Archive for the 'Compliance' Category
In an interesting case earlier this week, the CRTC announced that it had taken enforcement action against two India-based firms for breaching Canadian telemarketing laws under the National Do Not Call List (DNCL).
The CRTC ordered Pecon Software Ltd. and Avaneesh Software Private Limited to stop their current telemarketing practices and pay $507,000 in penalties. A parallel investigation in the United States by the Federal Trade Commission (FTC) has targeted 14 corporate defendants and 17 individuals in 6 legal filings (Pecon Software Ltd., Finmaestros LLC, Zeal IT Solutions Pvt. Ltd., Virtual PC Solutions, Lakshmi Infosoul Services Pvt. Ltd. and PCCare247 Inc., as well as a number of individual defendants).
According to the CRTC, in this scam dubbed the “Microsoft imposter” scam, telemarketers from the Indian firms would typically warn consumers that their personal computers were infected with viruses attempting to sell anti-virus software or technical support. The telemarketers allegedly claimed they were affiliated with legitimate companies, including Microsoft, Dell, McAfee and Norton, telling consumers that they had detected malware that posed an imminent threat to their computers, falsely demonstrating an infection then offering to remove the malware for fees that ranged from $49 to $450.
In making the announcement, the CRTC said:
“Foreign-based telemarketers have been put on notice that they must comply with our rules when calling Canadians,” said Andrea Rosen, the CRTC’s Chief Compliance and Enforcement Officer. “Canadians who receive these types of unsolicited calls are encouraged to file a complaint and should never give an unsolicited caller access to their computers or personal information.”
International Cooperation
According to the CRTC, it also conducted inspections as part of its investigation and worked with other international agencies including the U.S. Federal Trade Commission (see: FTC Halts Massive Tech Support Scams) and Australian Communications and Media Authority (ACMA) (see: Global action busts scammers posing as Microsoft).
The ACMA said that this scam, which targeted consumers in Canada, the United States, Australia, Ireland, New Zealand and the U.K., generated almost 10,000 calls to its Do Not Call complaint line over the past two years (and at its peak representing about 50% of all complaints it received). The FTC obtained court orders to stop six alleged tech support scams and has frozen the target firms’ assets.
The enforcement agencies involved in this case are also saying that, in an attempt to avoid detection, the telemarketers used some 80 different domain names and 130 phone numbers.
Regulation of Telemarketing in Canada
Canada’s DNCL is part of the CRTC’s Unsolicited Telecommunications Rules, which include the Telemarketing Rules, DNCL Rules and Automatic Dialing and Announcing Device Rules.
The OECD has published a new report on global competition law compliance entitled Promoting Compliance with Competition Law. The OECD’s new report, which is the result of a roundtable in 2011 on competition law compliance, includes submissions from more than twenty competition/antitrust enforcement authorities including Canada, as well as Australia, the EU, France, Germany, Japan, Korea, Mexico, New Zealand, South Africa, the UK and United States. Introduction:
“Over the past 20 years, courts and competition authorities have imposed fines and, in some jurisdictions, imprisonment with sharply increasing severity, yet there does not seem to be solid evidence that anti-competitive conduct – particularly cartel conduct – is declining in response. Then again, it is impossible to observe the number of undetected cartels, so it is possible that deterrence has increased. The delegates identified and assessed numerous factors that influence compliance, such as competition advocacy, financial penalties, imprisonment, leniency programs and the establishment of a culture of competition. There was general agreement that authentic corporate competition compliance programs can be helpful, but substantial variation among the delegates on whether and how such programs should be rewarded.”
For a copy of the OECD’s new report see: Promoting Compliance with Competition Law
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Gift cards are a type of stored-value payment card issued by retailers that are preloaded with a specific value for future purchases. These include cards that can be used at a particular store or retailer, cards redeemable at a chain or mall and credit card branded cards that can be used wherever a particular brand of credit card is accepted.
There are two main types of gift cards: “open loop” and “closed loop” cards. Open loop gift cards can be used anywhere (e.g., in any store in a shopping mall). Closed loop gift cards can only be used at a particular store, location or chain.
Gift cards are primarily regulated by provincial legislation, although some federal legislation can also apply (e.g., the misleading advertising provisions of the federal Competition Act). Key aspects of provincial gift card regulation include rules relating to expiry dates, fees and the disclosure of key terms and conditions.
British Columbia introduced gift card legislation in 2008. In British Columbia, the Business Practices and Consumer Protection Act (“BPCPA”) and Prepaid Purchase Cards Regulation regulate prepaid purchase cards. Consumer Protection BC enforces British Columbia’s gift card legislation and regulations.
“Prepaid purchase cards” are defined as cards, written certificates or other vouchers or devices with a monetary value that are issued or sold in exchange for the future supply of goods or services to consumers, including gift cards and gift certificates.
In general, British Columbia’s gift card legislation prohibits expiry dates and fees (except in certain circumstances), requires suppliers to disclose certain prescribed information (and sets out how that information must be disclosed) and gives gift card purchasers certain refund and other rights where the legislation is not complied with.
On September 28, 2012, the Competition Bureau announced that Irving Oil and its Quebec manager have been charged (three charges against each of the corporation and manager) for allegedly fixing gasoline prices in certain local Quebec markets in the Bureau’s ongoing Quebec gas price-fixing investigation. In making the announcement, the Bureau said:
“’These charges highlight our continued and steadfast commitment to combating domestic price-fixing cartels,’ said John Pecman, Interim Commissioner of Competition. ‘Canadians are ultimately on the losing end of secret agreements that cheat them out of their money.’
By using a number of investigative tools, including wiretaps and searches, the Bureau found evidence that in certain local Quebec markets gas retailers, or their representatives, communicated with one another to agree on the price they would charge customers for gasoline.
Thirty-nine individuals and 15 companies have now been charged with criminal price-fixing in this case. To date, 27 individuals and seven companies have pleaded guilty with fines totalling over $3 million. Of the 27 individuals who have pleaded guilty, six have been sentenced to terms of imprisonment totaling 54 months.”
Under Canadian competition law, the federal Competition Act makes the following three categories of agreements between competitors (or potential competitors) per se illegal:
1. Price-fixing agreements. Agreements to fix, maintain, increase or control the price for the supply of a product.
2. Market allocation/division agreements. Agreements to allocate sales, territories, customers or markets for the production or supply of a product.
3. Output/supply restriction agreements. Agreements to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product (which is broad enough to potentially include group boycotts).
According to Reuters reporting earlier today, Irving said it was not aware of the alleged price-fixing activities involving its personnel and took steps to stop the conduct:
“Our company was not aware of these activities and, when our company became aware of them, we took immediate steps to address the situation, including disciplinary action,” spokeswoman Carolyn Van der Veen said in an email. “Our company believes that we should not be held responsible for the actions of employees who knowingly violated company policy.”
The potential risk for individuals involved in criminal price-fixing and other activities under the Competition Act has also increased, given several key recent developments that include the elimination of conditional sentences (i.e., sentences served in the community) for price-fixing offences under the Act, an increased appetite by the Bureau to seek penalties against individuals and a recent decision by the Federal Court indicating that that Court will not necessarily automatically accept sentencing submissions carving out individuals in the context of pleas.
For a copy of the Bureau’s news release and backgrounder see: Irving Oil Charged in Gas Price-Fixing Cartel and Bureau Activities.
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On September 28, 2012, the Competition Bureau published its September In Brief newsletter, which includes recent announcements of the appointment of John Pecman as Interim Commissioner of Competition, publication of the Bureau’s final Abuse of Dominance Guidelines, commencement of its new misleading advertising suit against Bell, Rogers and TELUS and update on its abuse of dominance challenge against Canada’s largest real estate board, The Toronto Real Estate Board (TREB).
The Bureau also announced a joint Internet fraud sweep together with members of ICPEN (the International Consumer Protection and Enforcement Network), which targeted deceptive and fraudulent advertising in the “rapidly growing online and mobile markets.” In making the announcement, the Bureau indicated that it was focused on undisclosed fees and hidden terms (themes consistent with its recent challenge of Bell/Rogers/TELUS – see: here):
CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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Social media is increasingly important for effective marketing and promotion, including the operation of contests. Contest organizers should be aware, however, that there can be specific terms of use that apply to the promotion and administration of a contest using social media.
The Competition Bureau has updated its organizational chart with John Pecman (formerly head of the Criminal Matters Branch) as Acting Commissioner of Competition. From the Bureau:
“John Pecman is Acting Commissioner of Competition.
The Commissioner is responsible for the administration and enforcement of the Competition Act and three labelling statutes, the Consumer Packaging and Labelling Act, the Precious Metals Marking Act and the Textile Labelling Act.
Under the Competition Act, the Commissioner can launch inquiries, challenge civil and merger matters before the Competition Tribunal, make recommendations on criminal matters to the Director of Public Prosecutions of Canada (DPP), and intervene as a competition advocate before federal and provincial bodies.
As head of the Canadian Competition Bureau, the Commissioner leads the Bureau’s participation in international fora such as the Organization for Economic Cooperation and Development (OECD) and the International Competition Network (ICN), to develop and promote coordinated competition laws and policies in an increasingly globalized marketplace.
CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
Do you need a precedent or checklist
to comply with CASL (Canadian anti-spam law)?
We offer Canadian anti-spam law (CASL) precedents and checklists to help electronic marketers comply with CASL. These include checklists and precedents for express consent requests (including on behalf of third parties), sender identification information, unsubscribe mechanisms, business related exemptions and types of implied consent and documenting consent and scrubbing distribution lists. We also offer a CASL corporate compliance program. For more information or to order, see: Anti-Spam (CASL) Precedents/Forms. If you would like to discuss CASL legal advice or for other advertising or marketing in Canada, including contests/sweepstakes, contact us: contact.
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September 23, 2012
I’ve been seeing an increasing flutter of updates and newsletters recently discussing the status of Canada’s new (though still unclear when) anti-spam legislation (“CASL”). So I thought I would have a poke around the web, see what Industry Canada, the CRTC, the Competition Bureau and Privacy Commissioner’s office have been up to lately and post a few thoughts on the progress of the new law that is inching along, some recent developments and practical steps that can be taken before the law is in force.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
