Misleading Sales Practices Hearing

What information did the CCTS share at the CRTC’ Sales Practices Hearing?

October 22, 2018

 

The CCTS was invited to provide information at the CRTC hearing on sales practices used by telecommunications service providers.

The CCTS hopes to help set the stage for the discussions about current consumer protections respecting retail sales practices, and whether and how to strengthen or expand those measures.

Founded in 2007, the CCTS is Canada’s national and independent organization dedicated to resolving customer complaints about unregulated telecommunications and television services, fairly and free of charge, from approximately 242 service providers, providing service through about 360 brands.

We handle thousands of complaints each year, successfully resolving over 90 per cent of them. Helping customers resolve their complaints is our raison d’être. We do not regulate our participating service providers and tell them how they should operate. What we do is accept eligible complaints, according to a codified and Commission-approved mandate, review those that are unresolved according to our standard of review, and try to and facilitate a resolution, and when necessary impose a remedy.

What type of complaints do we deal with?

We deal with contract disputes, billing issues, service delivery and credit management issues, among others.

Customer satisfaction with the CCTS is high. We often hear that the only way a customer was able to get an issue resolved was to come to us. Of course, we don’t please all parties all of the time, but we listen to feedback and are committed to continuous improvement.

We track and report on our activities, which we do in Annual and Mid-year reports, and in CRTC proceedings like this one. Because of our process which results in most complaints being resolved without us having to assess the provider’s conduct, our data reveals just the tip of the iceberg in terms of what may be happening more broadly.

We also administer three CRTC-developed codes: The Deposit and Disconnection Code for residential phone service, the Wireless Code for wireless service, and the Television Service Provider Code, for home TV service.

What is our focus?

First, what we see to be a leading cause of customer frustration, specifically, is a mismatch between customer expectations from the sales process, and subsequent customer experiences. In other words, a mismatch between what customers think they’re going to get, and what they actually get.

Second, we set out a series of considerations about the CRTC’s current consumer protection framework, and our role in it, to assist in considering whether to recommend additional measures

What is the leading cause of customer frustration?

We sampled 441 complaints, from wireless, internet, home phone and TV customers, selected from the categories in which complaints about sales practices normally appear – breach of contract, non-disclosure and misleading terms, material contract change and incorrect charge.

In 53% of complaints, the customer complained about a mismatch between what they were expecting or informed when they subscribed to service and their subsequent experience with the service.

This mismatch between expectations and outcomes often manifests itself in complaints about billing charges, service delivery or usage, and changes by the service provider to any of these that take the customer by surprise.

What are the three main scenarios in which we see this mismatch?

In 48% of the complaints, there was a conflict between what the customer said they had agreed to, and what was actually delivered.

In 41% per cent of the complaints, the customer claimed not to be aware that their provider’s Terms included a right to make unilateral changes to price or service, either because it was not enclosed, or because the sales person promised a price or service for a fixed period.

In 11% per cent of the complaints, customers alleged that they were not aware of conditions attached to promotions, such as time-limits, or ongoing eligibility requirements, such as having to subscribe to certain services to maintain the promotion.

This is consistent with the comments we have frequently repeated in our Annual Reports identifying non-disclosure, misleading information, and incorrect billing charges as top customer issues.

How to help protect consumers from the “mismatch phenomenon”?

It is fair to say that customers generally don’t like these kinds of surprises, and that they want some level of predictability in what they pay, and what they receive.

Regarding whether new rules are necessary, some proponents say new rules are needed, and some appear to suggest the rules already exist, they just need to be codified. The CCTS sees how codifying minimum standards of behaviour in codes of conduct, or in a new code, may be a way to improve all parties’ understanding of what is expected.   However, as a neutral party, we take no position on whether there should be new rules.

In the event the CRTC recommends new rules which the CCTS would administer, we offer a few considerations:

In the event that the mismatch phenomenon is the result of non-disclosure or ineffective disclosure, rules requiring the disclosure and documenting of certain information, at the point of sale, and then the preservation of records, could facilitate our handling of these situations. Trial periods may be another measure for mitigating mismatches.

The current consumer protections are not consistent across all lines of business, and any consideration of new measures should consider whether more symmetry would assist all stakeholders better understand the ground rules.

Our role is to resolve disputes between customers and providers, and we do it well, resulting in a high rate of timely resolutions without the need to fully investigate every complaint. Any changes to our mandate, which we hope to be consulted on, should not compromise that, nor cause overlap with other publicly-funded bodies.

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