Do not call

Consumers have long complained about telemarketing calls; solicitations at dinner time, long computerized voice messages, and telemarketing calls and faxes. The Canadian Radio-television and Telecommunications Commission (CRTC) attempted to put the brakes on telemarketing in 1994 by enacting rules to govern practices, but it’s fair to say that, for whatever reason, the rules did not have their intended impact.

However, with recent amendments to the federal Telecommunications Act, which, among other things, gave the CRTC new enforcement powers, firms that conduct any form of telemarketing to customers and potential customers need to make sure they are in compliance. New CRTC telemarketing rules and a National Do Not Call List (N-DNCL) come into effect on September 30, 2008.

Advisors planning to cold-call or even call existing clients to promote their services had best become familiar with the N-DNCL, as well as the updated telemarketing rules. Significantly, the CRTC only has jurisdiction over telecommunications. Telecommunications does not cover email or Internet solicitations, but rather includes telephone calls and faxes.

As of September 30, consumers will be able to register any residential, cellular or fax telephone number on the N-DNCL. The CRTC will investigate complaints about telemarketers calling numbers registered on the N-DNCL, and if a telemarketer is found to have violated the rules, the CRTC may levy a fine of up to $15,000 per offence (for a corporation) and up to $1,500 per offence (for an individual). In addition, the violator’s name, the amount of, and reason for the penalty may be published.

The first and most important thing to know is that anyone making unsolicited telephone calls or sending unsolicited faxes in order to sell or promote a product or service must register as a telemarketer. Registering doesn’t cost anything, at least until such time as the CRTC appoints a Complaints Investigator, after which it is expected that telemarketers will have to pay a fee.

Secondly, all firms doing any form of telemarketing must maintain an internal do not call list (I-DNCL). Even if a call is exempt from the N-DNCL rules, if the consumer is on your I-DNCL, they are off limits. You are not required to poll clients or potential clients to ask them whether they want to go on your I-DNCL, but if they ask, you must respect their request.

IOptOut.ca is a free online website initiated by Michael Geist, a law professor at the University of Ottawa, frustrated with what he views as the imperfections of the N-DNCL and the new telemarketing rules. The service provided by the website is designed to help consumers register on a company’s I-DNCL. Using iOptOut.ca, consumers can select companies that they do not want to receive telemarketing calls from. The system will send emails to the selected companies requesting that the consumer be placed on the company’s I-DNCL. IOptOut. ca explains that companies must comply with this request, since the system is merely facilitating the consumer’s request to go on the company’s I-DNCL.

Just because consumers register their number on the N-DNCL does not mean that you are prohibited from telemarketing to them. There are numerous exemptions available, which means that if you fall under one of the exemptions, you do not have to subscribe to the N-DNCL (i.e. pay to access the list). Some of the exemptions include: being in an existing business relationship with a client you are calling, calling a client at a business number; or, obtaining consent from the client for you to make the call. Ideally, client consent should be explicit – for example, the client gives you his or her telephone number and asks you to call to explain your services.

Even if your telemarketing call doesn’t fall into an exempt category, you will still be able to make cold calls; it will just cost you a little more and you must make sure you don’t call someone on the N-DNCL. If your plan is to call just a few numbers, then you can check those numbers against the N-DNCL registry for $0.50 per number. If you are planning on conducting telemarketing for a specific period of time or in a specific region, you can subscribe to the list for 1, 3, 6, or 12 months, and you can also select the number of area codes you want. The more and longer you subscribe for, the more it costs. The CRTC has made it a violation to share the list, even among affiliated companies, which means that if you do subscribe, make sure to keep a record of your subscription. Registered numbers remain on the N-DNCL for three years, even if the person who registered the number no longer has it. But after three years, consumers need to re-register to stay on the list.

Importantly, all of these rules apply to a firm even when it has hired a third party (a telemarketing firm) to conduct the telemarketing. If the third party violates the rules, the firm that hired the telemarketing firm will be liable. Given that the CRTC has jurisdiction only over companies operating in Canada from within Canada, companies based outside of Canada will still be able to conduct telemarketing to Canadians without regard to the new rules and the N-DNCL.

The best way to avoid violating the telemarketing rules is to ensure that you and those working for you know and understand them. Creating and maintaining a telemarketing policies and procedures manual, as well as providing training to staff, will help ensure that there are no violations. Having proper procedures and training will also help you defend against any penalties.

This column was written with research conducted by David Goluboff, a summer law student at Borden Ladner Gervais LLP.

Rebecca Cowdery and Prema Thiele are securities lawyers focusing on legal matters associated with the securities, investment management and insurance industries. They are partners in the Toronto office of Borden Ladner Gervais LLP. Their column appears regularly and deals with compliance and regulatory issues.

The views expressed in their columns are their own and are not necessarily the view of other lawyers at BLG, the firm or its clients. No person should act or refrain from acting in reliance on any information found in these columns without first obtaining appropriate professional advice.

rcowdery@blgcanada.com and pthiele@blgcanada.com