Effective September 30, 2008, Canada's National Do Not Call List ("DNCL") became operative, essentially obliging all businesses who conduct telemarketing to refrain from calling individuals who register on the list. Amendments to the federal Telecommunications Act ("Act") enabling the establishment of the list came into force in June 2006. For the next year the Canadian Radio-television and Telecommunications Commission ("CRTC"), which regulates telephone communications in Canada, held hearings involving industry and government stakeholders with the objective of articulating the detailed rules for the DNCL.
Pursuant to its authority under the Act, the CRTC regulates unsolicited telemarketing communications. Through its "Decisions", the CRTC has created a set of rules which it refers to as the "Unsolicited Telemarketing Rules" ("Rules"). Until the amendment to the Act creating the DNCL, telemarketers were required under the Rules only to maintain and comply with their own internal do not call lists. As well, certain organizations, in particular the Canadian Marketing Association, maintained a do not call list, with which their members were required to comply. The result of the amendments to the Act is the CRTC's expanded Unsolicited Telecommunications Rules framework which, most significantly, encompasses the new National Do Not Call List.
The 2006 amendments created a legislative framework for the DNCL and authorized the CRTC to articulate the details of that framework. The amendments also authorized the CRTC to delegate administration of the DNCL to a third party. Through several Decisions made by it following its hearings on the DNCL (most notably Decision No. 2007-48, dated July 3, 2007), the CRTC has set out the rules for the DNCL; these rules are considered to form part of the Rules.
In addition to setting out the rules for the DNCL, the Rules establish other requirements and restrictions on unsolicited telemarketing communications, including time of calling restrictions, information which must be presented to the customer receiving the phone call, and other related requirements. The Rules apply to organizations that conduct telemarketing, in addition to their telemarketing service providers.
In essence, the DNCL rules enable consumers who do not want to receive telemarketing calls to register their telephone numbers with a registry maintained by the third party service provider authorized to operate the DNCL, which is Bell Canada. All businesses that conduct telemarketing activities in Canada, whether directly or indirectly through telemarketing service providers, are required to register with Bell Canada to ensure that they do not call numbers that are registered with the DNCL.
Consumers may register any Canadian telephone number on the DNCL, regardless of whether they use that number with a landline, a cellular telephone, or a fax machine. To register or de-register on the DNCL, consumers must call a toll-free number from the telephone number that they wish to register or de-register. The same service will be available for fax numbers. Online registration will also be available and will permit registration of a maximum of three numbers at a time.
A 31-day grace period following a consumer's registration is granted to allow telemarketers time to update their telemarketing lists. In other words, an organization is not prevented from calling a number until 31 days following its registration on the DNCL. In effect, this permits organizations to download updates from the DNCL every 31 days.
Registration will expire three years after the effective registration date, at which point the registered number will automatically be removed from the DNCL. Consumers may re-register at any time, which will restart the three-year period.
The effect of registering a number on the DNCL will be to prohibit organizations and their telemarketing service providers from calling that number unless the consumer has expressly consented to being called, or the organization or the consumer falls within an exempt category. In addition, as a client of a telemarketing service provider, an organization must make all reasonable efforts to ensure that the telemarketer calling on its behalf does not initiate calls to consumers registered on the DNCL.
Telemarketer Registration and Access to the DNCL
All telemarketers and clients of telemarketers will be required to register with Bell Canada, even if they only make exempt unsolicited calls. Bell may also require the telemarketer or its client to advise whether it is solely making exempt unsolicited telecommunications.
Fees will be charged to telemarketers accessing the DNCL on either a subscription or specific query basis. Under the subscription basis, a telemarketer will download a copy of the entire DNCL and use it to scrub its own telemarketing contact lists so as to remove all numbers that have been registered. If the telemarketer intends to make calls to registered numbers on the basis of one or more of the exempt categories, it does not need to obtain a copy of the list. However, it will need to qualify its own internal list to validate the basis of the exemption (such as, existing business relationship). It is anticipated that all organizations using significant telemarketing contacts lists will use the download method of inquiry.
The fees have been set by Bell Canada for the first year of operation of the DNCL. The annual fee for all area codes will be $11,280. Individual codes can be accessed for an annual fee of $615. All telemarketers (or their clients) who make any calls outside of the exempt categories are required to pay the subscription fees.
An additional fee, not yet effective, is anticipated to be payable by all telemarketers and their clients, whether calling under an exempt category or not. This fee will be payable to a third party "complaints operator" and is meant to offset the costs of administering a DNCL complaint hotline and investigating violations. The fee is not payable for the first year of operation of the DNCL, since the CRTC will perform these functions during this period.
Exempt Categories of Telemarketing Communications
The amendments to the Act provided for a number of categories of telemarketing communications to be exempt from the DNCL Rules. These are the following:
i) communications made by charities registered under the Income Tax Act;
(ii) communications made for purposes of elections, surveys, and soliciting newspaper subscriptions;
(iii) business-to-business communications; and
(iv) communications based on an existing business relationship with a consumer.
In essence, a telemarketer may call a consumer for the purposes set out in one of these exempt categories notwithstanding that the consumer has registered on the DNCL.
Existing Business Relationship Exemption
For most organizations, the most significant category of telemarketing call exempt from the DNCL will be the "existing business relationship" category. This exemption, set out in subsection 41.7(1)(b) of the Act, provides that the DNCL does not apply in respect of a telecommunication:
"made to a person
(i) with whom the person making the telecommunication, or the person or organization on whose behalf the telecommunication is made, has an existing business relationship; and
(ii) who has not made a do not call request in respect of the person or organization on whose behalf the telecommunication is made."
In other words, a telemarketer may call a consumer who has registered on the DNCL if the telemarketer, or the telemarketer's client has an existing business relationship with the consumer and the consumer has not made a specific request to the organization not to be called. Such a request would take the form of being added to the organization's internal do not call list, which it is still required to maintain under the Rules.
An existing business relationship, as defined by the Act, is established between a consumer and an organization in one of three ways:
(i) a consumer's purchase of services or the purchase, lease or rental of products, within the eighteen-month period immediately preceding the date of the telecommunication;
(ii) a consumer's inquiry or application, within the six-month period immediately preceding the date of the telecommunication, regarding a product or service offered by the person or organization on whose behalf the telecommunication is made; or
(iii) by any other written contract between the person to whom the telecommunication is made and the person or organization on whose behalf the telecommunication is made that is currently in existence or that expired within the eighteen-month period immediately preceding the date of the telecommunication.
The CRTC does not recognize a business' corporate group or affiliates for the purpose of this exemption. In other words, affiliates of the legal entity with which a consumer has a relationship may not benefit from the exemption. The exemption is only extended to a business' corporate group or affiliates if the consumer has provided express consent to be contacted by way of telecommunications by such related organizations.
Similarly, the CRTC does not recognize any extension of an existing business relationship to joint marketing partners of an organization. The relationship may only extend to joint marketing partners if the consumer has provided consent to the organization to be contacted by such partners. The CRTC has also indicated that it will not permit a marketer (such as a joint marketing partner) to call on behalf of an organization that has an existing business relationship exemption unless the marketer itself has an existing business relationship or the consumer has consented to the call.
Telemarketers' Internal Do Not Call Lists
Organizations that benefit from one of the exemptions from the DNCL must still maintain an internal do not call list containing the names (and presumably telephone numbers) of individuals who have contacted the organization requesting that they do not receive calls from it. In other words, consumers who could have been called by the organization, for example because they have an existing business relationship with it, may request not to be called in any event.
While there is no obligation upon organizations to publicize the availability of such internal do not call lists, the CRTC considers it a best practice for organizations to do so. The CRTC does not specify exactly how a consumer may (or must) place this request. A recent CRTC "Consumer Fact Sheet" respecting the DNCL indicates that consumers may either contact the business directly and request registration on their internal do not call list, or place the request at the time of the telemarketing call. It should be noted that if a consumer's request not to be called is made during a telemarketing call, the request must be processed at that time. The consumer should not be asked to call elsewhere to make their request.
Consumers May Consent to Receive Calls
A consumer who has registered a telecommunications number on the DNCL is able to consent to receiving specific telemarketing telecommunications. A consent to receive unsolicited telecommunications will override the consumer's registration on the DNCL. The consumer's consent to receive telemarketing calls must be express and not implied. However, the CRTC states that consent may be obtained in any of the ways permitted under the relevant provisions of the Personal Information Protection and Electronic Documents Act (Canada), which means that oral consent may be used as well as an opt-out method.
The express consent to receive specific telemarketing calls must constitute a positive act by the consumer. Furthermore, it must specifically refer to telemarketing calls and, according to the CRTC's 2007 Decision, include the telephone number to which calls may be placed. In other words, a general consent to be contacted by an organization – as would be sufficient for privacy compliance purposes – will not suffice. Therefore, the consent needs to be included in a communication or document that is provided by the consumer. For example, an application form, response to a marketing solicitation, or another contract.
The CRTC has stipulated that telemarketers, or their service providers, must maintain for a period of three years following their creation, records establishing the telemarketer's subscription to the DNCL, and its payment of all required fees. The CRTC does not expressly require retention of records relating to calls, but notes that it expects telemarketers or their service providers to do so for an appropriate period in order to respond to a complaint or alleged violation respecting a call. A similar three-year retention period for records in connection with calls would be a reasonable approach for retention of such records.
Violations and Complaints
A consumer who continues to receive telemarketing calls after registering on the DNCL (not subject to exemptions and after the 31-day grace period) may file a complaint by calling a toll-free number. The complaint must be filed within 14 days of the call, and must include the name or number of the telemarketer (or client of the telemarketer), the date of the call and the nature of the complaint.
Violations of the DNCL Rules will expose organizations and individuals to "administrative monetary penalties" (or "AMPs") of up to $15,000 for a corporation, and $1,500 for an individual, per violation. Liability is imposed on the telemarketer and on the client of any telemarketing service provider.
The CRTC has stated that it will not release complaint thresholds (i.e., the minimum number of complaints that must be received before investigating a particular telemarketer), or a compliance continuum (a series of steps and responses, such as education, monitoring, inspections, and ultimately a monetary penalty, designed to encourage compliance). However, the CRTC has indicated that it will take a compliance-oriented approach to enforcement, encouraging first-time offenders to remedy their practices rather than moving directly to imposing penalties.
In order to maintain enforcement flexibility, the CRTC will evaluate a number of factors before determining whether to issue a notice of violation and in setting the amount of the penalty. Factors which will be taken into account are:
- the nature of the violation (minor, serious, very serious, negligent or intentional);
- the number and frequency of complaints and violations;
- the relative disincentive of the measure; and
- the potential for future violation.
Due Diligence Defence
The Act provides for a due diligence defence in respect of violations of the Rules. The CRTC has provided guidance criteria for telemarketers to follow in order to establish the due diligence defence. The CRTC states that the alleged violator must demonstrate that the telecommunication resulted from an error and that as part of its routine business practices:
(i) it has established and implemented adequate written policies and procedures to comply with the Rules and to honour consumers' requests that they not be contacted by way of telemarketing telecommunications;
(ii) it provides adequate on-going training to employees and makes all reasonable efforts to ensure adequate on-going training is provided to any person assisting in its compliance with the Rules and any written policies and procedures established under paragraph (i);
(iii) it uses the DNCL obtained from the DNCL operator no more than 31 days prior to the date any telemarketing telecommunication is made;
(iv) it uses the telemarketer's, or where applicable, the telemarketer's client's, do not call list that was updated no more than 31 days prior to the date any telemarketing telecommunication is made;
(v) it uses and maintains records documenting a process to prevent the initiation of a telemarketing telecommunication to any telecommunications number that has been registered for more than 31 days on the DNCL, the telemarketer's do not call list or, where applicable, the telemarketer's client's do not call list;
(vi) it monitors and enforces compliance with the Rules and its written policies and procedures referred to in paragraph (i); and
(vii) in the case of a client of a telemarketer who engages in telemarketing on its behalf, it has entered into an agreement between itself and the telemarketer requiring that the latter comply with the Rules.
These criteria provide important guidance to telemarketers and their telemarketing service providers in establishing internal procedures to ensure, to the extent possible, compliance with the new DNCL regime and to establish the strongest due diligence position as a defence to any potential violation of the Rules.
The CRTC's new National Do Not Call List clearly will have an important impact on businesses that rely on telemarketing either directly, or through marketing partners, to promote their products. Businesses will need to establish and ensure compliance with internal procedures to conform to the requirements of the DNCL. Training of staff by businesses and their telemarketing service providers will be important. Finally, documentation providing for consumers' consent will need to be revised and appropriate contract provisions with service providers will need to be stipulated.