owed $12 billion plus interest for unfair "system access" fees collected over the years.

After two weeks of arguments from lawyers for the class action and the cell phone companies, the Court of Queen's Bench in Regina ruled Tuesday that the suit has enough validity to go forward.

It is described as the largest class-action in Canadian history, potentially affecting every cellphone user in the country. Currently, there are 7,500 complainants signed onto the suit.

"As a financial story for these companies it has an absolute blockbuster impact upon them. So if the industry has a judgment of $20 billion delivered, the impact would obviously be huge," Merchant said

The suit claims the companies are practicing "unjust enrichment" by charging the so-called "system access" or "licensing" fees.

Merchant maintains cellphone service providers have convinced customers the fees are required under federal regulations.

"They're gouging people. They're receiving money they ought not to receive and people believe they're paying it with good and just cause, and they're not."

The practice effectively allows companies to advertise lower prices, then boost the cost of cellphone plans through hidden fees, he said.

Here are the monthly subscriber access fees charged by Canada's major cellphone providers:

Rogers Wireless: $6.95
Telus Mobility: $6.95
Bell Mobility: $8.95, after a recent $2 increase
An investigation by the Toronto Star several years ago revealed many employees of cellphone companies were incorrectly telling customers the fees were required by the Canadian Radio-Television and Telecommunications Commission.

While required by the CRTC when the cellphone industry was in its infancy, the fees are no longer legally required, but are still being charged.

The investigation also found the fees would generate about $800 million annually for the industry.

Merchant said that number is now closer to $1.3 or $1.5 billion.

Critics argue the fees are necessary in order to allow cellphone companies to continue doing business, and point out that the court's certification of the class-action suit doesn't mean the case has been deemed to have merit.