What are text short codes?
Text short codes are a by-product of the text message segment of the wireless industry. Short codes are numbers that consumers can send a text message to in order to participate in an automated application. These can include promotions, contests, products such as ringtones and wallpaper, and "jokes of the day". Consumers send a text message to the short code and are charged an initial fee for sending and receiving messages. They are then enrolled in a subscription through the short code. The short code number continues to send the consumer text messages, while charging them a subscription fee through their wireless carrier. To opt-out of the subscription, the consumer must send a text with the word "STOP" to the short code. They can also receive customer service by texting the word "HELP".
The Issue
The issue with short codes is that in advertisements, short code companies are not clear with how one can opt-out of the subscription or that there is even a subscription and associated charges involved. They usually include this information in small text that appears only briefly at the bottom of the advertisements. Short code advertisements often target the 12-15 year old age market, a group that are hardly savvy consumers and who often do not read legal fine print.
The goal for our Buyer Beware project was to examine if short code companies are misleading consumers by not properly disclosing subscription fees and other charges. We went about our research from several angles. We looked at the regulations behind the short code industry and the legality of subscription fees. We then took a look at short code scams. Our third angle was actually subscribing to a short code and seeing how the subscription works. Finally, we surveyed 50 high school students (the target market) to uncover their knowledge of short codes and fees.
This research led us to one final conclusion to present to you, the consumer:
AVOID TEXT SHORT CODES!
Regulations
The one thing that became clear through our research was that while text short codes follow industry regulations, they are often misleading and often vague about subscriptions and the charges that are involved. As a savvy consumer, it is best to avoid short codes because there is a good chance that you will receive a startling wireless bill at the end of the month. If you are intent on using a text short code, make sure that you read the fine print and are aware of subscription fees and how to opt-out of the subscription.
As I mentioned earlier, we came to this conclusion by looking at the issue from several different angles, starting with the regulatory side of short codes. They are regulated by the Canadian Wireless Telecommunications Association (CWTA) and are required to disclose subscription fees and an opt-out method. Marc Choma, the Director of Communications for the CWTA had this to say about short code regulations:
"All short code subscriptions are strictly permission based by the consumer. As far as advertising, all prices for short code programs must be present in any call-to-action advertising, as well as in the short code message itself.”
The CRTC decided that CWTA regulations were sufficient for the short code industry when it shot down a petition from L'Union des consommateurs of Quebec, that called for the CRTC to regulate the industry.
The research indicated that short code regulations are fairly strong in this country. They are not consumer friendly however, because they do not regulate the size or length of the fine print in advertisments. This can cause consumers the most hassles.
Scams
We then took a look at short code scams. Short code scams do exist in other countries, but in Canada, CWTA regulations make them a non-issue for wireless consumers, as unsolicited texts are against regulations. The issue is that people do get scammed by not reading the fine print in advertisements. They then are charged fees through their wireless carrier and feel they have been scammed when they see large fees that they don't understand. As always, the moral here is to always read the fine print.
Short Code Enrolment
Emmanuel enrolled in several short codes to see exactly how short code subscriptions work. First, he subscribed to a "Celebrity Soulmate Calculator". The website advertising was clear in identifying that the cost of a text was $1.25. After discovering that his celebrity soulmate was Natalie Portman, Emmanuel soon found out that he had been enrolled in a subscription that sent him a daily horoscope at the cost of $1.25 per text. This was not mentioned at all on the website. Emmanuel used the "STOP" function to opt-out because he was aware that was how to get out. This function was only mentioned briefly in the first text that he received from the short code. This short code obviously targets teenagers and if they did not catch that information, they would not know how to opt-out at a later time.
The second subscription Emmanuel enrolled in was from local radio station, Curve 94.3. They were advertising on a billboard to text if you like the band Pearl Jam or not. At the bottom of the billboard was the fine print, which was so small that it was completely illegible to passing motorists. The fine print states that each text costs $0.50. The ad campaign encourages texters to send up to ten texts a day. That would work out to a lot of money on a monthly wireless billing statement.
Again, the evidence pointed to the fact that consumers must always read the fine print.
Survey and Results
After examining several short code marketing campaigns, we came to the conclusion that they generally target teenagers. So Christa hit the streets to survey teenagers on their knowledge of short codes and fees. 50 surveys were completed by teenagers in the 13-15 age group. Here are the results:
• 35 out of 50 surveyed do not read fine print.
• 17 out of 50 said that you must be over 18 years old to use the service. Out of the 17, 10 had used the service anyway.
• 20 out of 50 answered “no” when asked if there was a charge for the service.
• 7 out of 50 answered correctly on question #3-How many times are you charged? The correct response being, “until you tell the company to stop charging”.
• 21 out of 50 have subscribed to the service.
Here are some quotes taken directly from answers to the survey:
“Have you had any experiences, good or bad, with the service?”
“Bad because my mom got mad and I got grounded.”
“Once, and it was ok but I didn’t know how to stop it.”
“Do you read the fine print on the ad? If so what does it say?”
“It’s too small to read.”
“Try to-Too small.”
“I don’t read fine print.”
“Wouldn’t know it’s too fine.”
“No, I never have time to.”
This survey indicates that teenagers are major users of text short codes, but have little knowledge of the fees and subscriptions that are involved. Reading the fine print is not a concern for them.
Again, all evidence points to the fact that consumers must always read the fine print.
After conducting this research, we came to an enlightening conclusion, which I'm sure you can figure out as well. Always read the fine print!
We recommend that consumers avoid using text short codes because if you do not read the fine print and are not aware of subscriptions and the associated fee, a large monthly wireless bill is likely to be awaiting you.
UPDATE: Emmanuel discussed the results of our project with supervisors at the MTS call centre. They were extremely impressed with our conclusions as educating consumers on short code avoidance will help to minimize the call volume they receive related to short code disputes.
As well, two supervisors from the Wireless Sales & Service department of MTS Allstream Inc. have informally requested a copy of our project, as the information we gathered would be helpful in understanding short code regulations, not only for their customers, but also for their employees taking calls.
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