Originally published in the Advertising & Marketing Bulletin November 2005
Telemarketing has recently found itself in the spotlight with Bill C-37's proposed do-not-call legislation. Talk of a national do-not-call list has buzzed around Canada for some time and it seems proponents will soon have their way. Given that Canadians buy over $16 billion in goods and services over the phone each year, telemarketing has been an effective tool for marketers to connect with consumers.1 However, the increased use of telemarketing to promote goods and services combined with a move towards greater protection of personal privacy seem to be driving more intense scrutiny of telemarketing practices. Bill C-37 is a significant addition to existing legislation and has raised some controversy amongst consumers and marketers.
The Canadian Radio Television and Telecommunications Commission (CRTC) began reviewing current telemarketing rules in March 2001. It issued Telecom Decision 2004-35 in May 2004, which introduced significant changes to existing telemarketing regulations, including stricter identification procedures and predictive dialling constraints (see our May 2004 Advertising & Marketing Client Alert, CRTC Blinks at Regulating Telemarketing).2 But enforcement was suspended that September following an application by the Canadian Marketing Association (CMA) to stay the decision until further review. Do-not-call legislation was contemplated by the CRTC at the time of issuing Decision 2004-35 but the Commission concluded they had no authority to implement a national list.
A Closer Look at Bill C-37
Similar to successful legislation already in place in the US, Bill C-37 introduced Canada's proposed do-not-call legislation in December 2004. Amending the Telecommunications Act, the proposed legislation would allow the CRTC to establish a national bilingual do-not-call list to which individuals not wishing to receive unsolicited calls could add their telephone numbers. Telemarketers who call individuals on the national registry will be committing an offence and subject to monetary fines.
After extensive lobbying, Bill C-37 has since been amended to exempt calls to customers with whom the caller has an "existing relationship" and calls made by or on behalf of a "registered charity" as defined by the Income Tax Act. Also exempted are calls from political parties and calls made solely to conduct market research or to solicit a subscription to a newspaper of general circulation.
Definition of "Existing Relationship"
As currently drafted, the definition of "existing relationship" covers a business relationship that has been formed by a voluntary two-way communication between the person making the telecommunication and the person to whom the telecommunication is made, arising from: (a) the purchase of services or products within the eighteen-month period immediately preceding the date of the call; (b) an inquiry or application within the sixmonth period immediately preceding the call; or (c) any other written contract that is currently in existence or that expired within the eighteen-month period immediately preceding the call.
Exemption for Charities
The proposed exemption for "registered charities" applies only to organizations the federal Income Tax Act defines as charitable. The CMA would like the definition broadened to include organizations recognized as charitable under provincial law as well. The CMA also wants the government to create an additional list, allowing individuals to "opt in" to a separate do-not-call list for charities. The CMA believes such organizations will benefit from requiring individuals to make an active choice.
The Status Of Bill C-37
Bill C-37 was passed by the House of Commons on October 24, 2005 and has been referred to the Standing Committee on Transport and Communications after a second reading before the Senate. The Committee is expected to discuss the appropriateness of the current exemptions and the need to hear from all stakeholders. Thus, the final version of the bill could include either fewer or greater exemptions than its current form. Should the Senate decide to amend Bill C-37 and send it back to the House, an impending election could kill the measure. If the Senate passes the bill, the CRTC could establish the necessary regulations and set up the list within one year.
Existing Rules On Telemarketing
Telemarketing regulation in Canada has many facets. The two main statutes governing telemarketing are the Competition Act and the Telecommunications Act.
The Competition Act defines telemarketing as promoting any business interest through interactive telephone communications. Telemarketers must not make any false or misleading representations and must follow certain disclosure requirements. For instance, telemarketers must disclose at the beginning of each call the company they represent, the product or service they will promote and their purpose for calling. During the call, they must also disclose the price and conditions of any sale.
The Telecommunications Act authorizes the CRTC to regulate telemarketing in Canada. Activities falling under the CRTC's definition of telemarketing include unsolicited phone calls and faxes to sell or promote goods or services. Charitable organizations seeking donations and businesses calling on other parties' behalf are also covered. The use of Automatic Dialling and Announcing Devices to promote goods or services is also prohibited. Telemarketers who fail to comply with CRTC regulations risk having their phone service suspended or terminated.
The current CRTC rules governing telemarketing include the following:
- Telemarketers must identify the name of the person or organization they represent and provide the name, address, and telephone number of a contact person if requested.
- The calling number must be displayed unless technically not possible.
- Calls to emergency lines and health care facilities are prohibited.
- An individual's name and number must be removed from calling lists within 30 days (7 days for faxes) on request and do-not-call lists must be maintained for 3 years.
- Fax solicitations are allowed only during specified hours; the hours for telephone solicitations are not restricted.
- Although random dialling and calls to unpublished numbers are allowed, sequential dialling is prohibited.
CRTC's Decision 2004-35 significantly changed some of the rules governing telemarketing, but as noted above, enforcement was suspended that September until further review. Proposed changes would require telemarketers among other things to:
- provide the first person answering the phone with a toll free number (staffed during business hours) for comments or questions;
- issue as proof a unique registration number to individuals asking to be added to a do-not-call list; and
- keep the rate of abandoned calls below 5% when using predictive dialling devices.
It should not be overlooked that the CMA has set up and administered its own do-not-call list since 1989. Participation in CMA's registry became compulsory for its 800 corporate members in 1993. Non-members may also participate on a voluntary basis. The do-not-call list contains about 340,000 names with approximately 7,500 additions each month.
According to the CMA Code of Ethics and Standards of Practice, the accepted telemarketing practices include: identification of the caller, calling only unpublished numbers if the number was furnished to the marketer, removing consumers from lists upon their request, respecting the customers who have registered with the CMA's do-not-call service, employing lists that contain at least the surname and telephone number of the household called, restricting calling hours and limiting the frequency of contact to once per month.
With the recent passage of Bill C-37 by the House of Commons, Canada is one step closer to having a national do-not-call list. Telemarketers may soon have to re-examine their practices to ensure they are in line with new legislation. Those not falling within the statutory exemptions will have to develop other creative tactics to develop relationships with potential customers.
1. Sarah Dobson, "Wake-up Call" Direct Marketing Resource (14 November 2005).
2. Available at http://www.mcmbm.com/AdvertisingMarketing.html
The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.
© Copyright 2005 McMillan Binch Mendelsohn LLP