Canada Chargeback Penalties

Toronto – Improvements in controlling chargebacks has been a major factor that has made Canada an attractive audiotext market for domestic and international content providers. Many information providers are experiencing chargebacks at only one-third of the level that they used to. But, there is still work to be done.

Advanced Telecom Services, its agents, and fellow service bureaus continue to work to improve the CRTC tariffs that regulate the 900 number industry in Canada. Progress has already been made. For example, ATS was first forced to charge $4.74 per chargeback recovery fees as a penalty imposed by the Canadian carriers for handling a chargeback. Today, that rate has been reduced to $2.98 thanks to the combined efforts of several service bureaus.

There is, however, considerably more work that needs to be done. When reading the tariff that permits the carriers to impose a chargeback penalty to the service bureau, it certainly appears to us that such chargebacks should be on a per bill basis and not on a per call basis, but, not surprisingly, that's not the way the LEC's have interpreted it. This is very important, as chargebacks tend to be requested by those who have made a significant amount of calls. Rarely does a consumer call in to request a chargeback on a single phone call. Moreover, it is equally rare that a consumer will request a chargeback on one 900 number while agreeing to pay an undisputed call to a different 900 number service.

The current system is especially unfair to service bureaus and information providers because carriers actually have a perverse financial incentive to grant a chargeback in order to collect the chargeback penalty fees. In fact, in the case of a Call TV show, for example, where calls tend to be low cost ($1 to $2), a LEC can actually earn more on the chargeback fees than on collecting on the 900 phone calls themselves! By changing the rules to allow only one chargeback penalty fee per bill, instead of per call, most of such suspicions of foul play would be removed.

Advanced Telecom Services remains hopeful that the Canadian regulators will see that its chargeback penalty should be imposed on a per bill basis and not on a per call basis as it currently is imposed. Such a fair and acceptable change would result in an ever increasing use of premium rate services in the burgeoning Canadian 900 number market which has proven in the last two years to be one of the best premium rate service markets in the world.

Bob Bentz is president of Advanced Telecom Services. ATS has operated a Canadian 900 number service bureau since the origins of the 900 number industry in Canada in 1993.

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