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.
In general, consumers may sign up to have their home, cellular or fax numbers included on the DNCL, which telemarketers are required to subscribe to (and then are prohibited from calling numbers that have been registered on the DNCL for more than 31 days, with some exceptions).
Exceptions include registered charities, political parties and companies with an existing business relationship (with which a consumer has done business in the past 18 months). Exempt telemarketers must, however, still maintain internal do not call lists, which consumers can request to be added to.
Telemarketers are also required under the Telemarketing Rules to disclose certain information on calls and comply with other rules, including identifying the caller (who they are and providing a phone or fax number), displaying their telephone numbers and restricting calls to certain times. The CRTC may impose penalties of up to $1,500 for individuals and $15,000 for corporations (per violation).
While the CRTC had not been significantly active in enforcing the Canadian DNCL Rules in the past several years, this case and several others recently appear to signal increased enforcement as well as a growing appetite to challenge international telemarketers targeting Canadian consumers.
These efforts have included an enforcement sweep in April against 85 companies (including for failing to register with the DNCL operator, subscribe to the DNCL and other violations – see: here) and launching an international enforcement network, with 11 other international enforcement agencies (see: here).
In addition to the National DNCL, telemarketing in Canada is also regulated by the federal Competition Act and in some cases provincial regulation – for example, in British Columbia by the Telemarketer Licensing Regulation.
The federal Competition Act makes it criminal offences to engage in deceptive telemarketing or to engage in telemarketing unless certain required disclosure under the Act is made. With respect to disclosure, the Competition Act requires that certain disclosure be made by telemarketers both at the beginning of a call and sometime during a call. For example, the Act requires that the following information be disclosed by telemarketers at the beginning of a call: (i) the person on whose behalf the call is being made; (ii) the nature of the product or business interest; and (iii) the purpose of the 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).
Telemarketers conducting business in British Columbia (or contacting British Columbia consumers by phone or fax) to enter distance sales contracts are subject to the Telemarketer Regulation, which also applies to telemarketers that contact BC consumers to solicit consumers for contributions on behalf of 3rd party suppliers – for example, 3rd party fundraisers Telemarketers are required to have licences for each location (which must be displayed), fulfill certain reporting obligations (including new employee identity and contact information and changes in senior officers or corporate control) and are subject to record-keeping requirements (including customer names and contract details).
The Telemarketer Regulation also limits the days and times for telemarketing calls and the frequency and manner of calls (for example, telemarketers cannot call on statutory holidays, outside of specified hours on weekdays or weekends or block their numbers).
Exemptions from the licensing requirement include charities, educational institutions, banks and credit unions, political organizations and survey firms.
For a copy of the CRTC’s news release see: CRTC takes action against telemarketers offering anti-virus software.
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