SERVICES
I offer a full range of Canadian advertising and marketing law services in relation to print, online and new media marketing and telemarketing. My telemarketing law services include advice in relation to:
- The deceptive telemarketing sections of the Competition Act
- The misleading advertising sections of the Competition Act
- British Columbia consumer protection legislation
- British Columbia Telemarketer Licensing Regulation
- National Do Not Call List (CRTC)
- Compliance policies and programs for telemarketing companies
- Preparation and review of telemarketing scripts
- Review of print and online/Internet marketing materials
- Regulatory and Competition Bureau investigations
- Criminal and civil searches and document production requests
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CANADIAN TELEMARKETING LAW
“In a move that I hope is indicative of an increased awareness of the damage deceptive practices do to our economy, the Ontario Superior Court also recently imposed a record $15 million fine against a Toronto company for operating a business directory scam targeting Canadian and U.S. businesses.”
(Commissioner of Competition, Melanie Aitken, remarks
to the 2010 CBA Fall Competition Conference)
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“Today, the Canadian Radio-television and Telecommunications Commission (CRTC) concluded a five-month investigation and took enforcement action against 85 companies for breaking the telemarketing rules. This investigation marks the latest step in the CRTC’s efforts, using a variety of enforcement strategies, to reduce unwanted calls made to Canadians.
The CRTC issued citations to 74 telemarketers who had failed to register with the National Do Not Call List operator or subscribe to the National Do Not Call List. Notices of violation were issued to an additional 11 companies for more significant breaches. Administrative monetary penalties totalling $41,000 were imposed on those 11 companies. In setting the penalty amounts, the CRTC recognized that many of these telemarketers are small businesses.”
(CRTC, News Release, April 2, 2012)
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Competition Act
The federal Competition Act makes it criminal offences to engage in deceptive telemarketing or to engage in telemarketing unless certain required disclosure under the Act is made.
Under section 52.1, “telemarketing” is defined as “the practice of using interactive telephone communications for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest”. In its telemarketing enforcement guidelines (Telemarketing – Section 52.1 of the Competition Act), the Competition Bureau has taken the position that “interactive telephone communications” does not include fax, Internet or automated pre-recorded messages but are limited to live voice communications between two persons.
Under the Competition Act’s deceptive telemarketing provisions, it is a criminal offence to: (i) make materially false or misleading representations; (ii) operate a contest where the delivery of a prize is conditional on prior payment or certain disclosure is not made (regarding the number and value of prizes, area or areas to which they relate and odds of winning); (iii) offer free or below cost products, as consideration for supplying another product, unless disclosure is made of the fair market value of the first product (and any restrictions, terms or conditions relating to its supply); or (iv) offer products for sale grossly in excess of their fair market value where their delivery is conditional on prior payment by buyers.
The Competition Act also requires that certain disclosure be made by telemarketers both at the beginning of a call and sometime during a call. For example, the Act requires that the following information be disclosed by telemarketers at the beginning of a call: (i) the person on whose behalf the call is being made; (ii) the nature of the product or business interest; and (iii) the purpose of the call.
Like the general misleading advertising provisions of the Competition Act (sections 52 and 74.01), the general impression is relevant to determining whether a claim made by a telemarketer is materially false or misleading. Unlike misleading advertising generally, however, if misleading claims are made in the context of telemarketing, the Competition Bureau does not have the discretion to proceed civilly, given that the only deceptive marketing provisions are criminal offences under section 52.1.
Deceptive telemarketing is punishable, on indictment, by unlimited fines (i.e., in the discretion of the court), imprisonment for up to 14 years, or both (and on summary conviction, to fines of up to $200,000, imprisonment for up to one year, or both). There is also no “mens rea” (i.e., intent) required for deceptive telemarketing, in that the offences under section 52.1 are strict liability offences. As such, proof of the act, regardless of any guilty mind (or lack of), is sufficient to make out an offence. There is, however, a due diligence defence available under section 52.1.
The enforcement of the telemarketing provisions of the Competition Act has been an enforcement priority for the Competition Bureau in recent years, although for the most part aimed at companies and individuals engaged in true “scams” not legitimate marketers who may have committed technical violations of the Act. Having said that, a number of individuals have been charged, convicted and imprisoned in connection with the marketing of a broad range of products, including business directories, office supplies and credit cards.
The Competition Bureau has also issued enforcement guidelines on deceptive telemarketing: Telemarketing – Section 52.1 of the Competition Act (2009).
The Competition Act is not, however, the only relevant legislation applicable to telemarketing. In this regard, provincial consumer protection legislation can also be relevant as well as the National Do Not Call List under the federal Telecommunications Act.
Provincial Consumer Protection Legislation
In addition to federal law, in some provinces consumer protection laws may also apply to telemarketing activities. For example, in British Columbia, the Telemarketer Licensing Regulation (the “Telemarketer Regulation”) under the British Columbia Business Practices and Consumer Protection Act (“BPCPA”) can apply to telemarketing (including licensing, reporting, record-keeping and conduct requirements).
Generally speaking, all telemarketers conducting business in British Columbia (or contacting British Columbia consumers by phone or fax) to enter distance sales contracts are subject to the Telemarketer Regulation. The Regulation also applies to telemarketers that contact BC consumers to solicit consumers for contributions on behalf of 3rd party suppliers – for example, 3rd party fundraisers.
“Distance sales contracts” are defined under the BPCPA as: “contracts for the supply of goods or services between a supplier and a consumer that [are] not entered into in person and, with respect to goods, for which the consumer does not have the opportunity to inspect the goods that are the subject of the contract before the contract is entered into, but does not include a prepaid purchase card.”
Telemarketers are required to have licences for each location (which must be displayed), fulfill certain reporting obligations (including new employee identity and contact information and changes in senior officers or corporate control) and are subject to record-keeping requirements (including customer names and contract details).
The Telemarketer Regulation also limits the days and times for telemarketing calls and the frequency and manner of calls (for example, telemarketers cannot call on statutory holidays, outside of specified hours during weekdays or on weekends or block their numbers).
Exemptions from the licensing requirement include charities, educational institutions, banks and credit unions, political organizations and survey firms.
For more information about the provincial licensing and regulation of telemarketers in British Columbia see: Consumer Protection BC – Telemarketing Portal, Do Not Call – Telemarketers, Charities and Telemarketing – Avoiding Scams, Telemarketer Licensing Regulation, Telemarketing in BC – The Basics, Questions to Ask a Telemarketer.
National Do Not Call List
In addition to the federal Competition Act and provincial consumer protection legislation, the national Do Not Call List is also important for telemarketers in Canada to understand.
The Canadian Radio-Television and Telecommunications Commission (the “CRTC”) launched the National Do Not Call List (the “DNCL”) in Canada in 2008.
Generally speaking, telemarketers cannot contact consumers that have registered their numbers for free (residential, wireless, fax or VoIP) on the DNCL (subject to certain exceptions). Registration for consumers is valid for five years (and may be renewed) and becomes effective thirty-one days after registration.
Registration on the DNCL will not eliminate all telemarketing calls, as there are a number of exemptions including calls made by or on behalf of: (i) Canadian registered charities, (ii) organizations that telemarketers have done business with in the past eighteen months (or to whom a consumer has made an inquiry in the past six months), (iii) political parties, candidates and associations of members of a political party, (iv) people collecting information for surveys, (v) general circulation newspapers (for soliciting subscriptions), (vi) where express consent has been given, and (vii) calls to businesses.
Consumers may also directly or expressly request that the organizations listed above, except for market research firms in certain circumstances, place their numbers on specific do not call lists, in which case such numbers must be kept on their do not call lists for five years. (All telemarketers, even if they are exempted generally, must keep internal do not call lists.)
The CRTC also has other specific rules for telemarketers, including rules governing disclosure (e.g., requiring telemarketers to disclose why they’re calling and on whose behalf the call is being made), times for calling (e.g., telemarketers may only call within certain hours) and regulating the use of automated dialing-announcing devices (so-called “ADADs”).
Penalties for violating the DNCL rules, which are enforced by the CRTC, include penalties of up to Cdn. $1,500 per violation (for individuals) and up to Cdn. $15,000 per violation (for corporations).
For more information about Canada’s National Do Not Call List see the links and resources below.
LINKS AND RESOURCES
COMPETITION BUREAU & INDUSTRY CANADA
Accomplishments of the Toronto Strategic Partnership (Report)
Competition Bureau – Deceptive Telemarketing Overview
The FACT Campaign: Fraud Awareness for Commercial Targets (Pamphlet)
FACT: Fraud Awareness for Commercial Targets (Multi-media Tool)
False or Misleading Representations and Deceptive Marketing Practices (Pamphlet)
Fraud! Are you at risk? Quiz (Multi-media tool)
Fraud Awareness Fact Sheet for Small and Medium-Sized Enterprises (Fact Sheet)
Fraud Prevention Month ToolBox
Hang up on Cross-Border Phone Fraud
Information Sheet on the Competition Bureau & Deceptive Telemarketing Investigations (Fact Sheet)
Interception of Private Communications and the Competition Act
Looking for work? Beware of deceitful employers! (Pamphlet)
“Recognize the Scam” Quiz (Multi-media Tool)
Telemarketing – Section 52.1 of the Competition Act (Enforcement Guidelines)
What You Should Know About Telemarketing (Pamphlet)
OTHER CANADIAN & INTERNATIONAL TELEMARKETING RESOURCES
British Columbia Business Practices and Consumer Protection Act
International Consumer Protection and Enforcement Network
National Do Not Call List (CRTC)
Telemarketer Licensing Regulation (British Columbia)
U.S. Department of Justice – Mass Marketing Fraud
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For more information about our regulatory law services contact us: contact
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BOOKS
The Competition Law Guide for Trade Associations in Canada is a practical and concise summary of Canadian competition law for trade, professional and other associations and their advisors
COURSES
Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA to help Canadian REALTORS® understand and comply with Canadian competition law
For more see: ACRE