The Competition Bureau announced earlier today that five companies and three individuals were found by the Ontario Superior Court of Justice to have violated the Competition Act in relation to a deceptive marketing operation (see: Competition Bureau Secures Over $9 Million and Money Back to Victims for Business Scam).
In making the announcement, the Bureau said:
As a result of the Bureau’s actions, the Ontario Superior Court of Justice has ordered that any mail sent to the companies and individuals, which has been held since a Court order in July 2011, be returned to the victims. The Court also declared that any contracts entered into with the companies and individuals by Canadians null and void.
Additionally, the Court has ordered that the companies and individuals: pay administrative monetary penalties totaling $9,035,000 ($8 million by the companies and $1,035,000 by the individuals); publish corrective notices on websites hosted at any of the domain names of the companies or individuals and send letters to all Canadian businesses, individuals and organizations targeted by the scam; and pay full restitution to the victims of the scam.
‘The court’s decision supports our work to protect businesses and consumers from deceptive marketing practices and gives money back to these victims,’ said Melanie Aitken, Commissioner of Competition. ‘Today’s order is the product of significant international coordination with our law enforcement partners to vigorously pursue those seeking to deceive consumers on a global scale.’
By using symbols that closely resemble the well-known trademark of the Yellow Pages Group, the companies and individuals deceived consumers into believing that they were merely updating contact information for an online business directory listing. In fact, buried in the fine print was a stipulation that, by returning the form, victims were committing to a new two-year contract for a listing at an annual cost of $1,428 with companies that have no relation to the Yellow Pages Group.”
According to the Bureau, it also worked with U.S. antitrust enforcement officials in its investigation, the ACCC in Australia and the U.K. National Fraud Intelligence Bureau.
Following amendments to the Competition Act in 2009, civil misleading advertising carries maximum penalties of C $750,000 for individuals ($1 million for subsequent orders) and C $10 million for corporations ($15 million for subsequent orders).
In addition, a new remedy has been added under section 74.1 of the Competition Act allowing a court (the Competition Tribunal, Federal Court or in this case a provincial superior court) to order restitution (i.e., that consumers harmed by false or misleading advertising practices be compensated for losses).
The Competition Bureau has also indicated on a number of recent occasions its intention to step-up its enforcement of misleading and deceptive marketing (see e.g.: Competition Bureau Kicks Off Fraud Prevention Month, Advertising Update: Recent Misleading Advertising Penalties and Developments, Commissioner of Competition Speech Highlights Enhanced Competition Bureau Enforcement and Commissioner of Competition Addresses Current Enforcement Priorities in Two Wide-ranging Talks in Vancouver).
Given that March is also Fraud Prevention Month, we have a feeling the Bureau will be tooting its enforcement horn in the fraud and deceptive marketing areas a few more times before the month is over (see: Competition Bureau Kicks Off Fraud Prevention Month).
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