Canada: New Federal Law Will Affect How and When You Call Your Customers

Last Updated: January 12 2006

Article by Kelly Moffatt, Phil Rogers, Andraya Frith & Patricia Brady

Originally published December 8, 2005

Do Not Call legislation gets Royal Assent as the 38th Parliament comes to a close

Newly enacted amendments to the Telecommunications Act authorize the Canadian Radio-television and Telecommunications Commission (the CRTC) to establish a national Do Not Call List (the List) aimed at reducing the volume of telemarketing calls to Canadians.

Many businesses would be surprised to know that some of their most common and seemingly innocuous telephone communications with customers may in fact be considered to be telemarketing.

Telemarketing has been broadly defined by the CRTC as any unsolicited call made for the purpose of selling or promoting a product or service, or the soliciting of money or money's worth, whether directly or indirectly. This clearly includes "cold calls" but could also include "reminder calls" and other calls to existing customers. The breadth of the term "telemarketing" led many businesses and industry associations to lobby for exemptions to the Do Not Call legislation to allow them to continue to make calls to existing customers that have registered their phone numbers on the List, without running afoul of the new law.

Calls to existing customers may be exempt

As a result, an exemption for "telemarketing" calls made to a person with whom the caller has an "existing business relationship" has been built into the new legislation. In addition, telemarketing calls made by charities, political parties, opinion surveyors, and newspapers are also excluded from the scope of the Do Not Call law.

This means that a company will still be able to call a customer with whom it has an "existing business relationship" even if that customer has registered his or her phone number on the Do Not Call List, as long as the customer has not specifically asked that company not to call. For the purposes of the exemption, an "existing business relationship" between a caller and a call recipient arises from a purchase or written contract within the 18 month period immediately preceding the call, or an inquiry or application made by the recipient within six months before the call.

The "existing business relationship" exemption does not align perfectly with the requirements of Canadian privacy laws. Canada’s relatively new privacy laws require businesses to obtain the consent of their customers in order to contact them for marketing or promotional purposes. Once this consent has been obtained, there is no express requirement under the privacy laws to update this consent. As a result of the Do Not Call law, businesses will only be able to call an existing customer whose telephone number has been registered on the List if their relationship with the customer meets the "existing business relationship" requirements – even if that particular customer has previously consented to receive marketing materials, including by way of telephone, from the company. This issue was not publicly considered by the Parliamentary Committee that studied the Do Not Call legislation before it became law but should be raised before the CRTC in the upcoming public proceeding described below.

Under the existing telemarketing rules, businesses are already required to maintain their own do not call lists to ensure that they do not telephone to solicit business from any customer who has asked not to be called by that business. Businesses that have taken steps to comply with Canada’s new privacy laws will already have internal procedures in place to ensure customers who have not consented to being contacted by phone are removed from the company’s telephone marketing database. When a business wishes to call a person with whom it does not have an existing relationship, it will have to first check the national Do Not Call List and refrain from calling those listed or risk fines from the CRTC.

It is quite likely that calls falling under the existing business relationship exemption will still be subject to the CRTC’s oversight. For example, if a complaint is filed against a business with respect to a call to an existing customer, the business would likely have to demonstrate to the CRTC that it had complied with the timeframes within which it was allowed to call the customer.

Costs of complying with the Do Not Call List

The CRTC has indicated that Canadians seeking to avoid unwanted calls from telemarketers will be able to register their phone numbers on the List free of charge. This means that the substantial costs of establishing and administering the List will fall on telemarketers who will likely have to pay a fee to access and/or download the List. While the maintenance of the Do Not Call List is expected to be handled by an independent third party, the fees for accessing the List will be approved and regulated by the CRTC.

In addition to fees for accessing the List, businesses will incur additional internal costs associated with record keeping, call tracking, and employee training.

To ensure compliance, there are penalties of up to $15,000 per day for each day of non-compliance.

The Do Not Call List is expected to be up and running by mid-2007. However, the CRTC is expected to initiate a public proceeding shortly to seek input from Canadian businesses and consumers on the details of the administration and operation of the List and on compliance issues. Businesses that rely on telephone communications with their customers or potential customers would be wise to review the effects that the new law will have on their business and make their views known to the CRTC.

Kelly Moffat is a partner in Osler’s Business Law Department and Co-Chair of the Franchise, Distribution & Marketing Specialty Group. Phil Rogers is a partner in the Business Law Group of Osler's Ottawa office practising telecommunications, broadcasting, regulatory, Internet and privacy law. Andraya Frith is a senior associate in the firm's Business Law Department and is a member of the Franchise & Distribution Specialty Group and the Intellectual Property Department. Patricia Brady is an associate lawyer in the Corporate (Regulatory) Group in Ottawa, and a member of the firm's Communications Law Practice Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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