Bell Wins Canada Class Action Lawsuit Over Prepaid Cells

cellphoneThis week, Ontario's top court gave Bell Mobility, who manages prepaid cellular accounts for Virgin Mobile Canada and Solo Mobile, a win in a certified class action lawsuit brought by consumers who said that the company had improperly applied expiration dates to their accounts.

Regulations under Ontario's Consumer Protection Act prohibit expiration dates and disregard any expiration dates that are contained on cards. The motion judge interpreted the definition to require an actual gifting of cards, from the purchaser to a third party and that the prepaid cellular credits were generally purchased for personal use. In the alternative, the Company could rely on an exemption from the expiration date prohibition for cards that only cover one specific service or product. While the Court of Appeals found these persuasive, the Court ultimately relied on a different analysis: that the agreement may limit the period for service even in light of the prohibition of expiration dates on gift cards.

In this case, the purchased credits were for a set period of time, between 30 and 365 days, depending on the specific credit purchased. The credits could be activated at any time after purchase and then expired at the end of the purchased period. The motion judge found that “[a]t no time during the class period did class members receive anything less than the full period of wireless service for which they had contracted to receive.” The Court said that to find otherwise would require the Company "to keep the wireless service and number available to the customer indefinitely, a patently unreasonable outcome."

The Court also found persuasive an intervening action by the Canadian Radio-television and Telecommunications Commission ("CRTC") which implemented a Wireless Code, effective December 2, 2013. The Code required carriers, like Bell Mobility, to permit users to "top up" accounts for up to seven days following the expiration date. This top up practice was previously required before the expiration date to keep credits active after the initial expiration date. The CRTC found that this balanced the interests of the wireless carrier and consumers, including those in this lawsuit. The CRTC, in its decision to implement the seven day policy, said specifically that it was not reasonable to require the wireless carrier to hold the accounts open indefinitely. Bell Mobility amended its agreements, in November 2013, to reflect this new requirement from the CRTC.

This decision by the Ontario Court of Appeals likely puts an end to the class action lawsuit, estimated to be valued at nearly $200 million Canadian/$152 million US.

See Also:
SoulCycle Gift Card Lawsuit Moves Forward
Manitoba Nixes Gift Card Inactivity Fees
Prepaid Card Planning Goes Beyond Legal Analysis