December 7, 2012
Earlier today, the Competition Bureau announced that five individuals have been charged under the Criminal Code and Competition Act for allegedly misleading and deceptive telemarketing (see: Five Individuals Facing Charges for Fraudulent and Misleading Telemarketing Calls).
In making the announcement, the Bureau said:
“In August 2006, a Bureau investigation revealed two telemarketing operations in Montréal using questionable tactics. One, using names such as ‘Advance Financial’, ‘Consumer Benefit’, and others, promoted government grants to American citizens. The other, using names including ‘Global Electronic Solutions/Solutions Électroniques Global’ and ‘Federal Emergency Medical Supply/Agence Federal des Produits Medicales (sic)’, promoted the sale of office supplies and medical kits to Canadian and American businesses. The operations were shut down following a search in December 2006. The combined revenue of the two operations is estimated to be as much as $840,000.
The Bureau’s investigation determined that some of the alleged tactics used during the telemarketing calls included implying that the caller represented a business that had an existing relationship with the victim’s company, indicating that certain products or services were required under government rules, or implying that the call was being made on behalf of a government agency.”
In Canada, the Competition Act makes it a criminal offence to engage in deceptive telemarketing and also requires certain disclosure to be made during telemarketing calls.
In particular, 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.
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.
Earlier this week, the federal CRTC announced that it has taken sweeping enforcement steps against 85 companies for breaching Canada’s telemarketing rules.
In making the announcement, the CRTC said:
“Today, the Canadian Radio-television and Telecommunications Commission (CRTC) concluded a five-month investigation and took enforcement action against 85 companies for breaking the telemarketing rules. This investigation marks the latest step in the CRTC’s efforts, using a variety of enforcement strategies, to reduce unwanted calls made to Canadians.
The CRTC issued citations to 74 telemarketers who had failed to register with the National Do Not Call List operator or subscribe to the National Do Not Call List. Notices of violation were issued to an additional 11 companies for more significant breaches. Administrative monetary penalties totalling $41,000 were imposed on those 11 companies. In setting the penalty amounts, the CRTC recognized that many of these telemarketers are small businesses.”
According to the CRTC, it has imposed penalties of $2.1 million to date.
Under Canada’s National Do Not Call List (“DNCL”) rules, established under the federal Telecommunications Act, consumers may register their residential, wireless, fax or VoIP telephone numbers to reduce the number of telemarketing calls received. Registrations are valid for five years and become effective 31 days after registration (consumers must periodically renew their registrations before expiry).
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
