B.C. males cannot sue Freedom Cellular over ‘SIM swap’: court docket

A Freedom Cellular buyer who sued the corporate for negligence after a “SIM swap” rip-off price him greater than $63,000 in bitcoin should undergo the corporate’s arbitration course of to pursue his declare, a B.C. court docket has dominated.

Alireza Tahmasebpour and his son Sepehr filed a lawsuit in B.C. Supreme Court docket alleging that the cell phone provider had been negligent when it allowed a fraudster impersonating Alireza to acquire a brand new SIM card with Sepehr’s cellphone quantity in January 2021.

Freedom didn’t file a response to the allegations, as a substitute petitioning the court docket to dismiss the case due to a compulsory arbitration clause in its phrases of service that requires buyer disputes to be resolved exterior of court docket.

In a call revealed Thursday, B.C. Supreme Court docket Justice F. Matthew Kirchner expressed reservations about Freedom’s case, however nonetheless concluded that an arbitrator – not the courts – should resolve who has jurisdiction over the matter. 

‘SIM swap’ blamed for bitcoin theft

Kirchner’s determination explains that Sepehr has had a cellphone related to Alireza’s plan since 2015, when Alireza opened his account with WIND Cellular, Freedom’s predecessor.

Sepehr obtained a brand new iPhone on the Cellular Store in North Vancouver in December 2018, and Alireza accompanied him to make the acquisition. Based on the choice, each males declare that they have been by no means given the phrases of service that included the necessary arbitration clause.

The incident that led to the litigation occurred roughly two years after Sepehr obtained his new cellphone.

Whereas snowboarding at Mount Seymour in January 2021, Sepehr obtained a textual content message from Freedom indicating that the e-mail deal with on his account had been modified, the choice signifies. That was adopted by a second textual content notifying him that his PIN had additionally been modified.

“The message said that if he didn’t make this alteration he was to name a quantity that was given,” the choice reads. “He tried to name that quantity, however his cellphone misplaced service. He thought this was as a result of cell service on Mount Seymour should have been poor, however when he drove house later that night he nonetheless had no service and discovered that his sister’s and his mom’s telephones additionally had misplaced service.”

When Sepehr was lastly capable of get in contact with Freedom the following day, he discovered that somebody had attended a Freedom location and obtained a brand new SIM card together with his cellphone quantity.

“This is called a ‘SIM swap,’ and it’s a scheme the place a fraudster deceives a cellphone firm into swapping a SIM card related to one cellphone to a brand new system, giving the fraudster entry to all of the individual’s cellphone quantity, cellphone name data, and textual content messages,” the choice explains.

Sepehr advised the court docket he believes the SIM swap allowed the fraudster to make use of two-factor authentication to entry his bitcoin pockets, which was emptied of its contents – 1.46049931 bitcoin, then valued at $63,099.84 – the day after he obtained the messages from Freedom whereas snowboarding.

Decide finds firm has ‘controversial case’

In response to the Tahmasebpours’ lawsuit, Freedom utilized for a keep of proceedings below B.C.’s Arbitration Act, which says that such a keep should be granted if there’s an “controversial case” that the arbitration clause applies to the dispute.

“The ‘controversial case’ commonplace is a comparatively low bar and will likely be met until there’s ‘no nexus between the claims and the issues reserved for arbitration,'” Kirchner’s determination reads.

“Any ‘reliable query of the scope of the arbitration jurisdiction’ is to be deferred to the arbitrator.”

The choose concluded that Freedom had an controversial case that the arbitration clause applies, noting that whereas the plaintiffs declare to have by no means been introduced with the phrases of service, the corporate asserted that they have been, and offered “regenerated” paperwork exhibiting a hyperlink to the phrases.

“There isn’t any proof to elucidate what a ‘regenerated’ model of the doc is or the way it was regenerated,” the choice reads. “The regenerated doc doesn’t say (at the very least expressly) that the phrases of service are included into the contract, though maybe which may be implied … it’s at the very least controversial that the hyperlink hyperlink was enough to attract Alireza’s consideration to the phrases of service and, by implication, that they’re included into the contract.”

Kirchner described Freedom’s case as “weak,” however famous that the corporate couldn’t legally take steps – comparable to doc discovery – to strengthen its case as a result of it was petitioning for a keep of proceedings, fairly than responding to the lawsuit.

“It isn’t for me to resolve on this software whether or not the plaintiffs are topic to the arbitration clause however provided that there’s an controversial case that they’re,” the choice reads. “For my part, whereas the proof is weak, there’s at the very least an controversial case that the phrases of service, together with the arbitration clause, apply to Alireza and Sepehr.”

Plaintiffs didn’t show clause was ‘unconscionable’

Kirchner additionally thought-about the plaintiffs’ arguments that the arbitration clause was both rendered void by Ontario regulation – which is the provincial regulation governing the phrases of the settlement – or “unconscionable,” which means it “arose from a relationship of unequal bargaining energy and is considerably unfair to the plaintiffs,” based on the choice.

The choose concluded that the Ontario regulation the plaintiffs referenced lists particular claims that it shields from arbitration clauses, and negligence is just not amongst them.

On the query of unconscionability, Kirchner discovered that the plaintiffs had not offered sufficient proof for him to achieve a conclusion.

He famous that the arbitration clause makes no point out in regards to the prices clients should bear, and that makes it probably susceptible to unconscionability claims.

“It’s virtually sure that the arbitration clause, which accommodates no carve-out for small claims issues, would lead to an arbitration course of whose prices are disproportionately excessive in relation to many forms of claims that customers would possibly deliver,” the choice reads. “Nonetheless, whether or not that’s true within the current case is just not apparent.”

“I discover there’s potential that the arbitration clause may very well be unconscionable relying on the circumstances and notably the prices the plaintiffs may need to pay up-front to begin an arbitration. I’m not glad that the plaintiffs have met their onus of clearly exhibiting unconscionability on this software or that there’s a actual prospect that unconscionability (or, for that matter, the substantive declare for $63,325.99) is not going to be decided if the matter is referred to arbitration.”

Kirchner granted Freedom the keep of proceedings it sought, however declined to award the corporate court docket prices.

He additionally allowed a small portion of the declare – introduced primarily based on B.C.’s Enterprise Practices and Shopper Safety Act – to proceed via the court docket system, fairly than arbitration. The quantity the plaintiffs claimed below that regulation was simply $150.