The Canadian Radio-television and Telecommunications Commission (CRTC) has determined that 36-month device financing plans violate the Wireless Code.
In July 2019, several carriers started offering new device financing plans, which give customers the option to pay for a device in monthly instalments until the device is fully paid for over a certain period of time.
Once carriers such as Rogers and Telus started offering 36-month device financing plans, the CRTC asked the providers to stop offering them until the commission completed its review and determined whether the plans were considered consistent with the Wireless Code.
With this latest decision, the CRTC has determined that the plans are not consistent with the Wireless Code. It’s worth noting that all device financing plans must comply with the Wireless Code to ensure consumers are fully protected.
Wireless service providers have been given one month to update their contracts and documentation to reflect this latest decision.
“One of the core principles of the Wireless Code is the ability of customers to take advantage of competitive offers in the marketplace. We want to ensure that device financing plans are not being used to keep customers with their current provider at the end of their service contract,” said CRTC chairperson Ian Scott in a statement.
The Wireless Code states that providers that sell phones with an upfront subsidy have to make up the cost of the device in equal payments over 24 months and are not allowed to charge a cancellation fee afterwards.
A three-year financing option could force customers to pay off their phones immediately if they switched over to another carrier after two years.
“The Wireless Code requires early cancellation fees to be reduced to zero within 24 months. Within the 24 months, you may need to pay an early cancellation fee and it will be calculated according to the formulas set out in the Wireless Code, the CRTC noted in its decision on March 4th.
The CRTC has also asked the Commission for Complaints for Telecom-television Services (CCTS) to separately track complaints regarding device financing plans.