Measuring the Level of Mass Marketing Fraud (MMF) in Canada

Branch and directorate:

The Competition Bureau of Canada (Bureau) contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice. This project was commissioned by the Bureau's Fair Business Practices Branch (FBPB), which is responsible for the administration and enforcement of provisions of the Competition Act that cover false or misleading representations and deceptive marketing practices. The Branch also administers and enforces the Consumer Packaging and Labelling Act, the Precious Metals Marking Act, and the Textile Labelling Act. FBPB officials carry out their investigations through enforcement activities in regional offices across the country, including Vancouver, Calgary, Winnipeg, Toronto, Hamilton, Montreal, and Halifax.

As part of its regional participation, the Bureau plays an active role in six regional enforcement partnerships in place across Canada to combat MMF. These partnerships include: the Vancouver Strategic Alliance, the Royal Canadian Mounted Police (RCMP)-led Projects Emptor (Vancouver) and COLT (Montreal), the Alberta Partnership Against Cross Border Fraud, the Toronto Strategic Partnership, and the Atlantic Partnership — Combating Cross Border Fraud. Branch officials support the Bureau-chaired Fraud Prevention Forum, a concerned group of 100 plus members representing private sector firms, consumer and volunteer groups, and government and law enforcement agencies. The Fraud Prevention Forum is committed to fighting fraud aimed at consumers and businesses in Canada through increased public awareness. Additionally, FBPB supports the Canadian Anti-Fraud Call Centre — PhoneBusters (CAFCC), a program located in North Bay, Ontario, and managed on a tripartite basis by the Ontario Provincial Police, the RCMP, and the Bureau. The FBPB is headed by a Deputy Commissioner who currently serves as the federal Co-Chair of a National Mass Marketing Fraud (MMF) Strategy Working Group (WG); the other federal Co-Chair being the Director of Commercial Crime Section, RCMP (Headquarters).

Rationale:

Fraud is an issue of growing concern in Canada and other countries. Despite this, there is no comparative figure cited by Canadian partners in estimating the level of financial losses incurred by victims of Canadian-based MMF operators. MMF operators target individuals through fraudulent schemes ranging from prize pitches, lottery clubs, credit card offers and advance fee loans to credit card protection and health insurance frauds, among others. There is a need to collect data that is empirically sound, that can be systematically monitored on an annual basis or over time to measure changes in the level of fraudulent activity in this country.

Prior research for the Bureau suggests that a general population survey would be beneficial in helping to gain further insights into patterns of victimization in Canada, through self-reported data from Canadian adults who had been victimized or targeted by fraudsters. Should such a general population survey be undertaken, it was deemed important that the survey sample should be large enough and cover the types of frauds most frequently reported by consumers and those investigated by Canadian enforcement partners.

For the purpose of the proposed research, the Competition Bureau defines Mass Marketing Fraud (MMF) in Canada as fraud committed via mass communication media using the telephone, mail, and the Internet. This definition includes instances of deceptive SPAM, but excludes identity theft and phishing activities.

Anticipated Outcomes / Benefits:

The main objectives of this research are as follows:

• To gain a better understanding of the incidence of MMF and, where possible, the level of victim losses resulting from fraudulent operations targeting Canadians. This will be used to inform Canadian enforcement partners as to current profiles of Canadian victims who lost money through a particular scam or scams, as well as those targeted by fraudsters, and to achieve a more accurate depiction of the scope of this problem;
• Complement existing efforts by Canadian partners at the Canadian Anti-Fraud Call Centre — PhoneBusters (CAFCC), Canada's central repository for MMF-related complaints and intelligence information, to achieve the collection of harmonized and national data on MMF through more uniform reporting using common data requirements, entities and definitions; and
• Through the design of the survey instruments, to achieve some degree of harmonization with the consumer fraud data released by the United Kingdom's Office of Fair Trading (December 2006) and the United States' Federal Trade Commission (August 2004 and November 2007).

Research Information:

This report is based on a national telephone survey conducted between June 13 and August 14, 2007 with a representative sample of 6,116 Canadians 18 years of age and over. The margin of error for a sample of this size drawn from the population is plus or minus 1.3 percentage points, in 19 out of 20 samples. The margins of error are greater for results pertaining to regional or socio-demographic subgroups of the total sample.

Contracting:

The work was undertaken by a public opinion research firm meeting the qualifications set out through this project using the Government's Standing Offer Index for quantitative public opinion research.

Research Firm: Environics Research Group
Contract #: U3200-062514/001/CY
Contract issued by: Public Works Government Services Canada
Contract value: to a maximum of $199,910.70

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2007 Canadian Consumer Mass Marketing Fraud Survey