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.
Certain disclosure must also be made by telemarketers at the beginning of a call and sometime during a call.
Deceptive telemarketing is punishable, on indictment, by unlimited fines (i.e., in the discretion of the court), imprisonment for up to 14 years, or both (and on summary conviction, to fines of up to $200,000, imprisonment for up to one year, or both).
The general misleading advertising provisions of the Act also apply to telemarketing, as is illustrated by this case.
The enforcement of the telemarketing provisions of the Competition Act has been an enforcement priority for the Competition Bureau in recent years, with the Bureau reiterating as recently as this week that enforcement of the criminal deceptive marketing provisions of the Competition Act remains a priority – for example, in remarks made earlier this week by the Interim Commissioner (see: here).
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