December 5, 2013
Yesterday the Competition Bureau announced that a Quebec telemarketer has pleaded guilty to deceptive telemarketing under the Competition Act and fraud under the Criminal Code and was sentenced to nine months imprisonment.
According to the Bureau, this particular telemarketing operation had been promoting “government grants” to Americans under the names “Advance Financial” and “Consumer Benefit” and office supplies and medical kits to Canadian and American businesses.
Some of the sales practices targeted in this investigation included falsely suggesting that existing business relationships existed, suggesting that products/services were required by government rules or implying that calls were being made by a government agency.
Telemarketing in Canada is, generally speaking, regulated by the Federal Do-Not-Call List rules, the Federal Competition Act and in some provinces by provincial telemarketing regulations.
With regard to the Competition Act, the Act makes it criminal offences to engage in deceptive telemarketing or to engage in telemarketing unless certain required disclosure is made.
In particular, 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 following information must 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 also relevant to determining whether a claim made by a telemarketer is materially false or misleading (i.e., not merely whether a claim is literally true or false).
In Canada, 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.
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I am a Toronto competition and advertising lawyer offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
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