The Consumer Council has submitted an application to certify a class action lawsuit against three cell phone companies in the amount of NIS 400 million.
The complaint was filed against Cellcom, Pelephone and Partner for collecting money from customers for content services without their consent. In the past, representative plaintiffs who filed applications were unable to successfully complete the procedure, and so the Consumer Council has volunteered to assist the general public who have been harmed over the years and have been charged without their knowledge and consent.
The lawsuit deals with a widespread phenomenon that existed for years (at least until the reform carried out by the Ministry of Communications in 2011), whereby cell phone companies collected money for "content services" (such as astrology, jokes, trivia games and the like), without obtaining prior consent from the consumer as required by law and in accordance with the licenses of the cell phone companies. The customers did not know the provider of the content for which they were charged, nor did they knowingly agree to the terms of the transaction. Further, the cell phone companies did not check whether the customers explicitly agreed to purchase the specific service(s) for which they were charged, and used the payment method provided by customers (to pay their cell phone bill) as a kind of "credit card" to collect money for other parties as a supplier of the aforementioned content.
Customers’ cell phone bills did not specify the nature of the content service for which they were charged; the bills only stated that the charge was collected for "Unicell services" or "Teleclal services" or "Cellact services" or "Shamir Systems" services in the name of the clearing companies (the aggregators), without the content providers’ details. When customers contacted the cell phone companies to dispute charges in their bill made without their consent, the cell phone companies attempted to absolve themselves from responsibility, claiming that they did not know what content service was being charged, as they were merely a "channel" or a means of collection. When customers contacted the clearing company or the content providers, they were referred back to the cell phone companies.
In addition, cell phone companies took a high percentage (as much as 50%) of the amounts collected from customers, and the remainder was distributed between the aggregator and the content provider, with the aggregator giving the cell phone companies full (100%) indemnity against lawsuits filed by customers. Therefore, the lawsuit claims that since the cell phone companies collected high rates and received a letter of indemnity from the aggregator, they did not merely serve as a "channel" but were a very significant factor in the deal that enabled the orchestration of the entire cell phone industry. By comparison, credit card companies charge 1% or less of the value of a transaction for collecting services.
According to the Consumer Council, despite the fact that the Ministry of Communications made it clear to cell phone companies in 2007 that they were acting unlawfully by not verifying the customer’s consent to the transaction and its terms before billing them, the cell phone companies continued to use the cellular device as a kind of "credit card" to collect money for third parties without obtaining the consent of the customer. As a result, the cell phone companies yielded huge profits at their customers’ expense by pocketing, as mentioned, a high percent of the money they collected on behalf of the content providers.
In 2011, after numerous requests from the Ministry of Communications that cell phone companies stop the phenomenon were to no avail, the cell phone operator license was modified and the option to charge customers for content services was blocked by default, unless the customer explicitly requested to be charged for these services. Following the license modification, the content services industry went into a slump and almost ceased to exist.
When the same phenomenon occurred in the United States, dubbed Mobile Cramming, the FTC’s Bureau of Consumer Protection took legal proceedings against two telecommunications companies, AT&T and T-Mobile, each of which paid over $ 100 million in compensation and fines.
In November 2018, as part of a class action lawsuit filed against Partner, a class action lawsuit was approved only for the funds Partner collected for one specific content provider, and not for all funds collected for all content providers.
The Consumer Council’s position is that given the severity of the conduct of the cell phone companies, the extent of the phenomenon and the high volume of customer complaints received (both in the Consumer Council and the Ministry of Communications), a class action should be filed against all the cell phone companies for all content services, in a format that the Council thinks will involve applying the comments of the Supreme Court in its judgment on Partner, and in a way that the Council believes would justify the approval of the claim as a class action in the format in which it is currently being filed.
The Consumer Council's CEO, Ofer Merom: " Representative plaintiffs who have previously submitted applications have not been able to successfully complete the procedure, and so the Consumer Council has volunteered to assist the general public who have been harmed over the years and were unknowingly charged by the cell phone companies for services they did not request."