April 29, 2023
On April 28, 2023, the Competition Bureau (Bureau) announced that Terry Croteau, a Canadian telemarketer, was sentenced to serve 30 months in prison and to pay a fine of $1.28 million for running a fraudulent online directory scam (see: here). See also: 30 Months in jail and $1.28 million restitution ordered in online business directories case.
According to the Bureau, the accused pleaded guilty in the Ontario Superior Court of Justice to fraud over $5,000 under the Criminal Code (Code) and using a forged document, as well as deceptive telemarketing under Canada’s federal Competition Act.
More specifically, the accused was sentenced under the Code for soliciting businesses via mail notices that were false or misleading and under the criminal deceptive telemarketing provisions of the Competition Act for making misleading statements to promote his business directories, which included misrepresentations about the identity of the caller, the purpose of the call and the price of the services offered.
According to the Bureau, the accused used deceptive telemarketing and false or misleading statements to get Canadian businesses to sign up for listings in online directories.
In addition to Canada’s federal Do-Not-Call-List rules, telemarketing is also governed by the federal Competition Act (both by its general criminal and civil misleading representation provisions (sections 52 and 74.01)) and stand-alone deceptive telemarketing rules, as well as local telemarketing related regulations in some Canadian provinces and territories.
In this regard, the general criminal and civil misleading representation provisions of the Competition Act can apply to any false or misleading advertising/marketing claim made to promote a product or business interest, regardless of the medium (i.e., whether the false or misleading claim is made in print, online, social media or on telemarketing calls). For more information, see: Misleading Advertising.
In addition, the Competition Act sets out specific rules for telemarketers. In this regard, under the Competition Act’s deceptive telemarketing provisions (under section 52.1), it is a criminal offence to: (i) make materially false or misleading representations; (ii) operate a contest where the delivery of a prize is conditional on prior payment or certain disclosure is not made (regarding the number and value of prizes, area or areas to which they relate and odds of winning); (iii) offer free or below cost products, as consideration for supplying another product, unless disclosure is made of the fair market value of the first product (and any restrictions, terms or conditions relating to its supply); or (iv) offer products for sale grossly in excess of their fair market value where their delivery is conditional on prior payment by buyers.
The Competition Act also requires that certain disclosures be made by telemarketers at the beginning of a call and also sometime during a call. This includes the requirement that the following information be disclosed by telemarketers at the beginning of a call: (i) the person on whose behalf the call is being made; (ii) the nature of the product or business interest; and (iii) the purpose of the call. For more information, see: Telemarketing.
While it is relatively rare for deceptive marketers to be criminally convicted and receive jail time in Canada, fraudulent marketing has continually been and remains a Bureau enforcement priority, particularly in relation to deceptive telemarketing and fraudulent directory schemes. For more information about Bureau enforcement, see: Competition Bureau Enforcement.
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