Information sheet on the Competition Bureau & deceptive telemarketing investigations
June 2, 2009
What is the Competition Bureau?
The Competition Bureau is an independent agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice. Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act. Its role is to promote and maintain fair competition so that Canadians can benefit from competitive prices, product choices and quality services.
What is the Competition Act?
The Competition Act is a federal law governing business conduct in Canada. It contains both criminal and civil provisions aimed at preventing anti‑competitive practices in the marketplace.
Telemarketing under the Competition Act
In general usage, telemarketing refers to the selling of goods or services, everything from magazines to chimney and carpet cleaning services, directories, photocopier toner, and even the solicitation of charitable donations, over the telephone.
Telemarketers' requirements under the Competition Act
Section 52.1 of the Competition Act defines telemarketing as:
"The practice of using interactive telephone communications 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."
The Bureau defines an interactive telephone communication as a live-voice telephone conversation between two or more persons.
It should be noted, however, that deceptive prize notices in any form are specifically prohibited under section 53 and any other criminal misrepresentations are covered under section 52 of the Competition Act.
Act applies whether recipients are in or outside of Canada
Amendments to the Act, which took effect March 12, 2009, clarified that the Act captures misleading representations whether the recipients of the representations are in or outside of Canada.
Telemarketers' disclosure requirements
With telemarketing, consumers often do not know with whom they are dealing, and offers are not made in print where they can be carefully considered, or on television or radio where they are repeated often. Therefore, the law requires that all of the following facts must be disclosed by the telemarketer to each called person or business at appropriate times during each telephone call.
At the beginning of each call the telemarketer must disclose:
- the name of the company or person the caller is working for;
- the type of product or business interest he or she is promoting; and
- the purpose of the call.
At some other time during each call they must also disclose:
- the price of any product or service being promoted; and
- any restrictions or conditions that must be met before the product is delivered.
In addition, the law forbids telemarketers to:
- make any representation that is false or misleading in a material respect;
- conduct a contest, lottery or other game where delivery of the prize is conditional on payment in advance, or where the approximate value of the prizes and other facts that affect the chances of winning are not fairly disclosed;
- offer a free gift or a product at minimal cost as an inducement to buy a second product (this is acceptable if they accurately disclose the approximate value of the gift or premium); and
- require payment in advance where the price of the product upon delivery is found to be grossly in excess of the fair market value of that product.
Responsibility and liability of corporations, corporate officers and directors
Section 52.1 specifically makes corporations legally liable for the illegal telemarketing activities of their employees and agents, even if those activities cannot be ascribed to a particular individual, unless the corporation establishes that it exercised due diligence in trying to prevent the commission of the offence.
In addition, when a corporation, or any of its employees or agents, is shown to have committed an offence under this section, any officer or director of the company who is in a position to direct or influence the policies of the company in regards to the activities covered by this section, is considered to be a party to, and guilty of, the crime and is liable to the penalties provided for by this section, unless the officer or director can establish that he or she exercised due diligence in trying to prevent the commission of the offence.
Penalties under the Competition Act
Amendments to the Act, which took effect March 12, 2009, increase the maximum jail terms to those convicted of offences under the deceptive telemarketing provisions, section 52.1 and also under sections 52 and 53, from 5 years to 14 years.
In addition, courts can impose fines in amounts at their discretion.
The Bureau's Immunity Program
The Bureau's immunity program encourages parties who have engaged in criminal conduct prohibited by the Act to come forward to admit their illegal activity and offer to cooperate with the Bureau's investigation and any subsequent prosecution. Where the applicant party meets the requirements of the program, the Bureau will recommend that the Director of Public Prosecutions of Canada (DPP) provide the applicant with immunity from prosecution.
The Bureau treats the identity of a party requesting immunity as confidential.(Footnote 1)
Furthermore, the Bureau treats information obtained from a party requesting immunity as confidential, subject only to the exceptions listed below, or where disclosure of such information is otherwise for the purpose of the administration or enforcement of the Act.
For more information on the Bureau's immunity program, please view the following page on the Bureau's Web site.
Whistle-blowing and confidentiality
Under section 66.1 of the Act (commonly referred to as the whistle-blowing provisions), anyone who has reasonable grounds to believe that a person has committed or intends to commit a criminal offence under the Act may notify the Bureau of the particulars of the matter and may request that his or her identity be kept confidential. The Bureau will keep confidential the identity of a person who has made such disclosure and to whom an assurance of confidentiality has been provided.
When such an assurance has been provided, the identity of the person cannot be communicated under section 29 of the Act. The Bureau will make every effort to ensure that the identity of a whistle-blower and any information that could reveal such identity is kept confidential.
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