Court Sends Warning to Fraudulent Marketers Targeting Foreign Residents

OTTAWA, February 19, 2009 — An Ontario Court of Appeal decision should send a warning to marketers who make false and misleading representations, the Competition Bureau said today. The Court of Appeal ruled that those who make false and misleading representations to the public can be prosecuted in Canada even if they make the representations only to people outside the country. A lower court had earlier ruled that prosecution in Canada was possible only if some of the victims were located in Canada. Many Canadian-based mass marketing fraud operations target foreigners, especially Americans.

“We are very pleased that the Court of Appeal recognized that the Competition Act applies to representations made to those outside of Canada. This ruling will enhance our ability to ensure that Canada will not be a haven for scammers targeting foreign victims,” said Andrea Rosen, Deputy Commissioner, Competition Bureau.

The Court of Appeal also ruled that an accused cannot rely on legal advice as a defence. Those engaged in fraudulent marketing practices often ask lawyers to approve their promotions or telemarketing scripts. According to this decision, such legal advice cannot be used to excuse illegal activity.

David Stucky, a resident of Ontario, was accused of marketing lottery programs, under names such as International Monetary Funding and Canadian Lottery Buyers Association, that were alleged to have greatly exaggerated what consumers could win and falsely misled consumers to believe that the promotions were affiliated with government. He was also accused of marketing sweepstakes offers to 200 countries that alleged to have provided recipients the false impression that they were to receive a $5,000 or £3000 cash prize, or some other valuable prize. In reality, nearly every respondent received a predetermined prize of an inexpensive piece of jewellery. The Court of Appeal ordered a new trial.

Consumers who suspect they have been the victim of deceptive mail or telemarketing are encouraged to contact the Competition Bureau's Information Centre at 1-800-348-5358, or PhoneBusters, the Canadian Anti-Fraud Call Centre, operated by the Competition Bureau, the RCMP and Ontario Provincial Police, at 1-888-495-8501.

The Competition Bureau is an independent agency. It contributes to the prosperity of Canadians by protecting competitive markets and enabling informed consumer choice. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

R v. Stucky judgement:

http://www.ontariocourts.on.ca/decisions/2009/february/2009ONCA0151.htm

http://www.ontariocourts.on.ca/decisions/2009/february/2009ONCA0151.pdf

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