Why American Telemarketers Should Be Concerned About Canadian Do Not Call Laws by Mark McMackin, Partner, Ricketts Harris LLP
A new regulatory headache has arisen for contact professionals and telemarketers, and this time it comes straight from snowy Canada.
While American telemarketers have had to adjust to telemarketing and telesales regulations and a Do Not Call List for almost a decade, they may now have to adjust to Canada’s new Do Not Call List rules and regulations which came into effect on September 30, 2008.
Under Canada’s Telecommunications Act, the Canadian Radio-television and Telecommunications Commission (the Canadian equivalent to the Federal Communications Commission) was given authority to pass regulatory rules relating to ‘unsolicited telecommunications’. These rules related to unsolicited phone calls and faxes for commercial purposes.
Like the Federal Communications Commission and Federal Trade Commission’s harsh treatment of American telemarketers in the United States, in only three years the Canadian Radio-television and Telecommunications Commission has proven its worth by releasing two record penalties against companies for telemarketing to Canadian consumers registered on the Canadian Do Not Call List: $1.3 million and $500 thousand respectively.
For all intents and purposes, Canadian consumers are no different than American consumers in purchasing and consumption practices – meaning that Canada is often a fruitful market for American telemarketers. With the new Canadian Do Not Call List, and the aggressive Canadian Radio-television and Telecommunications Commission, this means that American telemarketers need to pay attention to Canadian rules.
The Unsolicited Telecommunications Rules (‘Rules’), which establish the Canadian Do Not Call List, have been drafted to apply to any unsolicited call made to a Canadian consumer. In short, American telemarketers selling to Canadians are subject to its authority.
While it seems unlikely that a Canadian regulator would chase down an American company, the Rules were also drafted in a way to allow the Canadian Radio-television and Telecommunications Commission to go after a ‘client of a telemarketer’ who ‘should have known’ that the telemarketer it hired was calling consumers registered on the Do Not Call List. So, even if an American telemarketer is located in the United States, a client located in Canada may be on the hook for the American telemarketer’s non-compliant contact practices. This situation could lead to not only unhappy customers and tarnished reputations for contact professionals, but indemnity lawsuits from former clients seeking restitution from American telemarketers. With Canadian fines currently listed at $15,000 per call by a corporation, the potential damage is not negligible.
Further, in today’s climate of terrorism and cross-border smuggling, Canadian and American authorities are working more closely together in monitoring regulated, trans-border industries such as telemarketing. For example, a lot of illegitimate telemarketing is conducted out of the Canadian city of Montreal. Most investigations and raids are joint efforts of the Canadian Bureau of Competition, the Canadian federal police, and the U.S. Federal Trade Commission.
For the regulation of legitimate telemarketing, the joint efforts and sharing of resources between Canada and the United States are no different. It is well-known within the contact professional industry that should the Canadian Radio-television and Telecommunications Commission be unable to pursue an American telemarketer, the files and investigations are forwarded to the Federal Trade Commission or Federal Communications Commission for their enforcement. Even if non-compliant calls to Canadians do not result in Canadian fines, they will likely result in a ‘red-flag’ in FCC or FTC files.
It is also important for American telemarketers to be aware of the difference in Do Not Call List rules between Canada and the United States. In particular: (1) consent, (2) existing relationships, (3) registration, and (4) business exemption.
Industry critics have been vocal in noting the strictness of the Canadian ‘consent’ to contact requirements in the Rules. Canada’s Rules are purely a prior ‘express consent’ model. This means that for each Canadian consumer who is registered on the Canadian Do Not Call List, a telemarketer must have proof of consent in order to contact them. Proof means actual evidence of the consent, such as a signature, a checked-off box, or a contract. The Canadian Radio-television and Telecommunications Commission will not accept an ‘implied’ consent to contact, such as affiliated, but separate, corporations who share customer lists or non-business phone numbers conspicuously published in a place that would suggest interest in being contacted. American telemarketers must also ensure to keep records of and proof of such consent should the Canadian Radio-television and Telecommunications Commission demand records.
There is also immense concern over the Canadian Rules definition of existing relationships. As defined, ‘existing business relationships’ with a customer apply only to current clients, or former clients up to 18 months from the time of relationship severance. Like consent, this exemption to contact a Canadian registered on the Do Not Call List cannot be transferred to affiliated, yet separate, companies – the relationship must be with the company itself.
Thirdly, even telemarketers exempted from the Canadian Do Not Call List Rules (registered ‘Canadian’ charities, political candidates, and daily circulation newspapers) must register as a ‘telemarketer.’ This means that even exempt companies can, and have, been punished for simply initiating telemarketing calls when they were not ‘registered’. It also means that non-exempt American telemarketers who initiate a non-compliant call may be punished with two violations for one phone call: a violation for calling a Canadian registered on the National Do Not Call List and a violation for calling when not registered as a ‘telemarketer.’ Suddenly, one call can cost $30,000.
Lastly, Canadian Do Not Call List Rules do not apply to business to business (B2B) calls. Again, the onus is put on the American telemarketer to ‘prove’ that a telephone number is, in fact, a business telecommunications number. In an age where almost everyone runs a home-based business, a residential phone line sometimes doubles as a business line. The assumption of the Canadian Radio-television and Telecommunications Commission will be that a phone line is ‘residential’ and it will be the American telemarketer who has to prove that the call was being received by a business. Again, this means retaining records to substantiate that phone numbers are, in fact, business numbers.
In short, American contact professionals and telemarketers cannot treat Canadian consumers as merely another English-speaking group of consumers. Despite the similarity between American and Canadian consumers, the regulation of telemarketing in Canada is different, if not more strict, than that of the United States. It is recommended that any American contact professional, call centre, or telemarketer also retain Canadian counsel, if even to prove due diligence, prior to initiating any calls into Canada.
For $15,000 fines per call, the benefits are obvious.
Mark McMackin is a Canadian lawyer practicing in telemarketing defence and SPAM law. He practices in Toronto Canada and is a partner at the firm Ricketts Harris LLP. He can be reached at mmcmackin@rickettsharris.com
Mark McMackin
Partner
Ricketts Harris LLP
181 University Avenue (at Adelaide)
8th Floor
Toronto, Ontario
M5H 2X7
rickettsharris.com
Email mmcmackin@rickettsharris.com
Tel: 416-364-6211ext 214