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CRTC agrees that industry can self-regulate itself when it comes to short codes

by Phil Barrett

On 21 January 2009, the CRTC received an application by l’Union des consommateurs (l’Union) requesting the Commission to intervene in the wireless services market to regulate billing of text messages from short codes – which is what marketers use for SMS / mobile marketing campaigns.

Based on the filings by Canadian Wireless Telecommunications Association (CWTA) and members, the Commission has denied the application.

“In this decision, the Commission denies the application by l’Union des consommateurs requesting the Commission to intervene in the wireless services market to regulate billing of text messages from short codes.”

In concluding, the Commission affirmed CWTA’s position, namely:

  1. The Commission considers that the evidence presented by l’Union does not lead to the conclusion that market forces have systematically failed to resolve complaints about billing of text messages from short codes.
  2. The Commission is of the view that it can rely on market forces,(2) including industry self-regulation through the mechanisms put in place by the CWTA and the CCTS, to resolve complaints about billing of text messages from short codes.

Full text of the Decision is available at http://www.crtc.gc.ca/eng/archive/2009/2009-445.htm

This is good news for mobile marketers who rely on SMS as part of their marketing efforts. Having the CRTC step in & regulate short codes would have likely slowed down and further complicated a process that is already perceived to be complex.

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  • Tygyrtoo

    This is an appalling decision which belays even the most cursory examination of the facts. Having just been through this with Fido, the following is true:

    a) an “approved” short code biller can bill charges for any amount to any cellphone number of its choice. These charges are automatically accepted by the carrier, which then holds the customer responsible.

    b) While the short code biller is SUPPOSED to require opt-in replies and adhere to STOP requests, this is frequently not the case in reality. Disturbingly, the cellphone carrier provider (e.g. Rogers) has NO mechanism in place whereby they can validate that an opt-in was indeed sent. In the words of Fido – “the short code biller tells us that you opt in and we believe them”. The same applies when it comes to the service provided, the number of times you requested it, and the price – these are all factors entirely in the control of the biller and not checked by the carrier. Essentially, the short code biller is free to charge you whatever they want, however they want, and there is no validation performed by the carrier.

    c) The cellphone carrier provider additionally has NO mechanism to protect you from such billing. Requests to please remove/screen/block the short code billers from your number are met with polite refusal by the carrier. Therefore there is no way to opt out of this “service”.

    d) While one can text a “STOP” message, even if it is received, the enduser is deemed to be responsible for any charges already incurred – even if they did not request them in the first place.

    All these are worrying, unethical and potentially illegal breaches of service. If a merchant uses Visa to charge me $80 for something I never bought, I have paths of redress or at the very least can change my credit card number. A short code provider can do precisely the same and there are no checks, no redress, and no protection.

    In other words, the cellphone carriers are aiding and abetting scammers by not only given them an open field on which to levy fradulent charges, but actually HELPING the scammers bill the client and collect the funds.

    Now I’m off to register a short code, because I can get very, very rich off billing random numbers $5. Most people will pay without looking; and very few people will actually spend the time and effort required to complain loud enough to get that $5 back – maybe 5 in 100. So for every $500 I bill – for no reason – I might need to pay back $40. What a rort!