What You Should Know About Telemarketing
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, photocopier toner, and even the solicitation of charitable donations — over the telephone.
The vast majority of Canadians are aware that telephone lines are frequently used by businesses to contact potential customers, including other businesses, either person‑to‑person, by pre‑recorded messages or by fax.
Although most telephone sales calls come from legitimate businesses or charities, the telephone can also be used to trick unsuspecting consumers and businesses out of their money — money that can seldom be recovered.
This pamphlet is designed to inform consumers and assist businesses in complying with the provisions of the Competition Act. It approaches the law from the telemarketer's point of view by describing the disclosure requirements and penalties outlined in the Act, and by briefly explaining the Bureau's interpretation of this section of law.
Section 52.1 of the Competition Act is a criminal provision. It 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, which excludes pre‑recorded telephone messages, Internet or fax communications.
It should be noted, however, that deceptive prize notices in any form are specifically prohibited under section 53 and any other misrepresentations are covered under either section 52 or 74.01 — the criminal and civil general prohibitions regarding the making of false or misleading representations — of the Competition Act.
Telemarketers' disclosure requirements
With telemarketing, consumers often do not know with whom they are dealing. Offers are not made in print where they can be carefully considered, or on television or radio where they are repeated often, but are made instead during a telephone conversation. 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 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.
What are the possible penalties?
Any person convicted on indictment under section 52.1 of the Act can face fines at the discretion of the court and/or can be imprisoned for up to 14 years.
Any person found guilty under this section on summary conviction can be fined up to $200,000 per count and/or can be imprisoned for up to one year.
The Competition Bureau is an independent law enforcement 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.
For more information:
National Capital Region: 819‑997‑4282
TTY (for hearing impaired): 1‑866‑694‑8389
50 Victoria Street
Gatineau, Quebec K1A 0C9
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