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Canadian Senate Thwarts Adoption of Telemarketing Fraud Legislation

OTTAWA – A bill that would introduce tough new measures to combat deceptive telemarketing practices hit a snag on Dec. 10 in the Senate when the Liberal majority failed to defeat a move by Progressive Conservatives to delete an amendment protecting whistle blowers.

Bill C-20 amends Canada’s Competition Act, which has not been altered since 1986.

Under the Canadian parliamentary system, the bill must now return to the House of Commons where the Senate’s decision to remove the whistle-blower amendment will either be accepted or rejected. If it’s rejected, the bill will return to the Senate for further consideration.

The earliest the House of Commons could vote on the Senate’s changes to the bill is Feb. 2, which is when members of parliament return to work from their holiday break. But there is virtually no chance they will look at it on their first day back or for some time to come.

Don Mercer, head of the amendments unit with the Competition Bureau, said the expectation is the House of Commons will get to Bill C-20 sooner rather than later in the year, “but when they do it depends on their schedule.”

Whatever decision the House of Commons and the Senate come to with respect to whistle blowers won’t affect the new provisions to counter telemarketing fraud. These have already received final approval in both the House of Commons and the Senate.

The Act will require telemarketers at the beginning of any solicitation to identify the company or organization on behalf of which the solicitation is being made, the nature of the solicitation and to give full and fair disclosure of the price of any products or services being offered.

As well, the amendment brings in two provisions targeted directly at telemarketing fraud.

One requires any telemarketer to reveal to the customer the fair market value of any free bonus or incentive that is being offered. Another makes officers of the company responsible for statements by their employees in the course of telemarketing.

In addition, Bill C-20 will make deceptive telemarketing a criminal offense punishable by a maximum of five years in prison and a fine within the discretion of the court.

It will also permit the Competition Bureau to apply for judicial authorization to intercept private communications without consent (wiretap) when investigating cases of deceptive telemarketing.

John Gustavson, president and chief executive officer of the Canadian Marketing Association (CMA), formerly the Canadian Direct Marketing Association (CDMA), supports the bill, which he sees as an important step toward cleaning up telemarketing fraud and building consumer confidence in doing business over the phone.

“We’re very disappointed that the Senate sent the bill back,” said Gustavson. “For the sake of building a legitimate telemarketing industry, we need to have proper law enforcement mechanisms to shut down fraudulent operators.”

In remarks made Nov. 24 to the Senate Banking and Commerce Committee, Gustavson pointed out that CMA members already “comply with a mandatory Code of Ethics and Standards of Practice, which includes requirements for full and fair disclosure of details relating to the marketer and the offer in question.”

However, he continued, “not all companies are bound by CDMA’s Code of Ethics. Membership in this association is voluntary, and despite the fact that we represent about 80 per cent of direct response sales in Canada, some marketers, whether responsible or not, are non-members.

“It is also an unfortunate truth that as an industry grows, some operations with questionable or fraudulent business practices will enter the field to take advantage of that growth – and indeed of the consumer trust that has been established.

“Scam artists have always been around, but with the emerging technological tools available, they are finding new ways to prey on innocent victims, especially those most vulnerable, such as senior citizens.

“Telephone fraud currently victimizes far too many individuals each year, and it also threatens consumer confidence in doing business by phone. We feel that the government’s role is to create and enforce laws that will protect consumers and prevent telemarketing fraud.

“The proposed changes outlined in Bill C-20 will improve the framework that already exists and will equip law enforcement agencies with the investigative tools they need to crack down on fraud.

“We welcome the new measures such as authorized wiretapping of suspected scam artists, a quicker resolution process and stricter penalties for offenders.

“In addition, the requirement for full disclosure of information brings this legislation in step with CDMA’s own Code of Ethics and Standards of Practice.”

Gustavson is hopeful the new legislation will be in place by late winter or early spring at the latest.

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