Last updated: October 2, 2012 1:28 am
Investigation finds Fido agents knowingly signed underage students to cellphone contracts
VANCOUVER (CUP) — A Ubyssey investigation has discovered evidence of salespeople from Fido Mobile compelling underage students to sign cell phone contracts using false ages.
Through interviewing students who signed up for Fido cellphones at two on-campus events and at an off-campus Fido store frequented by students, as well as reporting undercover from both locations, it appears that asking 18-year-old students to fudge an extra year onto their ages may be a common practice for dealers at the cell phone service provider.
“We’re just going to make [you] one year older,” a Fido saleswoman in the Student Union Building (SUB) at UBC told a Ubyssey reporter inquiring as a potential underage customer.
B.C. law prevents minors under the age of 19 from being legally bound by contracts. Additionally, law professors interviewed about Fido’s practices argue that this practice could possibly constitute fraud. Presently, no governmental agency appears to be responsible for enforcing the behaviour of cell phone providers.
Fido paid $5,000 for the exclusive sponsorship of two events during Jump Start, a two-week orientation event for first-year international students at UBC in August.
At a parents’ reception and a student dinner in mid-August, Fido signed many students up for their first Canadian cell phone plans. Fido also had a table in the SUB during the first week of classes, while Skynet Wireless, a Fido-authorized dealer, had booths in the first-year residences during the first week of school.
Several of the underage students who spoke to The Ubyssey found the lines at those events too long, and signed up at the Fido store on 519 West Broadway, a bus ride away, instead.
At all of these locations, salespeople reportedly offered to let 18-year-olds enter into multi-year contracts.
T., an 18-year-old Arts student from Wisconsin, said she visited the Broadway store with her mother, who T. assumed would need to sign the contract for her.
The Ubyssey is only identifying underage students interviewed for this article by the first letters of their names to avoid putting their contracts in jeopardy or exposing them to legal liability.
T. described standing at the counter while a Fido salesperson read off her passport, activating her account over the phone.
“They were reading it off and they said April 22 … 1993,” said T., whose passport attests that she was actually born in 1994. “And my mom and I both jumped up and we were like, ‘What? That’s not my birthday.’ And the person behind the counter told us, ‘Stop, let it go.’”
T. said the salesperson later offered to correct her birthday but discouraged it, saying it would make things more difficult.
A legal grey area
According to UBC law professor Bruce MacDougall, B.C.’s Infants Act declares that any contract signed by a minor is unenforceable on the minor, at least until he or she reaches the age of majority. In some cases, this can mean the contract stays unenforceable even after that minor’s 19th birthday.
MacDougall said that even though an 18-year-old signing a cell phone contract isn’t actually bound by its terms, many such minors feel compelled to follow them anyway.
“A lot of people actually abide by contracts that aren’t actually binding on them,” said MacDougall. “There are all sorts of contracts that you don’t have to abide by, but people do because they’re led to believe that somehow they’re binding.”
As well as believing they are locked into a cell phone plan’s monthly fees, underage students who have signed up with Fido also run the risk of having their credit damaged, MacDougall explained.
Many questions about the legality of Fido’s practices, and who is in charge of enforcing those laws, remain fuzzy. There is little regulation in the Canadian cell phone market, and it’s unlikely that the company would face any consequences for signing up underage customers unless the customers themselves complain.
In 1996, the federal telecommunications regulator, the Canadian Radio-television Telecommunications Commission (CRTC), decided that there was enough competition in the cellphone market that federal oversight was no longer needed.
“From that point onwards, wireless providers did not have to get the CRTC to approve their rates, terms and conditions of service,” said Kirsten Embree, a part-time professor at the University of Ottawa and former legal counsel at AT&T Canada. AT&T Canada previously held an ownership stake in Rogers Wireless, which has been Fido’s parent company since 2004.
Embree continued, “The CRTC has never really focused specifically on the age at which contracts are entered into ... I think there’s an implicit assumption that contracts will be with individuals who are over the age of majority.”
When The Ubyssey went undercover to the Fido authorized dealer at 519 West Broadway and began the process of signing up for a new cellphone plan, we discovered that the rules were easy to flout.
“Legally, it’s 19,” a salesperson at the Broadway store told this 18-year-old Ubyssey reporter, when asked if someone who is 18 years old can still hold a regular cellphone plan. “But I can make it work,” she added.
She indicated that she would be using a false age when entering the account information into a Fido database. When asked why it was necessary to put down a false age, she explained, “It’s just with Canada ... once you sign up, they want you to take responsibility of the account. So they want you to be older.”
It isn’t strictly illegal for people under the age of 19 to sign a contract; the law only says that while people are still minors, they can’t be bound by the contract’s terms. Recording a customer’s age incorrectly as 19 doesn’t make the contract enforceable, but it does make it look like salespeople are complying with Fido’s corporate policy when they aren’t.
Sara Holland, a spokesperson from Fido’s parent company, Rogers, said that the company’s policy was to only allow people who are 19 years and older to hold contract-based cellphone plans.
“Students may have different experiences going through [authorized dealers] when it comes to price,” wrote Holland in an email. “What should be consistent across the board, however, is our policy on age and account activation.”
Rogers’ policy states that proof of age must be provided when a customer opens an account.
“Customers under age of majority are not eligible to act as a financially responsible party (i.e. account holder),” wrote Holland.
While Holland said Rogers does not disclose employee compensation, several online sources, including a job description on the Rogers website, indicate Fido salespeople are expected to meet sales goals. On Glassdoor, a website where employees post reviews of the companies they work for, someone describing themself as a Rogers employee in Ottawa said commissions were tied to “impossible targets.” The pressure of sales goals would provide an incentive to violate corporate policy and sign up underage customers.
In 2008, the Toronto Star reported that Fido was shifting its business model from “one focused on attracting young urban professionals to one targeting price-conscious first-time buyers.”
“Price-conscious first-time buyers” might describe the 700 or so international students at Jump Start, most of whom were under 19, as well as many of the UBC students encountering Fido’s tables in the SUB and at campus residences during the first week of school.
Holland said Fido’s strategy during Jump Start was to sign up 18-year-olds for contract-free prepaid plans, and to restrict contract-based plans, which usually cost less on a per-minute or per-megabyte basis, to those 19 years and older.
She added that the goal of the Jump Start sponsorship was to attract international students in general, not specifically first-year students, though the Jump Start program is exclusively for first-year students.
Is this fraud?
According to Holland, there aren’t many checks on whether Rogers’ age policy is upheld. Age is only verified by the salesperson at the point of sale, Holland said. She said date of birth was kept on file as part of the mandatory credit check for contract plans. Holland said she wasn’t able to comment on whether Rogers or Fido monitor or review the contracts signed up by their authorized dealers.
Signing up minors is a risky business practice, said law professor MacDougall. “I can’t see how if [Fido salespeople are] the ones who are encouraging people to do this, how they would have any leg to stand on in trying to require the people to be bound by the contract,” MacDougall said.
He said that while the contract is unenforceable on the minor, it stays completely binding on Fido’s side. “Whatever they [minors signing the contract] were promised, they can get,” MacDougall said.
J., an 18-year-old Arts student from California, described a Fido salesman’s instructions after he signed up for a contract cellphone plan. “What he said was that, after I turned 19, to call the company and inform them of the error that was made on the sheet because I checked my own information and saw that they put my birthday in wrong.”
Under the Infants Act, if an adult ratifies a contract they signed while underage, then it becomes legally binding for both parties. Ratifying a contract can be as simple as the adult informing the other party, in this case Fido, that they are now old enough accept the terms of the contract and wish to do so.
“I have a suspicion that what they may be doing is trying to turn [a minor informing them about an 'error' in their age] into a ratification,” MacDougall said.
MacDougall added that if a student does not repudiate the contract, either verbally or simply by stopping payment, within one year of turning 19, the contract is considered to be ratified automatically.
MacDougall was clear in in his criticism of the Fido salespeople’s practices.
“In terms of contracts, it almost certainly would be an illegal contract,” MacDougall said. A contract becomes illegal when it violates a public policy or piece of legislation, he explained. In this case, getting a minor to sign a cellphone contract attempts to skirt laws meant to prevent the exploitation of minors.
Professor Joel Bakan, who also teaches contract law at UBC, took an even stronger stance. Encouraging minors to lie about their age “in order to avoid legal restrictions in British Columbia is … highly problematic, akin to fraud, as there is a deliberate attempt to profit through deliberate deceit,” wrote Bakan in an email.
“The company’s actions are certainly unethical and likely unlawful.”
UBC professor Joost Blom, who is familiar with both contract and fraud law, said it was unclear whether it constituted fraud to lead underage students to believe the contracts they signed were legally binding. However, Blom certainly thought the process was deceptive.
“Falsely telling someone what their legal rights are isn’t necessarily fraud,” Blom said, adding, “It’s not an easy matter.”
Legal hot potato
With the CRTC no longer regulating cellphone companies, it’s unclear who is in charge of ensuring they follow ethical guidelines. “We don’t regulate contracts like that; I know, for sure, that is provincially regulated,” a CRTC spokeswoman said, saying that The Ubyssey should instead contact Consumer Protection B.C.
Consumer Protection B.C. — the provincial agency charged with regulating business practices, including contracts — said the matter fell outside of their purview because there are federal bodies charged with overseeing the telecommunications industry. Those bodies are the CRTC and the Commissioner for Complaints for Telecommunications Services (CCTS).
The CCTS is a federal agency that addresses consumer complaints against phone companies. However, a representative said they cannot intervene unless a consumer brings a personal complaint to their attention, and even then, they can only act if a cellphone company is explicitly violating its own corporate terms of service. Fido’s terms of service make no mention of age.
Most of the 18-year-old students who signed contracts with Fido said in interviews with The Ubyssey that they were happy with their phone service, so it’s unlikely that any of them will be complaining to the CCTS anytime soon.
“The guy who was working at the [Fido] desk was really cool,” said J., the student from California. He said upon learning his age, the Fido salesman told him, “I know this is the situation, that you are a student, so I’m going to help you with this.”
The CCTS told The Ubyssey that Canada’s Competition Bureau, which enforces various business regulations, might have some jurisdiction over this matter. This summer, the bureau launched a class-action lawsuit against wireless companies Rogers, Bell and Telus for allegedly misleading customers about fees.
However, on the issue of minors signing contracts, Competition Bureau spokesman Bray Park said, “It may be more prudent to contact the Royal Canadian Mounted Police, or a local law enforcement authority.” The RCMP did not reply to repeated requests for comment and the Vancouver Police Department does not have jurisdiction over UBC’s campus.
When told that the federal agencies declined to address the issue, Consumer Protection B.C. spokesman Manjit Bains said the agency would follow up with the CRTC and CCTS. However, after Bains checked with both those bodies, he said he had no new information. A Consumer Protection B.C. representative said they would look to raise the issue during their periodic discussions with the government.
In the case of Fido’s Jump Start sponsorship, UBC international student advisor Michelle Suderman said Jump Start relied on the government to ensure sponsors followed ethical business practices.
Randy Schmidt, associate director of UBC Public Affairs, elaborated on the vetting process.
“Jump Start staff put out a request of interest for their event ... reviewed them for issues like fit, whether they met a student need, service [and] affordability,” Schmidt wrote in an email. “Fido was chosen as a good fit.”
Schmidt continued, “We are not aware of any complaints or concerns about their presence at the Jump Start [events].”
The Alma Mater Society (AMS), UBC's student union, provided little information about how they vetted vendors in the SUB, how much they charge to rent vendor tables, or which authorized dealer was representing Fido at the table in the SUB during the first week of school. The AMS referred any legal questions about vendors’ actions to the RCMP and said they had not heard from any students unhappy with the Fido booth’s actions.
As for Skynet Wireless, the Fido-authorized dealer present in the first-year residences during the first week of school, Schmidt said Student Housing and Hospitality Services enters into agreements with vendors every year who pay a daily fee. Schmidt added that Skynet had been on campus during the first week of school since 2010.
When this Ubyssey reporter went undercover to try to sign up at one of the Skynet booths, a salesperson said that no lying about age was necessary. The Skynet salesperson said they could sign up anyone who “had credit,” which they said could be obtained by purchasing a prepaid credit card. Anyone 16 years of age or older can get a pre-paid credit card in Canada, though most such cards do not actually contribute to the user’s credit history.
Tightening the leash
Rogers spokeswoman Holland said Rogers would be investigating these incidents, and she said they would take steps to make sure this practice doesn’t keep happening. “It is hugely concerning to us if students are being signed up in violation of our policy or being encouraged to be dishonest about their ages,” she wrote in an email.
With an eye toward providing more oversight of cellphone companies, Ontario, Manitoba and Nova Scotia have all passed legislation regulating cellphone contracts’ terms and conditions over the past year. Frustrated by the piecemeal nature of these new provincial regulations, Rogers and Telus have petitioned the CRTC to create a national consumer code regulating cellphone contracts, with Rogers going as far as to submit an actual code to the CRTC for consideration.
“Everybody seems to play a little bit of a different role,” said Bains, the Consumer Protection B.C. spokeswoman. “There’s definitely room for strengthening the oversight of cellphone contracts.”