Mexican vacation telemarketers can't escape from CRTC rules

October 18, 2011

In a recent case involving telemarketing calls made to Canada on behalf of foreign companies, the CRTC has entered into a novel compliance agreement with the companies in question, aided by the local consumer protection agency.

On October 17, 2011 the CRTC announced that it had recently reached an agreement with two Mexican companies relating to unauthorized telemarketing and “robocalls” made to Canadians to promote Mexican vacation packages.

The investigation and eventual agreement were apparently pursued in response to thousands of complaints received by the CRTC respecting the calls.  The companies were found to have committed several breaches of the CRTC’s Unsolicited Telecommunications Rules (the Rules), including calling numbers registered on the National Do Not Call List (the National DNCL) and calling outside of permitted calling hours.  Some of the calls were made by using Automatic-Dialling Announcing Devices (ADADs), which, while apparently permitted in Mexico, are prohibited in Canada for solicitation purposes, absent prior consent from the call recipient (for more on the ADAD restrictions, see our earlier post about another recent telemarketing settlement). 

Under the terms of the recent agreement, the companies have agreed to comply with the Rules with respect to all calls made to Canadians, and to implement certain measures to ensure ongoing compliance, including maintaining  a valid subscription to the National DNCL and developing a compliance program. 

The Commission’s announcement, and the agreement to which it relates, are noteworthy for a number of reasons.

First, the CRTC has clearly asserted its jurisdiction to deal with calls made to Canada from or on behalf of entities located outside Canada.   Although the Commission does not provide explicit rationale in the agreement for its jurisdiction, it is noted that s. 41 of the Telecommunications Act empowers the Commission to prohibit or regulate the use by any person of the telecommunications facilities of a Canadian carrier for unsolicited telecommunications.  Accordingly, the CRTC would appear to have jurisdiction to deal with telecommunications calls received in Canada, regardless of where that call may originate. 

In addition, even though it appears that the calls were made by an unnamed third party, rather than by the companies directly, the companies are still liable, since the Rules impose several obligations on the “clients of telemarketers” (i.e. those who engage a telemarketer to make calls on their behalf), such as maintaining their own internal “Do Not Call” lists, and ensuring that telemarketers that they engage comply with the Rules.   

The CRTC announcement also noted that the telemarketing calls in question sometimes mentioned well-known Canadian companies, falsely implying a business relationship with them.  Interestingly, the Commission’s agreement with the companies in question include a corresponding commitment to make reasonable efforts to ensure that future telemarketing calls do not suggest false associations with Canadian companies, although the CRTC would appear to have no legal jurisdiction to deal with fraudulent or misleading telephone solicitations.  By contrast, the Competition Bureau has the authority to investigate such representations, pursuant to the misleading representations and deceptive marketing practices provisions of the Competition Act.

Finally, unlike many recent well-publicized telemarketing settlements, which have included hefty fines and monetary payments to public institutions, the agreement with the Mexican companies does not contemplate any payments whatsoever, despite the receipt of a large number of complaints and a number of clear findings of non-compliance.  One is left to speculate whether the lack of sanctions is part of a deliberate policy to use a lighter hand in dealing with foreign companies that may be less familiar with Canadian law or, rather, reflects the potential legal uncertainties of collecting administrative monetary penalties from foreign entities.

Notwithstanding the lack of monetary penalties, the agreement is nonetheless a noteworthy example of increased cooperation between the CRTC and its foreign counterparts, as the CRTC worked closely during the investigative process with Mexico’s consumer protection agency, PROFECO.  This sort of international cooperation is expected to become more commonplace in light of provisions in Canada’s new anti-spam legislation which, once in force, will provide explicit authority for the CRTC, the Commissioner of Competition and the Privacy Commissioner to share information with their foreign counterparts. 

As such, foreign companies marketing or selling goods or services in Canada should be vigilant in ensuring compliance with the relevant Canadian telemarketing and electronic marketing laws.  Similarly, Canadian companies should expect that increased cooperation could make their activities abroad more susceptible to oversight by foreign authorities.    

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