Deceptive telemarketing

As a consumer or business owner, you might receive telemarketing calls from salespeople trying to sell you products or services, and some of these could be unwanted. While many telemarketers are making legitimate calls to you, there are others who may be deceptive or fraudulent. The Competition Act’s deceptive telemarketing provision protects both Canadian consumers and businesses from persons making, or allowing, any false or misleading claims to sell a product or promote a business interest. These activities are criminal offences. This provision applies to claims made not only orally over the phone, but also through any form of telecommunications, including recorded messages and robocalls.

Products and services include everything from:

  • the sale and promotion of magazines
  • air duct cleaning services
  • prize notifications
  • debt relief services
  • callers claiming to be government officials from tax or immigration offices

In the case of businesses, this can include:

  • the sale of business directory listings
  • office supplies
  • first aid kits

The Competition Act specifies the types of information that telemarketers must disclose and the types of practices that are prohibited, such as making materially false or misleading representations.

Note: the Competition Act applies to telemarketing conducted with individuals or businesses located both inside and outside Canada.

Disclosure requirements

The law requires telemarketers to provide all of the following information during a call.

At the beginning of the call:

  • the name of the company or person the telemarketer is working for
  • the type of product, service or business interest promoted
  • the purpose of the call

At some time during the call:

  • the price of any product or service promoted, if applicable
  • any restrictions, terms or conditions that must be met before the product is delivered

Prohibited practices

The following activities are prohibited:

  • making materially false or misleading representations. A representation is material if the general impression it conveys leads someone to take a particular course of action, like buying or using a product or service.
  • failing to meet any of the disclosure requirements listed above
  • requiring payment in advance as a condition for receiving a prize or benefit that has been, or supposedly has been, won in a contest or game
  • failing to fairly and adequately disclose the number and value of prizes or benefits and other facts that affect the chances of winning a contest or game
  • offering a “gift” as an inducement to buy another product, without fairly disclosing the value of the gift
  • offering a product at a grossly inflated price and requiring payment in advance.

Directors and officers of a corporation can be liable

Under section 52.1 of the Competition Act, directors and officers of corporations can be found legally liable for the illegal telemarketing activities of their employees and agents. This applies even if those activities cannot be ascribed to a particular individual, unless the corporation can show that it exercised due diligence in trying to prevent the commission of the offence.

General impression test

When deciding whether marketing information is false or misleading, the court considers both the literal meaning of the information and the general impression it creates. This is known as the “general impression test.”

Penalties for non-compliance

Any person found guilty on summary conviction can be fined up to $200,000 per count and/or imprisoned for up to one year. Any person convicted on indictment can face fines at the court’s discretion and/or can be imprisoned for up to 14 years under the criminal provisions.

Potential for immunity

If you have engaged in a deceptive marketing practice prohibited under the criminal provisions of the Competition Act, you are encouraged to come forward, share what you know, and fully cooperate with our investigation and any subsequent prosecution. If you meet the requirements of the Immunity Program, we will recommend that the Director of Public Prosecutions of Canada provide you with immunity from prosecution.

Compliance programs

Commissioner’s opinions

To find out more information on written opinions under section 124.1 of the Competition Act, contact the Bureau’s Information Centre toll-free at 1-800-348-5358 or online. If a written opinion is provided by the Commissioner, a fee will apply based upon the section of the Act the proposed conduct or practice applies to. A written opinion is binding on the Commissioner as long as the facts submitted are accurate, and it remains binding if the facts on which the opinion is based remain substantially unchanged and your conduct or practice is carried out, as proposed.  All fees and service standards for written opinions are set out in the Competition Bureau Fee and Service Standards Policy.

Further reading