Archive for the 'Uncategorized' Category
November 17, 2009
The Competition Bureau has announced that a national phone card supplier has been required to pay refunds and a penalty of Cdn. $300,000. Ontario-based Phonetime Inc. will offer refunds to consumer that bought Bravo! and Bravo! Atlantic prepaid long-distance phone cards.
November 13, 2009
The Financial Post has reported that the British Columbia Court of Appeal has approved the DRAM memory class action. The Court of Appeal has reversed a lower court ruling certifying a class action against a group of five technology manufacturers accused of fixing their prices for computer memory chips.
Performance claim.
Ontario Superior Court of Justice, Canada (Competition Bureau) v. Chatr Wireless Inc., 2013 ONSC 5315 (CanLII): “The burden of proving adequate and proper testing lies upon the respondents by virtue of the express wording of s. 74.01(1)(b) of the Competition Act. The adequate and proper test must be made prior to the representation to the public. … The phrase ‘adequate and proper test’ is not defined in the Competition Act. Whether a particular test is ‘adequate and proper’ will depend on the nature of the representation made and the meaning or impression conveyed by that representation. Subjectivity in the testing should be eliminated as much as possible. The test must establish the effect claimed. The testing need not be as exacting as would be required to publish the test in a scholarly journal. The test should demonstrate that the result claimed is not a chance result …”
Competition Bureau, Ensuring Truth in Advertising, Misleading Advertising and Labelling: “Businesses should not make any performance claims unless they can back them up. The Competition Act prohibits any representation in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of any given product, not based on adequate and proper testing. The onus is on advertisers to prove that the representation is based on an adequate and proper test. The test must have been concluded before the representation is made and the data must be readily available upon request by the Bureau.”
Personal information.
Personal Information Protection and Electronic Documents Act (PIPEDA): “ … information about an identifiable individual, but does not include the name, title or business address or telephone number of an employee of an organization.”
Office of the Privacy Commissioner of Canada: “Privacy Commissioners and courts have expanded and refined the meaning of personal information to include many things, from the commonplace (name, address and income tax returns) to the more unusual (voiceprints and tracking information collected by GPS).”
Phishing.
Industry Canada, The Digital Economy in Canada: “Phishing is a technique which counterfeits existing legitimate web sites and businesses, in order to obtain credit card numbers, bank account information, social insurance numbers and passwords, directly leading to identity theft and fraud.”
Consumer Protection BC: “Brand spoofing (aka phishing) happens when scammers create false website or send consumers e-mails or text messages from what appear to be well-known and trusted businesses. When a consumer provides information to these fake sources, scammers gain access to private information such as SIN numbers or bank PIN numbers.”
CRTC: “This is a type of fraud in which a scammer attempts to impersonate a reputable person or organization, such as a bank or another enterprise with which you may have done business. The swindler sends a phony e-mail that may ask you to confirm details about your account or to supply other personal information by clicking on a bogus link.”
Competition Bureau, The Little Black Book of Scams (2012): “Phishing scams are all about tricking you into handing over your personal and banking details to scammers. The emails you receive might look and sound legitimate but in reality genuine organizations like a bank or a government authority will never expect you to send your personal information by an email or online. Scammers can easily copy the logo or even the entire website of a genuine organization. So don’t just assume an email you receive is legitimate. If the email is asking you to visit a website to ‘update’, ‘validate’ or ‘confirm’ your account information, be sceptical.”
Government of Canada, Get Cyper Safe: “Fake e-mails, text messages and websites created to look like they’re from authentic companies. They’re sent by criminals to steal personal and financial information from you. This is also known as ‘spoofing’.”
RCMP, E-mail Fraud / Phishing: “Phishing is a general term for e-mails, text messages and websites fabricated and sent by criminals and designed to look like they come from well-known and trusted businesses, financial institutions and government agencies in an attempt to collect personal, financial and sensitive information. It’s also known as brand spoofing.”
Government of Canada, Canadian Anti-Fraud Centre, “Financial Crime Trend Bulletin: Spear Phishing” (2013): “Phishing is a term for e-mails, websites or even text messages that are created and disseminated by fraudsters to ‘trick’ a person into supplying their personal information (usually user name and password). The intent is that you will think the communication is from your bank / credit union, a business (like an upgrading request from your Google / MSN / Yahoo security) or a government institution (i.e., Canada revenue Agency) and you will trust the communication to the extent that you supply personal data. Where a phishing email is disseminated to a random audience composed of as many email addresses collected as possible, a spear phishing email has a more selective audience. This time the fraudster has been able to collect some type of information identifying certain groups of people as having a common link. Perhaps a company has been hacked or it could be a collection of information done through the internet (Blogs / chat groups / social networking sites). The result is a selection of email addresses associated to a known commodity. It could be a bank, a company or even an educational facility. Generally there is a link in the email leading you to a very authentic looking website where you are asked to confirm or supply personal information. Because you are at the onset familiar with the company or organization you are not alarmed and the website is very official looking so you are less likely to see a red flag that should be there.”
PIPEDA.
The Personal Information Protection and Electronic Documents Act (or “PIPEDA”) is Canada’s federal privacy legislation, which governs how organizations may collect, use or disclose personal information about individuals during commercial activities. PIPEDA also, among other things, gives individuals the right to review and ask for corrections to information an organization may have collected about them.
Political advertising.
Advertising Standards Canada, The Canadian Code of Advertising Standards: “’advertising’ appearing at any time regarding a political figure, a political party, a political or government policy or issue, or an electoral candidate.”
Ponzi scheme.
Competition Bureau, The Little Black Book of Scams (2012): “Ponzi schemes are fraudulent investment operations that work in a similar way to pyramid schemes. The Ponzi scheme usually entices new and well-to-do investors by offering higher returns than other investments in the form of short-term returns that are either abnormally high or unusually consistent. The schemer usually interacts with all the investors directly, often persuading most of the existing participants to reinvest their money, thereby minimizing the need to bring in new participants as a pyramid scheme will do.”
RCMP, Investment and Securities Fraud: “This type of scheme is named after Charles Ponzi who became notorious for using the technique in early 1920. A Ponzi scheme is an investment fraud that promises high financial returns or dividends that are not available through traditional investments. Unknown to the investors, returns are paid from their own money or money paid by subsequent investors rather than from profit. This provides an appearance of legitimacy. In a Ponzi scheme, there is no legitimate investment. The scheme generally falls apart when either the operator flees with all of the proceeds, a sufficient number of new investors cannot be found to allow the continued payment of the promised returns, or the scheme is discovered by authorities. Two recent Ponzi schemes include the Earl Jones case in Montreal and Bernard Madoff in the USA. Another form of a Ponzi scheme is a called a Pyramid or Multi-Level Marketing Scheme. In this scheme, participants earn money not by the sale of any product but by recruiting new participants to pay money to join the program.”
Pop-up ad.
RCMP, Internet Security: “Pop-up ads are those small windows containing advertisements that literally pop up during your Internet sessions. In some cases, closing the window results in the repeated opening of one or more advertisement boxes. These boxes often are generated when you are surfing a commercial site, but they can also be launched by spyware. As a rule, these windows are perfectly harmless. However, most Web users find them annoying because they hamper their Web sessions. It is possible to reduce and even to eliminate these pop-up ads.”
Predictive Dialing Device (PDD).
CRTC Unsolicited Telecommunications Rules: “Any software, system, or device that automatically initiates outgoing telecommunications from a pre-determined list of telecommunications numbers.”
Premium blind network.
A mobile advertising network term.
Canadian Marketing Association (CMA), “The Truth about Mobile Ad Networks”: “Premium blind networks offer access to premium, mid-sized publisher applications. These networks, again, do not offer much feedback and insight about the publishers you are working with. Like the blind networks, premium blind networks are great for increasing the volume of exposure to your campaign – with the advantage of gaining access to moderately well-trafficked applications. Options of Cost-Per-Click (CPC) and Cost-Per-Install (CPI) are offered. Advertisers opting for this type of ad network should expect a combination of self-serve tracking tools as well as direct support and targeting options.”
Premium network.
A mobile advertising network term.
Canadian Marketing Association (CMA), “The Truth about Mobile Ad Networks”: “Premium mobile ad networks work with a smaller pool of strong, premium publisher applications. These applications garner much attention and are highly popular amongst mobile users, increasing the value of investing in utilizing premium networks for your campaign. Publishers utilizing premium ad networks are able to pay a premium price to secure prime ad spaces on top-tier sites. Publishers opting to use premium ad networks will enjoy a heavy emphasis of direct sales support.”
Prepackaged product.
Canadian Food Inspection Agency: “means any product that is packaged in a container in such a manner that it is ordinarily sold to or used or purchased by a consumer without being re-packaged.”
See also Consumer Packaging and Labelling Act.
Pretender invoice.
Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “The “pretender scheme” is when scammers send you an invoice or bill requesting payment for goods or services. These invoices may state that you are past the due date for payment and threaten that non-payment will affect your credit rating. The invoices are fake and are for goods or services you haven’t ordered or received. For example, you might be sent an invoice for a domain name that is very similar to your current domain name or for a small amount of stationery. The scammer hopes that you don’t notice the difference and just pay the invoice.”
Principal display surface.
Canadian Food Inspection Agency: “generally, it is that part of the container that is visible to the purchaser when the package is being displayed for the purpose of sale.”
See also Consumer Packaging and Labelling Regulations.
Principal display panel.
Canadian Food Inspection Agency: “generally means that part of a label applied to the principal display surface, which is the side or surface of a container that is displayed or visible under normal or customary conditions of sale or use.” Consumer Packaging and Labelling Regulations.
“Prize-promotion,” “gimme gift”, “cheap gift” or “prize pitch” scam.
Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Telemarketers ‘guarantee’ that the victims have won valuable prizes or gifts, such as vacations or automobiles, but require victims to submit one or more payments for non-existent shipping, taxes, customs or bonding fees, or anything else the offender thinks plausible. Some schemes never provide their victims with any prize or gift, while others provide inexpensive items, often called ‘gimme gifts’ by U.S. telemarketers and ‘cheap gifts’ by Canadian telemarketers.”
Canadian Anti-Fraud Centre: “One of the most common scams is the “prize pitch”. Consumers are told they have been specially selected to win a prize, or have been awarded one of three or two of five prizes. These prizes usually include cash or a vehicle. You must purchase a product and pay in advance to receive your prize. These products may include “coin collections”, personalized pen sets, etc. The products are generally cheap or overpriced, but may sound valuable over the phone.”
RCMP, Prize Pitch (Lottery) Scams: “The classic prize pitch scam involves victims receiving notification by post, phone, or e-mail indicating they have won a prize (monetary or other valued item). However, in order to collect the prize the victim is required to pay various fees or taxes in advance. Victims either never hear from the organization again or receive further requests for money. If you have won a prize in Canada there are no fees or taxes to be paid.”
For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest FAQs, Contest Tips and Contests and Social Media.
For information about the Canadian contest/sweepstakes precedents (template rules) and checklists that we offer for sale, see: Canadian Contest Forms/Precedents.
Promotional Contest.
Promotional contests in Canada are largely governed by the federal Competition Act (statutory disclosure and misleading advertising rules), federal Criminal Code (provisions governing “illegal lotteries” that must be avoided), federal and provincial privacy legislation (relating to the collection of entrant personal information), the common law of contract (contests have been held to be contracts) and intellectual property laws (e.g., relating to the transfer of original artistic materials, for example in skill contests, or reproduction of 3rd party logos, trade-marks or other intellectual property not owned by a contest organizer). In addition, Quebec has a separate regime governing contests, regulated by the Régie des alcools, des courses et des jeux.
With respect to the Competition Act, subsection 74.06 makes it a reviewable (i.e., civil) matter, subject to civil penalties, to operate a contest without certain required disclosure, to unduly delay the award of prizes and also governs the selection of participants and distribution of prizes:
“A person engages in reviewable conduct who, 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, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit by any mode of chance, skill or mixed chance and skill whatever, where: (a) adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the knowledge of the person that affects materially the chances of winning; (b) distribution of the prizes is unduly delayed; or (c) selection of participants or distribution of prizes is not made on the basis of skill or on a random basis in any area to which prizes have been allocated.”
For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest FAQs, Contest Tips and Contests and Social Media.
For information about the Canadian contest/sweepstakes precedents (template rules) and checklists that we offer for sale, see: Canadian Contest Forms/Precedents.
Publisher’s defence.
Competition Bureau, Application of the Competition Act to Representations on the Internet: “For reviewable conduct under sections 74.01 to 74.06 of the Act [the civil misleading advertising and promotional contest provisions of the Competition Act], a defence is found in subsection 74.07(1) for a person who merely ‘prints or publishes or otherwise disseminates a representation, including an advertisement, on behalf of another person in Canada’, so long as certain conditions are met. This exception is sometimes referred to as the ‘publisher’s defence’ but, provided its conditions are met, it applies to any person who merely disseminates or distributes a false or misleading representation. In other words, it is available to any person who does not have decision-making authority or control over the content. The required conditions which must be met under this exception are: the disseminating person accepted the representation for dissemination in good faith and in the ordinary course of its business; and the person on whose behalf the representation is being made is in Canada, and the disseminating party recorded its name and address. The Bureau will focus its enforcement efforts primarily on businesses which are responsible for content or have a degree of control over that content, rather than on businesses operating as a conduit, that is, a disseminator or distributor of the content.”
Puffery.
Australian Competition & Consumer Commission: “Puffery is a term used to describe wildly exaggerated, fanciful or vague claims for a product or service that nobody could possibly treat seriously, and that nobody could reasonably be misled by. Examples of puffery include ‘best food in town’ or ‘freshest taste ever.’”
Pyramid selling.
Competition Bureau, Truth in Advertising, Pyramid Selling: “A scheme of pyramid selling is illegal under the Competition Act. It is a multi-level marketing plan that includes either compensation for recruitment, required purchases as a condition of participation, inventory loading, or the lack of a buy-back guarantee on reasonable commercial terms.”
“Sections 55 and 55.1 of the Competition Act are criminal provisions addressing multi-level marketing and pyramid selling. Section 55 prohibits operators or participants in a multi-level marketing plan from making representations relating to compensation without fair, reasonable and timely disclosure of the amount of compensation received or likely to be received by typical participants in the plan. Section 55.1 of the Act provides that a multi-level marketing plan that includes either compensation for recruitment, required purchases as a condition of participation, inventory loading, or the lack of a buy-back guarantee on reasonable commercial terms, constitutes a prohibited “scheme of pyramid selling. Any person who contravenes section 55 or 55.1 is guilty of an offence and liable to a fine of up to $200,000 and/or imprisonment up to one year on summary conviction, or to fines in the discretion of the court and/or imprisonment up to five years upon indictment.”
Competition Bureau, The Little Black Book of Scams (2012): “In a typical pyramid scheme, unsuspecting investors are encouraged to pay large membership fees to participate in moneymaking ventures. The only way for you to ever recover any money is to convince other people to join and to part with their money as well. People are often persuaded to join by family members or friends. But there is no guarantee that you will recoup your initial investment. Although pyramid schemes are often cleverly disguised, they make money by recruiting people rather than by selling a legitimate product or providing a service. Pyramid schemes inevitably collapse and you will lose your money. In Canada, it is a crime to promote a pyramid scheme or even to participate in one.”
Competition Bureau, Enforcement Guidelines, Multi-level Marketing Plans and Schemes of Pyramid Selling: “Section 55.1 of the Act defines a “scheme of pyramid selling” as an MLM plan with one or more of the following features: requires a payment for the right to receive compensation for recruiting others into the MLM plan (compensation for recruitment); requires purchases as a condition of participation (purchase requirement), other than a specified amount of product at the seller’s cost for the purpose of facilitating sales; includes inventory loading; or lacks a buy-back guarantee on reasonable commercial terms or participants are not informed about the guarantee. It is a criminal offense to establish, operate, advertise or promote a scheme of pyramid selling.”
Canadian Consumer Handbook: “Multi-level marketing (MLM) is a system for selling products in which participants get paid for selling products to other participants who, in turn, are paid for selling the same products to yet more participants. This type of marketing is legal in Canada when the plan does not contravene the Competition Act. Referral selling, matrix marketing and binary systems are all similar types of multi-level marketing plans, though some may be illegal under the Criminal Code, the Competition Act and some provincial and territorial laws. Under the Competition Act, MLM plans that make claims about potential compensation must also disclose the amount of compensation typical participants in the plan earn. Pyramid selling is an MLM plan that incorporates the following deceptive practices, which make it a criminal offence under the Competition Act: participants pay money for the right to receive compensation for recruiting new participants; a participant is required to buy a specific quantity of products, other than at cost price for the purpose of advertising as a condition of participation; selling unreasonable amounts of inventory to participants; having an unreasonable product return policy. Pyramid selling is also a criminal offence under the Criminal Code.”
Federal Government, Consumer Information website (www.consumerinformation.ca): “Multi-level marketing is a system for selling products whereby participants are paid for selling products to other participants who, in turn, are paid for selling the same products to yet more participants. This type of marketing must comply with the Competition Act. Pyramid selling is a type of multi-level marketing that is a criminal offence under the Competition Act due to the following deceptive practices: paying money to those who recruit new members (who also pay money for the same right); requiring new recruits to buy products as a condition of participation; selling unreasonable amounts of inventory to participants; and having an unreasonable product return policy. Pyramid selling is also a criminal offence under the Criminal Code of Canada.”
Halsbury’s Laws of Canada, 1st ed.: “Pyramid selling is a type of multi-level marketing plan where participants pay for the right to receive compensation from the recruitment of other participants into the plan. Those recruits also pay, in turn, for the right to receive compensation from the recruitment of further participants. It also includes schemes where, as a condition of participating in the scheme, a participant must purchase commercially unreasonable amounts of a product. The establishment, operation, advertisement or promotion of a pyramid selling scheme is prohibited.”
********************
SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
Bait advertising.
U.S. Federal Government, Electronic Code of Federal Regulations, Title 16: Commercial Practices, Part 238 – Guides Against Bait Advertising: “Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised.”
Bait and switch.
The Competition Act contains “general” misleading advertising provisions, which generally prohibit false or misleading claims to the public to promote a product or any business interest (sections 52 and 74.01). In addition to these general misleading advertising provisions, the Act also contains a number of other sections that prohibit or regulate specific forms of marketing and advertising practices, including “bait and switch selling” (section 74.04).
Competition Bureau, Ensuring Truth in Advertising – Bait and Switch Selling: “The Competition Act prohibits ‘bait and switch’ selling which occurs when a product is advertised at a bargain price, but is not available for sale in reasonable quantities. The provision does not apply if the advertiser can establish that the non-availability of the product was due to circumstances beyond its control, the quantity of the product obtained was reasonable, or the customer was offered a rain check when supplies were exhausted.”
Competition Bureau, Pamphlet, Bait and Switch Selling: “Under the Competition Act, retailers are prohibited from advertising products at bargain prices that they do not have available in reasonable quantities. Liability will be avoided where the advertiser can establish that the non-availability of the product was due to circumstances beyond its control, the quantity of the product was obtained when reasonable, or the customer was offered a rain check when supplies were exhausted. Retailers who contravene the law may be ordered by a court to stop the conduct, to publish a corrective notice, and/or to pay an administrative monetary penalty.”
See also, Better Business Bureau (BBB) Code of Advertising: “[A] ’Bait’ offer is an alluring but insincere offer to sell a product or service which the advertiser does not intend to sell. Its purpose is to switch consumers from buying the advertised merchandise or service, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser.”
See also Competition Act, section 74.04.
Behavioural advertising.
Office of the Privacy Commissioner, Guidelines, Privacy and Online Behavioural Advertising: “Online behavioural advertising involves tracking consumers’ online activities, across sites and over time in order to deliver advertisements targeted to their inferred interests. Behavioural advertisers often use sophisticated algorithms to analyze the collected data, build detailed personal profiles of users, and assign them to various interest categories. Interest categories are used to present ads defined as relevant to users in those categories. While advertising may help subsidize the delivery of free online content desired by most users, it is nevertheless essential that online advertising practices respect an individual’s privacy rights and consent choices. Online behavioural advertising may be considered a reasonable purpose under the Personal Information Protection and Electronic Documents Act (PIPEDA), provided it is carried out under certain parameters, and is not made a condition of service for accessing and using the Internet, generally.”
Blind network.
A mobile advertising network term.
Canadian Marketing Association (CMA), “The Truth about Mobile Ad Networks”: “These networks usually have a large database of smaller-sized publisher applications. Blind networks do not offer much insight or metrics in regards to the publishers that you are working with, but can be beneficial for stimulating awareness to your campaign within a broad audience segment. Publishers are usually given an assortment of self-serve tracking mechanisms to track and monitor the success of the mobile ad campaigns.”
Botnets.
Industry Canada, The Digital Economy in Canada: “The term ‘botnet’ refers to a collection of software robots, or ‘bots’, that operate undetected on a network of infected computers (commonly referred to as ‘zombies’). Computers can become infected in a number of ways, including: viruses sent as an attachment to a spam message; clicking on pop-up windows; or visiting an infected website. In the absence of security features such as firewalls or anti-virus programs, a computer can easily become compromised and users typically have no knowledge that their computer is operating as a zombie. Once established, botnets are controlled remotely by the originator and used for distributing all types of malware.”
CRTC: “Widely considered one of the biggest online threats today, a “botnet” is a network of computers infected by malicious software robots, or “bots”. The originator of the botnet, who is usually a spammer or criminal, controls the botnet remotely and automatically. Your computer can become compromised without your knowledge when, for example, you open an infected attachment in a spam e-mail, click on certain pop-up windows, or visit a booby-trapped website. Because of their ability to grow rapidly and without attracting attention, botnets threaten the stability of the Internet and online services.”
Government of Canada, Get Cyper Safe: “A collection of software robots, or ‘bots’, that creates an army of infected computers (known as ‘zombies’) that are remotely controlled by the originator.”
Brand spoofing.
Consumer Protection BC: “Brand spoofing (aka phishing) happens when scammers create false website or send consumers e-mails or text messages from what appear to be well-known and trusted businesses. When a consumer provides information to these fake sources, scammers gain access to private information such as SIN numbers or bank PIN numbers.”
RCMP, E-mail Fraud / Phishing: “Phishing is a general term for e-mails, text messages and websites fabricated and sent by criminals and designed to look like they come from well-known and trusted businesses, financial institutions and government agencies in an attempt to collect personal, financial and sensitive information. It’s also known as brand spoofing.”
“Business card” category of implied consent (CASL).
In general, Canada’s federal anti-spam legislation (CASL) requires that senders have express or implied consent (as defined by the legislation) to send unsolicited commercial electronic messages (CEMs) to Canadians, unless an exemption under CASL applies. CASL contains a so-called “business card” category of implied consent, which requires that a recipient has disclosed their electronic address to a sender without indicating that they do not want to receive unsolicited CEMs and the message is relevant to their business. It is very important for electronic marketers to carefully review the requirements for express consent and each type of implied consent defined by the legislation.
For more information about CASL, see: CASL (Anti-Spam Law), CASL Compliance, CASL Compliance Tips, CASL Compliance Errors, CASL FAQs, Contests and CASL.
For more information about the CASL compliance checklists and precedents that we offer for sale, see: CASL Compliance Checklists and Precedents.
Business directory scam.
U.S. Federal Trade Commission, Bureau of Consumer Protection: “The smooth-talking voice on the other end of the line claims to need some information to ‘confirm’ your existing phone book listing. Fast forward a few weeks and your mailbox is jammed with “invoices” threatening legal action if you don’t pay up. Chances are you’ve been hit by a business directory scam. The Federal Trade Commission (FTC) and the Better Business Bureau (BBB) have seen an increase in this form of fraud. Small and medium-sized businesses, churches, and not-for-profit groups have been hardest hit. Many will pay the bogus invoices in the mistaken belief that it’s simply a misunderstanding. But it’s not. It’s a growing form of fraud run by international scam artists. How the scam works: The Call. First, con artists make cold calls to offices. They ask the person answering the phone to ‘confirm’ the address, telephone number, and other information, claiming it’s for a listing the company has in the yellow pages or a similar business directory. The scammers then fire off a rapid series of questions they may tape-record, sometimes sliding in a confusing reference to the cost. The scam works because fraudsters convince the person who picks up the phone that they’re just ‘verifying’ an arrangement the company already has with the directory. The Bill. The con artist then sends urgent ‘invoices’ for $500 or more — sometimes including a copy of the ‘directory.’ They’re usually worthless and are never distributed or promoted as promised. Often, they’re just websites with listings of various businesses. In many cases, the person paying the bills will simply cut a check, not realizing that the company never agreed to pay the hefty fee for the directory. But if businesses resist, the scammers turn up the heat, threatening collection or legal action to get payment. They may use the name of the person who answered the phone or play a ‘verification tape’ as ‘proof’ that the company owes them money. Often these tapes have been doctored or the nature of the transaction was rattled off in a way no one could have understood. If companies stand firm in their refusal to pay for services they didn’t authorize, the scammer may try to smooth things over by offering a phony discount. Or they may let the company return the directory — at the company’s own cost, of course — but insist on payment for the so-called listing. At this stage, many companies pay up just to stop the hounding. What they don’t know is that they’ll likely get more bogus invoices — either from the same scam artist or from others who have bought their contact information for a new scheme.”
Business interest.
A false or misleading claim can violate the general civil or criminal misleading advertising provisions of the Competition Act (sections 52 and 74.01) where it is made to promote a product (i.e., in the context of traditional advertising or marketing of products or services) or also “any business interest”. “Business interest” has been broadly interpreted by Canadian courts in misleading advertising cases.
See for example, Commissioner of Competition v. Yellow Pages Marketing, 2012 ONSC 927 (Ont. Sup. Ct.): “… the Competition Act refers to promoting ‘any business interest’ and not just sales. The phrase ‘business interest’ must be given a wide meaning and collecting money, and threats made in relation to collection efforts, constitute promotion of the respondents’ business interests.”
Business-to-business (B2B) marketing.
Canadian Marketing Association, Code of Ethics and Standards of Practice: “Marketing products or services to other companies, government bodies, institutions and other organizations.”
Buying group.
Competition Bureau, Enforcement Guidelines, Competitor Collaboration Guidelines (2009): “A joint purchasing arrangement is an agreement between firms to purchase all or some of their requirements for a product from one or more suppliers. Such arrangements are often pro-competitive, as they permit firms to combine their purchases to achieve greater discounts from suppliers, and share delivery and distribution costs. However, joint purchasing agreements are agreements between parties that may be competitors in respect of the purchase of the products subject to the agreement. Accordingly, joint-purchasing arrangements can substantially lessen or prevent competition where, for example, purchasers agree to fix the price at which products will be purchased as an exercise of monopsony power. Joint purchasing arrangements can take several forms, including agreements to purchase products through a jointly controlled company, contractual arrangements between a group of firms and a supplier and buying groups.”
********************
SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
Administrative monetary penalty (AMP).
The civil misleading advertising (section 74.01) and abuse of dominance (section 79) provisions of the Competition Act include “administrative monetary penalties” or “AMPs” as penalties (essentially civil fines). Under subsection 74.1(1) of the Competition Act (the penalties section for civil misleading advertising) a court may impose AMPs of up to $750,000 for individuals (up to $1 million for subsequent orders) and up to $10 million for corporations (up to $15 million for subsequent orders).
Under subsection 79(3.1) of the Competition Act, the federal Competition Tribunal may order a person to pay an AMP of up to $10 million ($15 million for subsequent orders). The size of AMPs that may be imposed under the misleading advertising provisions was significantly increased as a result of the amendments to the Act that were introduced in 2009. AMPs were introduced as a potential penalty for abuse of dominance for the first time in Canada as a result of those same amendments.
Competition Bureau, Frequently Asked Questions – Amendments to the Competition Act: “Administrative monetary penalties, or ‘AMPs,” are civil remedies, and quite distinct from fines (which are criminal). The purpose of an AMP is to promote and encourage compliance with the Competition Act, and failure to pay one may be enforced civilly as a debt due to the Crown. A fine, by contrast, is a punishment imposed by a court upon conviction of a criminal offence, and failure to pay may lead to imprisonment.”
Address harvesting.
Government of Canada, Canada’s Anti-Spam Legislation (www.fightspam.gc.ca), FAQs: “This refers to the collection of email addresses through the use of things such as ‘web crawlers,’ which are computer programs that scan websites, usenet groups and social networking sites, trolling for posted electronic addresses; and ‘dictionary attacks,’ in which a computer program guesses live email addresses by methodically trying multiple name variations within a particular group of common email domains, such as Hotmail or Gmail. Once collected, email addresses are often sold to spammers as destinations for unsolicited electronic messages.”
CRTC: “A technique used by spammers to automatically compile lists of e-mail addresses for their bulk electronic mail-outs. The process uses a computer program to troll the Internet for addresses found, for example, on people’s websites.”
Adequate and proper testing.
In addition to the general misleading advertising provisions of the Competition Act (sections 52 and 74.01), and a number of other provisions of the Act that regulate specific types of advertising and marketing conduct, the Act also contains a specific performance claims provision (paragraph 74.01(1)(b)), which requires any person that makes a “representation to the public in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of a product” to have performed “adequate and proper tests” before the claim is made.
Canada (Competition Bureau) v. Chatr Wireless Inc., 2013 ONSC 5315 (Ont. Sup. Ct.): “The phrase ‘adequate and proper test’ is not defined in the Competition Act. Whether a particular test is ‘adequate and proper’ will depend on the nature of the representation made and the meaning or impression conveyed by that representation. Subjectivity in the testing should be eliminated as much as possible. The test must establish the effect claimed. The testing need not be as exacting as would be required to publish the test in a scholarly journal. The test should demonstrate that the result claimed is not a chance result: see [Canada (Commissioner of Competition) v. Imperial Brush Co., 2008 Comp. Trib. 2, [2008] C.C.T.D. No. 2 (Comp. Trib.)] at paras. 122, 124, 126 and 127. The respondents must show that adequate and proper testing supported the fewer dropped calls claim …”
Canada (Commissioner of Competition) v. Imperial Brush Co. (2008), 2008 Comp. Trib. 2 (Comp. Trib.): “In summary, and in respect of this case, I conclude that a ‘proper and adequate’ test depends on the claim made as understood by the common person; must be reflective of the risk or harm which the product is designed to prevent or assist in preventing; must be done under controlled circumstances or in conditions which exclude external variables or take account in a measurable way for such variables; are conducted on more than one independent sample wherever possible; results need not be measured against a test of certainty but must be reasonable given the nature of the harm at issue and establish that it is the produce itself which cases the desired effect in a material manner; and must be performed regardless of the size of the seller’s organization or the anticipated volume of sales.”
Administrative Monetary Penalties (Competition Act, CASL).
Some federal legislation in Canada includes “administrative monetary penalties” as potential penalties for contravening the legislation instead of criminal or quasi-criminal fines, including Canada’s federal Competition Act and CASL (federal anti-spam legislation).
For example, the potential penalties for violating the civil misleading representations provisions of the Competition Act include Competition Tribunal or court orders to cease the conduct, publish a corrective notice, pay restitution and/or pay an administrative monetary penalties (essentially civil fines): (i) for individuals up the greater of $750,000 ($1 million for each subsequent order) and three times the value of the benefit derived from the deceptive conduct if that amount can be reasonably determined; and (ii) for corporations up the greater of $10 million ($15 million for each subsequent order), three times the value of the benefit obtained from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of the company’s annual worldwide gross revenues. For more information, see: Misleading Advertising.
Violation of CASL (Canada’s federal anti-spam legislation) may result in an administrative monetary penalty of up to $1 million (for individuals) or $10 million (for corporations).
For more information about CASL, see: CASL (Anti-Spam Law), CASL Compliance, CASL Compliance Tips, CASL Compliance Errors, CASL FAQs, Contests and CASL.
For more information about the CASL compliance checklists and precedents that we offer for sale, see: CASL Compliance Checklists and Precedents.
Advance fee fraud (aka West African scam, 419 scam or Nigerian scam).
RCMP, Advance Fee Fraud: “Classified advertisements for loan opportunities do not guarantee the legitimacy of a company. Some companies claim they can guarantee you a loan even if you have a bad credit history or no credit-rating at all. They usually request an up-front fee of several hundred dollars. If you send your money to these companies, it is unlikely you will get your promised loan and your advance payment will be at risk. Advance fee loans operating for a criminal purpose generate millions of dollars annually in Canada. Persons with poor credit ratings are usually the key targets and once the ‘loan processors’ receive your money, they usually disappear.”
Competition Bureau, The Little Black Book of Scams (2012): “The Nigerian scam (also called the 419 fraud) has been on the rise since the early-to-mid 1990s in Canada. Although many of these sorts of scams originated in Nigeria, similar scams have been started all over the world (particularly in other parts of West Africa and in Asia). These scams are increasingly referred to as ‘advance fee fraud’. In the classic Nigerian scam, you receive an email or letter from a scammer asking your help to transfer a large amount of money overseas. You are then offered a share of the money if you agree to give them your bank account details to help with the transfer. They will then ask you to pay all kinds of taxes and fees before you can receive your ‘reward’. You will never be sent any of the money, and will lose the fees you paid.”
RCMP, Internet Security: “Fraud letters from Nigeria (and other African countries) is a type of scam that has been around for a number of years. Businesses, educational institutions and government departments were originally the prime targets of electronic messages bearing the promise of substantial amounts of money from alleged government or company officials in Nigeria. The general public is now also targeted, and thousands of people like you receive similar e-mail messages in their personal mail boxes. In some cases, con artists even send stolen or forged cheques to their victims. This scam can also be done by phone and from many countries. In addition to money you can be asked for confidential information against the promise of profits.”
Joewein.de LLC: “The so-called ‘419’ scam (aka ‘Nigeria scam’ or ‘West African’ scam) is a type of fraud named after an article of the Nigerian penal code under which it is prosecuted. It is also known as ‘Advance Fee Fraud’ because the common principle of all the scam format is to get the victim to send cash (or other items of value) upfront by promising them a large amount of money that they would receive later if they cooperate. In almost all cases, the criminals receive money using Western Union and MoneyGram, instant wire transfer services with which the recipient can’t be traced once the money has been picked up. These services should never be used with people you only know by email or telephone! Typically, victims of the scam are promised a lottery win or a large sum of money sitting in a bank account or in a deposit box at a security company. Often the storyline involves a family member of a former member of government of an African country, a ministerial official, an orphan or widow of a rich businessman, etc. Variants of the plot involving the Philippines, Taiwan, China, Hong Kong, Korea, Iraq, Kuwait, UAE, Mauritius, etc. are also known. Some emails include pictures of boxes stuffed with dollar bills, scans of fake passports, bank or government documents and pictures of supposedly the sender.”
Advertising.
Advertising Standards Canada, Canadian Code of Advertising Standards: “Advertising is defined in the Code as any message (the content of which is controlled directly or indirectly by the advertiser) expressed in any language and communicated in any medium to Canadians with the intent to influence their choice, opinion or behaviour. Excluded from the definition of “medium” and the application of the Code are: (i) foreign media (namely media that originate outside Canada and contain the advertising in question) unless the advertiser is a Canadian person or entity; and (ii) packaging, wrappers and labels. Also excluded from the application of the Code are political and election advertising.”
Association of Canadian Advertisers: “Advertising is defined as any message, communicated in any medium, the content of which is paid for and/or controlled by the advertiser, with the intent to influence choice, opinion or behaviour.”
Advertising troll.
Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “Consumers posting ads to free online listings like Craigslist to sell a vehicle are the target of unlicensed telemarketing companies. These companies are trolling through online ads to find someone to make a quick buck from. Companies often guarantee to sell vehicles quickly and promise a money-back guarantee. Problem is that these guaranteed vehicle brokers rarely sell your vehicle, rarely provide refunds, and only post your own ad to other free online listings – charging you a $500 fee for things you probably could do yourself for free.”
Advisory opinion.
Under section 124.1 of the Competition Act, any person may apply to the Commissioner of Competition, together with supporting information, for a binding written opinion regarding the application of any provision of the Act. Written opinions can be a practical way for businesses and individuals to reduce potential competition law liability for proposed conduct. A written opinion is binding on the Commissioner if all material facts relating to the proposed conduct have been submitted. If issued, written opinions remain binding for as long as the material facts on which they are based remain substantially unchanged and the conduct is carried out substantially as proposed. Binding written opinions are available, subject to the Commissioner’s discretion to issue them, for proposed conduct only. In other words, the Bureau will not issue advisory opinions for existing business conduct.
Written opinions are available under the following provisions of the Act, among others: resale price maintenance (section 76), exclusive dealing / tied selling / market restriction (77), abuse of dominance (79), civil agreements provision (90.1), conspiracy (45), misleading advertising and deceptive marketing practices (52, 55.1, 74.01, 74.06), deceptive telemarketing (52.1), deceptive prize notices (53), multi-level marketing and pyramid selling (55 and 55.1), performance claims (74.01(1)(b)) and promotional contests (74.06).
See Competition Act section 124.1; Competition Bureau, website, Legal Actions and Opinions section; Competition Bureau, Bulletin, Competition Bureau Fee and Service Standards Handbook for Written Opinions; definition of “written opinion”.
Advocacy advertising.
Advertising Standards Canada, The Canadian Code of Advertising Standards: “’advertising’ which presents information or a point-of-view bearing on a publicly recognized controversial issue.”
Affinity fraud.
Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “When a scam artist targets a group of people who know each other, it is called an affinity fraud. The investment schemes they promote may change or vary over time, but the methods they use to target groups are often the same. To be successful, scam artists need to earn the trust of an influential person in a group, family, or workplace. Once they establish this bond (and this can take time), they use this connection to get their hands on the money of other people in the group. In some cases, they may even pay the influencer to help them out, never telling the person that the investment is really a scam.”
Ambush Marketing.
Phillip Johnson, Ambush Marketing and Brand Protection (Oxford University Press, 2012): “Ambush marketing is any attempt to create an unauthorized or false association with an event thereby interfering with the legitimate contractual rights of the event’s official marketing partners.”
Assumed sale technique.
A type of advertising fraud.
Lisa Campbell, Deputy Commissioner of Competition, Fair Business Practices Branch, Competition Bureau, “Watch What You Say: Views From the Competition Bureau”, presentation at 2012 Competition Law Spring Forum, Toronto (May 2, 2012): An assumed sale technique “[leads] businesses into believing that a sale [has] already taken place … and that payment [is] due.”
Astroturfing.
An online fraud term that refers to the practice of spreading false or fake testimonials for products or services on online review websites, such as Google, Yahoo and Yelp. The artificial grass metaphor refers to the fake “grass roots” of false product testimonials.
Oxforddictionaries.com: “The deceptive practice of presenting an orchestrated marketing or public relations campaign in the guise of unsolicited comments from members of the public”.
Automated calling devices.
CRTC: “Automated calling devices are used to dial telephone numbers and automatically deliver a pre-recorded message. The CRTC’s Automatic Dialing and Announcing Device Rules prohibit telemarketers from using these devices to sell or promote a product or service unless a consumer has consented to be called by them.”
CRTC Unsolicited Telecommunications Rules: “’Automatic Dialing-Announcing Device’ or ‘ADAD’ means any automatic equipment incorporating the capability of storing or producing telecommunications numbers used alone or in conjunction with other equipment to convey a pre-recorded or synthesized voice message to a telecommunications number.”
********************
SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
