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			Back to listing of Laws & Regulations for Charities Amendments to the Competition Act... Deceptive Telemarketing New protection against telemarketing fraud Canadian consumers and businesses are now better protected from telemarketing fraud by new measures contained in the Competition Act. The deceptive telemarketing becomes a criminal offence with a maximum penalty of five years in prison and a fine in the discretion of the court. The law provide for stricter disclosure requirements to help potential victims make informed decisions and distinguish between legitimate telemarketers and scams. The law provides new tools to deal with deceptive telemarketing practices for effective enforcement.One of these investigative tools is the judicially authorized interception, without consent, of private communications to combat the most serious cases of deceptive telemarketing as well as for price fixing and bid-rigging.   Key points New Criminal Offence The deceptive telemarketing provision creates a new criminal offence where "interactive telephone communications" (person-to-person calls) are used to make false or misleading representations in promoting the supply of a product or a business interest (see the fact sheet: Competition Bureau authorized to tap phone lines to fight phone fraud).   New disclosure requirements The new provisions require all telemarketers to disclose, at the beginning of the call: the name of the company or person they are working for; the type of product or business interest they are promoting; the purpose of the call. Telemarketers are also required to disclose, during the call, in fair and reasonable terms, the price of any product being sold and any restrictions or conditions that must be met before the product will be delivered.   Deceptive practices prohibited Telemarketers are prohibited from certain practices, including: making payment in advance a condition for receiving a prize that has been, or supposedly has been, won in a contest or game; failing to provide adequate and fair disclosure of the value of the "prizes"; offering a "gift" as an inducement to buy another product, without fairly disclosing the value of the gift; offering a product at a grossly inflated price and requiring payment in advance.   Injunctions It will be easier for the courts to issue interim injunctions to halt operations of suspected fraudulent telemarketers.Injunctions can also be issued against third parties (such as telephone companies) providing services to businesses or persons who have been previously convicted of deceptive telemarketing.   Directors may be charged Officers and directors of companies engaged in deceptive telemarketing may be charged as parties to the offence and found guilty unless they establish that they exercised due diligence to prevent the offence.This provision is to help ensure that the individuals who are directing the operation can be charged, as well as those on the phones.   Provisions cover fund-raising for charities The definition of "business" in subsection 2(1) of the Act has been changed to include fundraising for charitable and other non-profit purposes. This amendment clarifies that persons engaged in fundraising efforts will be covered by the deceptive telemarketing and deceptive marketing practices provisions.   Background In Canada's new economy, tens of thousands of Canadians are employed in legitimate telemarketing activities.Increasingly, however, illegal telemarketing activities are casting a shadow over this important marketing tool. Total annual losses borne by Canadian consumers and businesses from all forms of telemarketing scams is estimated at $4 billion.This includes consumer dollars lost in prize and recovery pitches, loan scams, investment, fund-raising and lottery schemes, as well as consequential dollar losses to legitimate businesses who lose out on sales, and who are affected by the bad reputation of deceptive telemarketing. A disturbing aspect of this crime is that the favourite victims are the elderly, who may be isolated and who are more likely to be too polite to hang up the phone, and more likely to expect others to be as good as their word.But almost anyone can fall prey.In delivering their pitch, deceptive telemarketers mix skilled acting with manipulative psychology, and play on the human inclination to believe that "this is your lucky day." Because telephone scam artists are highly mobile, continually moving and changing the name of the business, and because they often target victims outside the legal jurisdiction they operate from, they are difficult to apprehend.The new provisions in the Competition Act are designed to improve the odds that these criminals can be stopped.   Guidelines The Competition Bureau has issued Draft Guidelines entitled "New Telemarketing Provisions," which set out the Bureau's approach to the administration and enforcement of these provisions. There will be broad consultation on these guidelines before they are finalized.Anyone interested in obtaining a copy of the guidelines or providing comments, may do so by calling the Bureau's Information Centre at: 1 800 348-5358 or (819) 997-4282. To report deceptive telemarketing, call: 1-800-348-5358    Downloaded from the Industry Canada web site: http://strategis.gc.ca

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