Barely nine months after the Canadian Radio-television and Telecommunications Commission launched its long-awaited Do-Not-Call List (DNCL) to cut down on unwanted telemarketing calls, the Canadian government introduced legislation that will, if implemented in its current form, kill off the DNCL and replace it with a much stricter regime.

The source of this unexpected initiative is Bill C-27, the Electronic Commerce Protection Act (ECPA), Canada’s proposed legislation to curtail spam and spyware. Under the ECPA, all electronic messages to encourage participation in a commercial activity are banned unless they fall under certain permitted exemptions (e.g., where prior consent is obtained or a pre-existing relationship exists between sender and recipient that is not more than 18 months old).

Although the clear focus of the ECPA is e-mails, the proposed legislation contains sections that extend the definition of "electronic message" beyond e-mails to include voice calling. This is not simply a matter of over-reaching definitions. Bill C-27 contains sections that deliberately revoke the DNCL-enabling provisions in the Telecommunications Act.

The ECPA’s approach of the consumer having to consent to receive commercial electronic messages (the "opt-in" model) is in contrast to the DNCL’s approach, where all telemarketing calls are permitted unless the consumer has taken the step of registering his or her number with the DNCL administration (the "opt-out" model). The former approach should be easier for the CRTC to administer, as it will not need to maintain a database of opt-out consumers. However, businesses that wish to engage in messaging activities will find a narrower scope of permitted activity.

Government officials have indicated that they do not intend to invoke the DNCL-ending sections of Bill C-27 anytime soon, but that they want to have the legislative framework in place so the government can do so in the future when such a step becomes desirable — without the need to go back to Parliament. What will trigger such action? The officials won’t say, although they do suggest that any change will be preceded by appropriate consultation.

McCarthy Tétrault Notes:

Any decision to terminate the DNCL and apply the ECPA to voice calling will have a dramatic impact on Canadian business. Suddenly, all calls to encourage participation in a commercial activity will be illegal except where permitted by specific exemptions. Unless the exemptions that are available in Bill C-27 are expanded, business-to-business cold calling, which is allowed under the DNCL, will be forbidden. Moreover, when permitted, every such voice call will have to comply with specific requirements, including the perplexing, e-mail-oriented requirement "to set out an ‘unsubscribe’ mechanism." Constraints such as these will make it difficult for Canadian businesses to reach out to new customers.

Start-up businesses will be particularly hard hit. Indeed, it is hard to see how any business could start up in Canada if it cannot make cold calls or send e-mails to prospective customers. Unless changes are made to the ECPA, some entrepreneurs will probably find it easier, and less risky, to set up outside the country and market to Canadian businesses from there.

Bill C-27 is presently before Parliament. Business groups are making representations to parliamentarians on many aspects of the Bill ? including, we expect, the sections intended to kill off the DNCL and replace it with the ECPA. It will be interesting to see how the government responds.