Rogers Wolfs Down Fido

Material Dividends

In an on-line article, George Takach, a corporate lawyer with McCarthy Tetrault, provides an excellent synopsis of the relevance of Rogers' arbitration clause. Takach begins with coverage of the Kanitz case, that troubled many of us in the legal community and ultimately led to a statutory amendment of the OCPA that overturned Rogers' arbitration clause. He also provides a clear statement about why corporations are so bothered by class action suits and clearly underlines why it is to the advantage of corporations to preclude them contractually as Rogers did. As he says, "In short, Rogers' tactic of inserting an arbitration clause has paid fairly material dividends."

Rogers seems to have developed a taste for material dividends though. A forest full of Rogers consumers doesn't seem to be sufficient for the corporation's insatiable appetite:

They Shoot Wild Horses, Don’t They? How Rogers Wireless corralled FIDO Subscribers

Copyright © 2006 Harry Gefen. All Rights Reserved.

Like a border collie, stealthfully shepherding a flock of wild animals into a gated pen, FIDO, the canine-branded cell phone service provider, has been quietly following directions from its new master, Rogers Wireless, to guide presently-unwitting subscribers into an astonishingly-restrictive corral of a contract.  Legal experts and discerning FIDO clients alike have expressed alarm over the legality and ethics of the techniques being employed. One thing appears certain, unless government agencies with the power to do so intervene swiftly, those subscribers that don’t bolt and leave FIDO before the contractual gate silently closes, on March 2, 2006, will soon be domesticated to behave and produce revenue the Rogers way.

“It was just a matter of time before Rogers had to shut down a lot of the things that made FIDO attractive to consumers nationwide” said Kevin, one of the given-name-only FIDO telephone customer service representatives contacted last week to explain the changeover. Marketing innovations, like City FIDO’s unlimited local-calling accounts, or billing-by-the-second - versus the by-the-minute industry standard - were, he said “cannibalizing accounts from Rogers.” A French-styled feeling of freedom from commitment to contractual fidelity was another one of the things that made the Quebec-based Cirque du Soleil of cell phone operators so very attractive to Canadian consumers.   As Mark Akrigg, a present FIDO client described, “I liked that I didn’t have to read and sign a lengthy contract.”

In fact that looser, informal style of relationship was something that FIDO has long presented to be one of its brand signatures. As one of the company’s now-archived web pages proudly promised until just recently:  “Fido likes to keep things simple: There’s no contract or long-term obligation on your part. Fido operates on mutual trust.” And that is the refrain anxious FIDO customers continue to be given, when calling in an attempt to understand the implications of new shifts at the company to a Rogers-style of consumer relations. They are told by FIDO representatives that “there is no contract” for them to compare with the unfamiliar, dense insert in their invoices this month. “We were the company that didn’t have a contract,” said one FIDO service representative, bemoaning the paradigm shift with Rogers' takeover.

All that changed in mid-February, when, along with his regular monthly billing sheets, Mr. Akrigg received a relatively small and inconspicuous document, simply titled “Important Notice to FIDO Customers”.  Upon closer examination, Mr. Akrigg, a studious man with a PhD in classical Greek and Latin languages, became dumbfounded when he discovered that the notice was, in fact, “a highly-folded accordion of paper, covered on both sides with over five thousand words of legalese”. The notice’s startling primary purpose became evident in the last line of the fourth paragraph: “If you do not contact with us by March 2, 2006, your Services will be governed by the terms and conditions of the updated Service Agreement.”  What, he thought, was there to be updated?

If the relationship was originally portrayed as a paragon of consumer freedom, the “Important Notice to FIDO Customers” made clear that was soon to be a thing of the past.  

Despite his abundant qualifications as an expert in deciphering words, Mr. Akrigg still could not grasp the significance of a clause that appears to be depriving him of his right to the courts – including the option of suing FIDO/Rogers in a class action or any other suit – in the event of a dispute with the company. Baffled, he feels anxious about giving away his litigation rights, by the default action of paying his next FIDO invoice. The new FIDO agreement has an arbitration clause that precludes consumers from pursuing claims in the courts. “Obviously we agree to nothing of the sort,” says Mr. Akrigg. “But FIDO says that if we do not cancel our service with them before March 2nd, we have accepted their new Service Agreement and have therefore voluntarily renounced our access to the courts.”

And yet, he also feels pressured to accept a contract that he has difficulty living with. “We consider this kind of behavior coercive,” he notes, “It is simply not possible for us to cancel the FIDO service, find another carrier, get the new service going, and notify everyone of our new numbers in the space of two weeks. So not canceling our service before March 2nd most certainly does not mean that we accept the terms of the new agreement.”

It appears the new “Claims” clause, buried at the end of FIDO’s so-called “Updated Service Agreement” is indeed something that Mr. Akrigg and other FIDO consumers need to worry about. According to Iain Ramsay, a consumer law professor at Osgoode Hall Law School, the Ontario Consumer Protection Act has rendered arbitration clauses in consumer contracts that exclude the right of consumers to sue a corporation in a class action unenforceable. The clause has been found to be unconscionable in provincial courts. Indeed the very presence of the clause in a consumer contract in Ontario appears to render both Rogers and FIDO liable to a charge of unfair trade practices. Under the Consumer Protection Act, a corporate practice constitutes an unconscionable representation if "the consumer is not reasonably able to protect his or her interests because of...[an] inability to understand the language of an agreement."

Professor Ramsay is particularly vexed by the disadvantages that consumers increasingly face trying to decipher terms on standard form contracts. “I think that lawyers who write these contracts for businesses should know that consumers will not understand the complexities and subtleties of legalese,” he remarks. “It’s almost unethical to write clauses with these kinds of weasel words in them. It’s like when you appear in court and there’s only one party there; an advocate has a duty to put the other side of the story to the judge. To extent that lawyers are writing these terms for businesses they should attempt to write them in a more consumer-friendly way, that’s fairer to the consumer, taking into account the interest of the consumer as well as the business, and the fact that the consumer is not represented in writing the contract.”

 The government agencies empowered to safeguard consumers from abusive corporate practices, and supposedly committed to a marketplace highlighted by ethical dealings, appear ready to do little to protect FIDO consumers from undue pressure in the Rogers takeover, beyond talking with industry “stakeholders” and talking, and talking and talking.  Asked this week for the provincial government’s view on the emerging controversy over FIDO’s Updated Service Agreement, Sam Colalillo, spokesperson for Marketplace Standards and Services of the Ontario Consumer Protection Branch, replied that agreements such as Rogers’ (and now Fido’s) Wireless Service Agreement “do not comply with the Consumer Protection Act.” he agreements “nclude an arbitration clause that, in our view, is contrary to the act.” When asked what the government is doing to bring Rogers into compliance, since the matter was raised with them by an aggrieved Rogers Wireless customer in November of 2005, Mr. Colalillo said “we have shared our views with the providers directly and at this point we trust that timely steps will be taken to rectify the non-compliant contracts.” Presumably, the Ontario Government will get around to using the powers available to them to force FIDO’s compliance with the law, sometime well after their customers have been unwittingly corralled by the new service agreement and broken to Rogers saddle.  

In the meantime, FIDO customers, like Mr. Akrigg, alert enough to detect the stealthy shift from an environment of “mutual trust” to one of elaborate and obscure contractual terms, feel anxious unprotected, and unsure about the advisability of donning the contractual saddle or bolting for the hills.

Copyright © 2006 Harry Gefen. All Rights Reserved.

Reproduction, in whole or part, without permission is prohibited.

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