Google has announced its new privacy policy, which will take effect on March 1. Google is doing away with the over 60 different existing privacy policies for its various products and replacing them with one single shorter and simpler privacy policy.

Those who are most affected by this change are people with Google accounts. Under the new privacy policy, if a user is signed in to the Google account, Google will be able to collect and combine user information from across its various products and services. For example, Google will be able to collect and analyze your search terms on the Google search engine and suggest related videos when you next go onto YouTube. This will enable Google to form fuller and more comprehensive user profiles. As Google emphasized in its announcement, this change will allow it “to create one beautifully simple and intuitive experience across Google.”

Facebook is already able to combine its user data. Facebook tracks everything its users do while on their accounts and that user data is used to target advertising for particular services and products to particular users. Given the volume of registered users and the often more personal nature of the information its users provide on the social networking site, Facebook has grown to be a formidable competitor to Google in the online advertising market.

This change to Google’s privacy policy is clearly a response to Facebook. The range of services and products Google provides is wider than that of Facebook. Though user data Facebook gathers tends to be more personal, Google has attempted to rectify this with the launch of its own social networking site Google+ last year.  Now Google’s new ability to combine user data collected from different services will enable it to better integrate its user data and use it to better target its advertising.

Google’s new change to its privacy policy has raised concerns from some users as well as a number of members of the US Congress. Users cannot opt out of the new privacy policy to prevent their user information from being combined across Google services. Google’s answer is rather unsatisfactory, i.e. don’t log in. information about users activities on Google services while not logged into their Google accounts would not be combined. However, without logging in, many of Google’s services would be inaccessible to users.

There have been growing privacy concerns about the user data Google and Facebook collect, which have attracted the attention of both US lawmakers and the Federal Trade Commission. Google and Facebook both have had to settle with the FTC over investigations of privacy complaints in the past. Google’s privacy policy change is likely to attract further regulatory scrutiny.

- Reprinted with permission.

Is the Price Right?  Increased Regulatory Scrutiny and Class Actions for Representations Involving Price

Businesses operating in Canada should be aware of a recent trend towards greater regulation and enforcement action surrounding pricing representations where additional costs are not clearly disclosed up front. Last week, the Minister of State for Transport announced that the Canada Transportation Agency is proceeding with regulations to require Canadian air carriers to include all fees, charges and taxes in advertised prices. This trend towards requiring up-front disclosure of all fees and charges in any advertised pricing is consistent with the enforcement initiatives recently undertaken by the Competition Bureau (the “Bureau”) as well as the approach taken in recent class actions involving pricing representations brought in Québec and Ontario. The Bureau’s aggressive enforcement approach combined with an increase in class actions concerning pricing representations suggests it may be prudent for businesses to consider disclosing all fees imposed by the seller and applicable to all customers up front in any advertising.

On December 16, the federal Minister of State for Transport, the Honourable Steven Fletcher announced that the Canada Transportation Agency will be developing regulations to require Canadian air carriers to include all charges in advertised prices. Mr. Fletcher explained that the regulations are intended to promote fair competition “by ensuring greater transparency of advertised airfares for Canadian travellers”. The Canada Transportation Agency is empowered under the Canada Transportation Act to make regulations respecting the prices for air services within or originating in Canada advertised in all media, including the Internet. The drafting and consultation process for the regulations is expected to take approximately a year to complete. The planned regulations will require air carriers who advertise prices to include “all costs to the carrier” of providing the service and to indicate in the advertisement all fees, charges and taxes collected by the carrier on behalf of another person. The advertised price must enable consumers to “readily determine the total amount” to be paid. The plans for Canadian airfare pricing regulation follow similar increased regulation in both the European Union and the United States regarding the pricing of airfares.

The move to require up front disclosure of all fees and charges in advertised prices for airline carriers also follows enforcement action undertaken by the Competition Bureau in other industries. Specifically, the Competition Bureau has taken the stance that “the popular trend” of advertising a price to consumers and then disclosing additional mandatory costs in accompanying fine print is misleading and may result in enforcement action. This stance is clearly evidenced in a recent settlement reached with Bell Canada regarding its approach to pricing representations as well as recent speeches by the Commissioner of Competition (the “Commissioner”) regarding the Bureau’s future enforcement activities.

On June 28, 2011, the Bureau announced that Bell Canada had agreed to modify certain advertisements which the Bureau alleged were contrary to the civil misleading advertising provisions in the Competition Act and to pay a penalty of $10 million as well as a sum towards the Bureau’s legal costs. According to the Bureau, Bell made false or misleading representations between December 2007 and June 2011 about the prices at which certain of its services were available. Specifically, the Bureau alleged that Bell’s advertisements created the misleading “general impression” that consumers need only pay the monthly price advertised in the main body of the advertisements and that Bell had used a variety of “fine-print disclaimers” to “hide” additional mandatory fees from customers. According to the Bureau, the actual price paid by Bell’s customers for the advertised products was higher than the price that was advertised in the main body of the advertisement. Although Bell did not accept the Bureau’s allegations, it agreed not to contest these allegations for the purposes of the settlement, and to modify all advertising at issue within 60 days.

Since the Bell settlement was announced, the Commissioner has given various speeches regarding the Bureau’s enforcement priorities for the coming year. In particular, the Commissioner has recently stated that “misleading representations continue to be an area of concern for the Bureau” and, with respect to pricing representations, the Commissioner has stated that the Bureau is “investigating several industries where we are concerned that Canadians have been taken advantage of, in this or related ways”. The Bureau’s focus on misleading advertising and consumer-oriented enforcement appears to be part of the Bureau’s goal to “demonstrate the relevance of the Bureau’s work to Canadians in their everyday lives”.

Given that the Bureau clearly considers price representations to be an enforcement priority, it is somewhat surprising that the Bureau has not issued any new guidance in the form of revised guidelines or any specific guidance to the industries where the Bureau is concerned about the disclosure provided (as it has done in prior instances). Rather, the Bureau appears to be taking aggressive enforcement action (such as that against Bell) in the hopes that such enforcement activity will motivate compliance. The lack of further guidance on this point is particularly surprising given that the use of “mice print” and disclaimers is widespread in Canadian advertising and the Bureau’s existing guidelines on point merely provide that “if a representation is made concerning the price of a product, any such additional required payment should be disclosed at the same time”. In other words, under the Bureau’s existing guidelines, it is certainly arguable that a customer has received adequate disclosure of the applicable price via the information contained in the smaller print.

In a similar vein, allegedly misleading advertising and charging consumers “undisclosed” costs has given rise to a number of class actions in Québec on the basis of Québec’s Consumer Protection Act (the “Québec CPA”). Section 12 of the Québec CPA, which applies to advertisements in all forms, provides that “no costs may be claimed from a consumer unless the amount thereof is precisely indicated in the contract.” While the word “costs” (or “frais” in French) is not defined in the Québec CPA, Québec courts have interpreted this term broadly as including, for example, commissions, administrative fees and surcharges. Québec’s Consumer Protection Office has taken the position that the advertised price must be the total price that a consumer has to pay and that the only amounts that can be excluded from this price are amounts payable pursuant to federal or provincial legislation that are levied directly on the consumer and that are remitted to a public authority such as, for example, the Québec Sales Tax (QST) or GST. The alleged failure to comply with section 12 of the Québec CPA has given rise, most recently, to a proposed class action against a Québec-based telecommunications company seeking restitution for amounts allegedly improperly charged, as well as $5 million in punitive damages.

Class actions based on a lack of full disclosure of applicable fees and charges have been initiated in Ontario as well. For instance, a class action against United Parcel Service Canada Ltd. (“UPS”) was brought on the basis that UPS failed to disclose mandatory brokerage fees to consumers, and thereby breached various provisions of Ontario’s Consumer Protection Act (“Ontario CPA”). This class action was recently certified by the Ontario Superior Court of Justice. The brokerage fees were imposed on consumers for the delivery of items shipped from the United States, and as the judge pointed out, were not a government imposed duty or tax, but rather were levied by UPS for its customs clearing services. Further, the judge found that various standard form contracts used by UPS did not disclose the disputed fee. UPS has indicated it plans to appeal the Superior Court’s decision.

The federal government’s planned regulation of airline advertising, the Bureau’s aggressive enforcement initiatives regarding price representations as well recent class actions should be taken as cautionary signals to Canadian businesses. In particular, when charges are imposed by the seller and applicable to all customers – in order to avoid enforcement action or litigation – businesses should consider disclosing such fees up front and including such fees in the prices featured in any advertising.

- Reprinted with permission.

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For more about Canadian advertising and marketing law see:

Misleading Advertising

Canadian Advertising & Marketing Law

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We provide competition and foreign investment law services to clients across Canada and internationally.

In particular, according to media reports, Rogers is arguing that the civil “performance claim” provision of the Competition Act is contrary to the freedom of expression rights under the Charter and that the penalties for civil misleading advertising are unconstitutional.

In addition to “general misleading advertising” provisions, the Competition Act also prohibits or regulates a variety of other advertising and marketing conduct, including performance claims that are not based on an “adequate and proper test” made before the claim is made.

Over the past few years the Bureau has challenged a fairly wide variety of performance based advertising claims including claims relating to gas saving devices, spas and recently weight loss claims made by Nivea’s Canadian distributor in relation to some Nivea products (see: Competition Bureau Requires Maker of Nivea to Reimburse Customers for Misleading Claims).

The penalties for civil misleading advertising were also recently increased (see: Canada’s Competition Act Amendments), with maximum “administrative monetary penalties” or “AMPs” (essentially civil fines) of up to $10 million for corporations, which has led to speculation as to whether these significant penalties would be subject to constitutional challenge as essentially penal in nature, without the accompanying procedural protections available for criminal offences.

The Rogers case is the first case to challenge the constitutionality of these AMPs recently introduced for misleading advertising.

This case arose based on concerns from several new entrant cell phone companies, including Wind Mobile, that Rogers was engaging in false performance claims relating to its Chatr cell phone brand, including claims that Chatr had “fewer dropped calls than new wireless carriers.”

The Bureau’s position has been that Rogers’ performance claims were both unsubstantiated and could not be substantiated because, for example, the new entrant carriers did not disclose dropped call rates (see: Competition Bureau Takes Action Against Rogers Over Misleading Advertising).

While Rogers’ recent constitutional arguments are interesting, their success is uncertain given, among other things, that a great many of the constitutional challenges to the Competition Act in the past have failed.

This case will, however, regardless of its outcome, prove to be one of the early tests of Canada’s amended Competition Act.

According to the Star, at a Dx3 Canada digital trade show earlier today Mr. Parent said:

“Online behavioral advertising is when we identify you as a user. … People wonder, Is this Big Brother? … Do they know what color hair I have?  Do they know my age and income?”

These remarks, and marketers’ decision to introduce self-regulation to govern “behavioral advertising” (defined by the Office of the Privacy Commissioner as “tracking consumers online activities over time in order to deliver advertisements targeted to their inferred interests”), are presumably intended to circumvent legislative and regulators’ efforts to impose restrictions on behavioral advertising.

For example, on December 6, 2011, the federal Privacy Commissioner Jennifer Stoddart announced new online tracking guidelines for advertisers which, among other things, restrict the tracking of children and tracking technologies people can’t opt out of (i.e., turn off) (see: Privacy Commissioner Issues New Online Behavioural Advertising (Tracking) Guidelines).

In announcing new industry self-regulatory measures, Mr. Parent also made a distinction between tracking “devices” as opposed to “people”: “Actually, we are identifying your device, not you …”

According to the IAB, under the advertising industry’s new self-regulation regime, online ads that reach users through behavioral tracking will soon carry arrow-shaped icons in the top right hand corner that, when clicked, will take users to a new website called Privacy Matters Canada where targeted advertising will be explained and users will be given a chance to opt out.

These recent behavioral advertising developments clearly illustrate that advertisers are moving rapidly away from traditional forms of advertising and marketing (e.g., direct mail, print advertising, etc.) and that this is proving challenging to legislators and law-makers to effectively regulate.

At the same time, new legislation has been introduced that will impact how companies market in Canada, most notably the new federal anti-spam legislation (Bill C-28), and new cross-border enforcement initiatives were announced including a new international do-not-call enforcement network co-chaired by the CRTC.

These developments mean that it remains important for companies to effectively and efficiently navigate through Canadian advertising and marketing rules.  Some of the more interesting and noteworthy developments in 2010 and 2011 are discussed below.

CANADIAN ADVERTISING LAW: A YEAR IN REVIEW

Bell Canada pays $10 million AMP.

On June 28, 2011, the Competition Bureau (the “Bureau”) announced that Bell Canada agreed to stop making allegedly misleading claims regarding the prices of some of its services and pay an administrative monetary penalty (“AMP” – essentially a civil fine) of $10 million, the maximum penalty for misleading advertising under the Competition Act (the “Act”).  The Bureau challenged the accuracy of price claims made by Bell, as well as alleged hidden fees and fine-print disclaimers.  The Bureau’s concerns were based, among other things, on services that were literally not available at the advertised prices, including for Bell’s home phone, Internet, satellite TV and wireless services. Advertising claims can violate the misleading advertising provisions of the Act where they are either literally false or misleading (e.g., material information, such as price or important conditions, are not adequately disclosed).

New federal anti-spam legislation (Bill C-28).

In late 2010, the federal government introduced new federal anti-spam legislation (Bill C-28, the Fighting Internet and Wireless Spam Act – “FISA”).  Unlike similar U.S. legislation, FISA creates an “opt-in” regime for commercial electronic marketing, imposing both consent and form requirements, and also amends the Act to prohibit false or misleading commercial representations made electronically (e.g., in website headers, web links or website content).  In particular, the criminal and civil misleading advertising provisions of the Act, and related penalty provisions, have been broadened to expressly include misleading representations in the electronic and online environment.  Once FISA is in force, maximum penalties will be $1 million (for individuals) and $10 million (for corporations).

Bureau challenges Rogers’ performance claims.

The Bureau is currently challenging Rogers for allegedly making false performance claims in relation to its Chatr cell phone brand (in particular, claims that Rogers’ brand had fewer dropped calls than competing new entrants).  The Bureau is seeking a court order for Rogers to cease the conduct, a $10 million AMP, restitution for consumers and publication of a corrective notice.

Privacy Commissioner issues new online behavioural advertising (tracking) guidelines.

On December 6, 2011, the federal Privacy Commissioner issued new online tracking guidelines for advertisers which, among other things, restrict the tracking of children and tracking technologies without an opt-out mechanism.

New international do-not-call network. 

In October, 2011, the federal CRTC announced that, together with the Australian Communications and Media Authority, it has assembled 12 enforcement agencies to form an international do-not-call network (Australia, Canada, France, Hong Kong, Ireland, Israel, Korea, Mexico, New Zealand, Spain, the UK and the United States).  Telemarketing in Canada is already subject to competition law rules, the national Do Not Call List and provincial licensing requirements.

Recent speech by the Commissioner highlights enhanced Bureau enforcement.

On October 25, 2011, the Bureau published the Commissioner of Competition’s (the “Commissioner”) speech given at the 2011 CBA Annual Competition Law Conference.  It is fair to say the Commissioner’s speech presented a singular tone across the civil and criminal competition law areas: continued enforcement.  Some highlights of her speech regarding advertising include comments that misleading advertising “continues to be an area of concern”, that companies should not “mislead the public by hiding charges or conditions in fine print” or by “making claims you can’t back up” (i.e., false performance claims).  The Commissioner also said the Bureau continues to look for “tangible results for Canadians” including restitution for false advertising claims and settlements to stop false marketing claims.

Misleading advertising a continued enforcement priority. 

Enforcement continued to be a theme for the Commissioner in two talks in Vancouver in the fall of 2011, where she confirmed that misleading advertising and deceptive marketing remain enforcement priorities – or, as the Commissioner put it, “an area of concern.”  In general, the Commissioner indicated that the Bureau did not have the resources to pursue all misleading and deceptive marketing and, with respect to fraudulent marketing, that enforcement was akin to the “whack a mole” game in that once a deceptive marketer was “hit” in one jurisdiction, they frequently “arose” in another.  The Commissioner also highlighted some of the Bureau’s initiatives with other major enforcement agencies – for example, the U.K., Australia and the United States – that have proven effective in fighting cross-border deceptive marketing.

Canadian telemarketer receives a two-year prison sentence.

On October 3, 2011, the Bureau announced that a deceptive telemarketer was sentenced to two years in prison for a deceptive telemarketing scheme relating to the sale of business directories.  This is the most recently announced telemarketing case by the Bureau, which shows that the criminal deceptive telemarketing and misleading advertising provisions of the Act remain enforcement priorities.  The case also illustrates that, while uncommon for competition law offences, the Bureau is increasingly seeking penalties against individuals.  The Bureau has brought and sought penalties in a number of deceptive telemarketing cases in the past several years, many of which have involved cross-border marketing of business directories to U.S. and other international companies.  The Act prohibits false or misleading telemarketing representations and also prohibits telemarketers from engaging in other activities including: (i) requiring advance payments to receive a prize, (ii) offering gifts as inducements to purchase other products without fairly disclosing the value of the gifts, (iii) failing to provide adequate and fair disclosure of the number and value of prizes and (iv) requiring advance payments for products offered at inflated prices.  Telemarketers are also required to disclose certain information at the beginning of a call and other information at some point during a call.

Bureau negotiates settlement with Canadian Nivea distributor over performance claims.

On September 7, 2011, the Bureau announced a settlement with Nivea’s Canadian distributor, Beiersdorf Canada Inc., relating to allegedly false or misleading performance claims.  The Bureau took issue in this case with claims suggesting that the use of skin cream could lead to weight loss.  Under the consent agreement negotiated with the Bureau, Beiersdorf agreed to pay a $300,000 AMP, refund Canadian customers and remove its products from Canadian shelves.  Under the Act, false or misleading product performance claims can violate both the “general” criminal or civil misleading advertising provisions (sections 52 and 74.01) and a specific performance claim provision, which prohibits representations to the public regarding the performance of products that are not based on “adequate and proper testing”.  This section can be particularly relevant to advertising and marketing where the speed, efficiency or other product performance is a key marketing component.  While performance claims themselves are not prohibited, any product testing or verification must be conducted before a claim is made and the onus, if challenged, is on the person making the claim to verify the performance.   The Competition Tribunal (the “Tribunal”) has also established a non-exhaustive list of factors relevant to determining whether product testing is “adequate and proper”.

Albertans sentenced to jail time for cross-border deceptive telemarketing.

On August 30, 2011, the Bureau announced that five Alberta individuals were convicted and sentenced for deceptive telemarketing under the Act.

International sweep of social media sites.

In late 2010, the Bureau participated in an international sweep of social media sites to detect fraudulent and deceptive advertising on social networking sites.

AMPs imposed in job search service case.

In late 2010, the Tribunal imposed AMPs of $20,000 and $10,000 against parties in Canada (Commissioner of Competition) v. Premier Career Management Group Corp. for making misleading claims in relation to a job search service (following a Federal Court of Appeal decision reversing an earlier Tribunal decision finding the claims were not made “to the public”).

Bureau settles with two Canadian spa retailers.

In 2010, the Bureau announced it had reached settlements with two spa retailers in relation to allegedly false energy savings claims.  According to the Bureau, the retailers made misleading representations incorrectly conveying the impression that their hot tubs or insulation met the criteria of the ENERGY STAR Program.  This case is the most recent example of the Bureau’s action in the spa retailing sector.  The Bureau and the Canadian Standards Association have also jointly published enforcement guidelines addressed specifically to environmental marketing – Environmental Claims: A Guide for Industry and Advertisers – intended to provide companies with more guidance for environmental marketing and “consumers with greater assurance about the accuracy of environmental claims.”

The Canadian Marketing Association will be holding a one-day seminar on January 24, 2012 on non-for-profit marketing: “Marketing Online Successfully”.

From the Canadian Marketing Association:

“If you’re a not-for-profit marketer who’s looking for a quick way to become more comfortable with and proficient at Internet direct marketing – this seminar is for you!

With the CMA’s Intensive One-Day Internet Marketing Seminar for Not-For-Profit marketers, you’ll save time, skip the aggravation and quickly move up your Internet marketing learning curve as you join a select group of Canadian not-for-profit marketers for a practical, interactive, hands-on session on Internet direct marketing.

Content areas will include: recap of online Canadians’ habits and usage; discussion about mobile, video and other upcoming trends; review of results tracking methodologies; in-depth look at direct response Internet media and pay per click search engine marketing as a basis for building SUCCESSFUL acquisition and advocacy based direct response campaigns; and real life examples and case studies of not for profit marketers who are doing Internet marketing right.

The seminar is led by Jay Aber, President of The Aber Group Inc., a leading Internet-based direct marketing firm whose clients include Plan Canada, WWF-Canada, Heart & Stroke, Habitat for Humanity, American Express, Sun Life & Stratford Shakespeare Festival among many others. In addition to his other accomplishments, Jay chaired the Digital Marketing Council for the CMA for six years and wrote and taught the inaugural CMA’s e-Marketing (now Digital Marketing) course.”

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For more information see:

Canadian Marketing Association – Not-For-Profit Seminar: Marketing Online Successfully

From the Canadian Institute:

“We have obtained the highest quality speakers to present you with cutting edge analysis and practical guidance on the latest issues in this constantly evolving area of law. In fact, leaders in this field have been relying on our conference year after year to hone their skills, so join us at The Canadian Institute’s 18th Annual Advertising & Marketing Law program and be equipped with the tools necessary to be completely confident in your practice.  Keynote Address: Melanie Aitken, Commissioner of Competition, Competition Bureau Canada Recent Enforcement Initiatives and Future Directions of the Competition Bureau.

In the past year we have already seen, and will continue to see significant developments. You will learn about them all through our stimulating and interactive mix of sessions, including:

The latest need to know enforcement trends and priorities of the Competition Bureau

An in-depth analysis of the Anti-Spam legislation – in anticipation of it being proclaimed into force

The noteworthy differences between our Anti-Spam legislation and the U.S. Can-Spam Act

A practical session on drafting disclaimers on all forms of media

The most up-to-date tips on running contests

Risk mitigation for all emerging and recently revived marketing & advertising techniques

The latest issues and trends from the U.S. and how they may affect you”

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For more information see:

The Canadian Institute – Advertising and Marketing Law Conference

Our new blog will include news and developments in Canadian advertising and marketing law, key resources and links and overviews of advertising law, the new anti-spam legislation (Bill C-28), comparative advertising, promotional contest law, misleading advertising, packaging and labeling laws and telemarketing.

For the CRTC’s complete news release see: CRTC announces creation of international network to facilitate cooperation on telemarketing enforcement.

The members of this newly created Do Not Call Network are: Australia, Canada, France, Hong Kong, Ireland, Israel, Korea, Mexico, New Zealand, Spain, the UK and the United States.

Under the new international Do Not Call Network, the CRTC and ACMA will act as the Network’s inaugural co-chairs, with the U.S. Federal Trade Commission hosting the secretariat.

In making the announcement, the CRTC said:

“Enforcement agencies face a common challenge in tracking down individuals and companies who violate telemarketing rules, but operate outside national borders,” said Konrad von Finckenstein, Q.C., Chairman of the CRTC. ‘A global problem calls for global solutions. Having a network that fosters collaboration will contribute to more effective cross-border enforcement activities and help reduce unwanted telephone calls to Canadians from foreign telemarketers.’

The International Do Not Call Network will facilitate cooperation between agencies that enforce telemarketing rules in their respective countries. Members will meet annually to establish best practices and encourage the development of robust telemarketing laws around the globe. The network will also work to harmonize telemarketing policies between countries to improve enforcement activities across different jurisdictions.”

Regulation of Telemarketing in Canada

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 Business Practices and Consumer Protection Act applies to “telemarketers”.

“Telemarketer” is defined in the Telemarketer Regulation as “a supplier who engages in the business or occupation of initiating contact with a consumer by telephone or facsimile for the purpose of conducting a consumer transaction.”

The Telemarketer Regulation requires telemarketers to obtain licences for each location from which they conduct business in British Columbia, to display licences, report certain changes in a telemarketing business (e.g., the names and addresses of new employees and changes in senior officers) and maintain certain records (e.g., in relation to sales contracts with consumers).

The Telemarketer Regulation also regulates and prohibits certain activities by telemarketers, including regulating the days and times telemarketers can contact consumers, the frequency that telemarketers can contact consumers and requiring that certain disclosure be made.

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).

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For more about the regulation of telemarketing in Canada see:

Telemarketing

Telemarketing News

An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (the “Anti-spam Act”).

Earlier this Fall, consultations on two sets of draft Regulations concluded and so the new law may come into effect later this Fall or in the Spring of 2012 (see coming into force information below).

In passing the Anti-spam Act Industry Canada said:

“On December 15, 2010, the Government of Canada passed the Fighting Internet and Wireless Spam bill, Bill C-28.  In doing so, the government delivered on a key commitment made by Prime Minister Harper to Canadians and Canadian businesses in September 2008.

The intent of the legislation is to deter the most damaging and deceptive forms of spam, such as identity theft, phishing and spyware, from occurring in Canada and to help to drive out spammers.

This law addresses the legislative recommendations of the Task Force on Spam, which brought together industry, consumers and academic experts to design a comprehensive package of measures to combat threats to the digital economy. As well the government studied successful legislative models in other countries and, based on their experiences, has developed a focused plan to address spam and related online threats.”

In his online videocast, Canada’s Industry Minister said that the passage of the Anti-spam Act was intended to “help … enhance safety and security in the online world”, “deter the most damaging and deceptive forms of spam from occurring in Canada” and “drive spammers out of Canada”.  The Minister also said that “Canadians need to feel just as confident in the electronic marketplace as they do at the corner store” and that “spam is at best a nuisance but it can also discourage electronic commerce, undermine privacy and introduce a host of online threats” (see: Minister of Industry – videocast – Government of Canada Moves to Enhance Safety and Security in the Online Marketplace).

LEGISLATIVE HISTORY

The Anti-spam Act, which was first introduced in April, 2009 and reintroduced on May 25, 2010, addresses legislative recommendations made by the Task Force on Spam (see links below), which assembled consumers, academic experts and industry to design comprehensive legislation to fight spam in the digital economy.

In 2005, the Task Force on Spam completed its one-year mandate and issued its final report (Task Force on Spam Report: Stopping Spam: Creating a Stronger, Safer Internet).  The Government also studied successful anti-spam measures in other countries.

During third reading, the amended Bill C-28 received unanimous support in the House of Commons and received Royal Assent on December 15, 2010.

ANTI-SPAM ACT – OVERVIEW

Canada’s new Anti-spam Act, which, unlike similar U.S. legislation, creates an “opt-in” regime for commercial electronic communications, amends the following federal statutes: the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, Personal Information Protection and Electronic Documents Act and the Telecommunications Act.

Some of the key aspects of the new Anti-spam Act, the Regulations for which are not yet finalized, are discussed below.

Commercial Electronic Messages (CEMs)

The Anti-spam Act prohibits sending commercial electronic messages (“CEMs”) without the recipient’s express or implied consent (i.e. permission), including messages sent to e-mail addresses and social media accounts and text messages sent to cell phones.

“CEMs” are broadly defined as any electronic message that encourages participation in a commercial activity regardless of whether there is any expectation of profit.  “Electronic messages” are defined as messages sent by any means of telecommunication, including a text, sound, voice or image message (with an exception for interactive two-way voice communications – i.e., telemarketing).

CEMs must also be in a prescribed form that, among other things, identifies the person who sent the message, includes information enabling the recipient to contact the sender and includes an unsubscribe mechanism (that meets the statutory requirements).

Electronic messages that request consent to receive CEMs are also defined as CEMs and, therefore, cannot be sent unless consent is received.

When requesting consent, the following is required: (i) stating the purpose for which consent is being sought and (ii) information identifying the person seeking consent (and any other information that may be prescribed by Regulation).

Consent for section 6 of the Anti-spam Act may also be implied, including in the following cases: (i) an existing “business” or “non-business” relationship (both as defined in the Anti-spam Act), (ii) a “business card” exception (a person has published their electronic address without a statement that they do not wish to receive unsolicited CEMs) or (iii) a recipient has disclosed their electronic message to a sender without indicating that they do not wish to receive unsolicted CEMs (and the message is relevant to the recipient’s business).

There are a number of exceptions, that the Regulations when finalized will clarify, including exceptions for: (i) personal or family relationships, (ii) inquiries for commercial goods and services, (iii) providing a requested quote or estimate for goods or services, (iv) messages to complete or confirm a commercial transaction, (v) the provision of warranty, product recall or safety information, (vi) information relating to an employment relationship and (vii) two-way interactive voice communications (i.e., telemarketing).

Altering Transmission Data

The Anti-spam Act prohibits the alteration of transmission data in an electronic message, which results in the message being delivered to a different destination without express consent (e.g., causing an electronic message to be sent to a destination that is different than what the sender intended).

Misleading Representations in Electronic and Online Content

The Anti-spam Act amends the Competition Act to prohibit false or misleading commercial representations made electronically (e.g., in website headers, web links or website content).

In this regard, the criminal and civil misleading advertising provisions of the Act, as well as the related misleading advertising penalty provisions, have been broadened to expressly include misleading representations in the electronic and online environment (e.g., representations made in the sender information or subject matter information of an electronic message).

Unauthorized Installation of Computer Programs

The Anti-spam Act prohibits the installation of computer programs without the express consent of the computer system’s owner or an authorized user of the computer system (e.g., an authorized employee).

Unauthorized Collection of Personal Information

The Anti-spam Act amends the Personal Information Protection and Electronic Documents Act to prohibit the collection of personal information by means of unauthorized access to computer systems.

Collection of Electronic Addresses

Finally, the collection of electronic addresses using computer programs or using such addresses without permission (“harvesting”) is prohibited.

This may include the collection of e-mail addresses through the use of, for example, “web crawlers” (computer programs that scan websites, usenet groups and social media websites, trolling for electronic addresses) or “dictionary attacks” (where a computer program guesses real/live e-mail addresses by methodically trying various name variations within a particular group of common e-mail domains – e.g., Gmail, Hotmail, etc.).

ENFORCEMENT

The three government agencies responsible for the enforcement of the new Anti-spam Act are as follows:

The Competition Bureau (the “Bureau”) – the Bureau’s mandate will be to focus on misleading and deceptive practices and representations online, including false or misleading headers, web links and website content.  The Anti-spam Act extends the Competition Bureau’s existing jurisdiction over misleading advertising and deceptive marketing practices in Canada, which already included online advertising and marketing (under the criminal and civil misleading advertising sections of the Competition Act – sections 52 and 74.01).

The Canadian Radio-television and Telecommunications Commission (“CRTC”) – The CRTC will have the power to investigate and take action, including imposing significant administrative monetary penalties (“AMPs”), against unsolicited electronic messages (i.e., without consent), the alteration of transmission data or the installation of computer programs without consent (e.g., malware, spyware or viruses).

Office of the Privacy Commissioner of Canada (“Privacy Commissioner”) – The Privacy Commissioner will have the power to take measures against the collection of personal information through unlawful access to computer systems (i.e., contrary to federal law, such as the Criminal Code) or electronic address “harvesting” where bulk e-mail lists are compiled through mechanisms, including the use of computer programs that automatically mine the Internet for e-mail addresses.

PENALTIES

Persons contravening the Anti-Spam Act will be subject to AMPs of up to $1 million per violation for individuals and $10 million per violation for corporations.

Private individuals or organizations affected by a violation of the Anti-spam Act will also have a right to commence private actions.  In this regard, in addition to allowing awards of damages for actual loss or damage suffered a court may also order persons that contravene the Anti-spam Act to pay damages for each day on which a contravention of the new law continued – for example, for violation of section 6 (unauthorized commercial electronic messages) $200 for each contravention up to $1 million per day the contravention occurred.

The Anti-spam Act also contains broad director and officer liability provisions which provide that directors and officers of a company that commits a violation are liable for that violation if they directed, authorized, assented to, acquiesced or participated in the commission of a violation (subject to a due diligence defence).

COMING INTO FORCE

Two sets of draft Regulations have been published (CRTC Regulations on June 30, 2011 and Industry Canada Regulations on July 9, 2011), the public comment periods for the two sets of Regulations were completed on September 6 and 7, 2011 and final Regulations may come into force in late Fall 2011 or Spring 2012.

In terms of a likely timetable for implementation of the new Anti-spam Act, there has been some debate as to whether, based on comments received during the consultation periods, revised draft Regulations will be issued and whether additional public consultations may be held.

For the draft CRTC Regulations see:

Draft Electronic Commerce Protection Regulations (CRTC)

For the draft Industry Canada Regulations see:

Electronic Commerce Protection Regulations

For the Canadian Bar Association’s comments on the draft Regulations see:

CRTC Draft Regulations Consultation 2011-400

Industry Canada Anti-spam Regulations

ANTI-SPAM ACT LINKS AND RESOURCES

Legislation

Anti-spam Act

Regulations

CRTC

Draft Electronic Commerce Protection Regulations (CRTC)

Industry Canada

Electronic Commerce Protection Regulations

Canada’s Anti-Spam Website (www.fightspam.gc.ca)

Canada’s Anti-Spam Legislation

Key Facts

Enforcement

FAQs

Links and Resources

Industry Canada

Summary of the Anti-spam Act (Canada’s Anti-Spam Legislation)

Industry Canada Q&A

Industry Canada News Releases

“Government of Canada Protects Canadians with the Electronic Commerce Protection Act” (April 24, 2009)

“Anti-Spam Legislation is Unanimously Passed by the House of Commons” (December 2, 2009)

“Harper Government is Getting Things Done for Canadians” (December 15, 2010)

Industry Canada Backgrounders

Anti-Spam Legislation Receives Royal Assent

Government of Canada Introduces Amendments to the Personal Information Protection and Electronic Documents Act (PIPEDA)

Industry Canada Spam Definitions

Online Threats

Canadian Task Force on Spam

Task Force on Spam

Stakeholder Roundtable

Roundtable Meeting with Key Stakeholders

Reports

An Anti-Spam Action Plan for Canada (May, 2004)

Stopping Spam: Creating a Stronger, Safer Internet (May, 2005)