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.”
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. The federal Competition Tribunal has given some consideration of relevant factors as to when testing will be adequate and proper.
See e.g., 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.”
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 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.”
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.”
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”.
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.”
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.”
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.”
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.”
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