“Telefunding” Schemes.
Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “These prey on the charity of victims, soliciting donations for worthy causes, such as antidrug programs or victims of natural disasters. The pitch may simply ask for donations, or it may include other inducements, such as donor eligibility for valuable prizes which never materialize. Charitable donors do not usually expect something in return for their contribution, and may thus never become aware that they have been defrauded.”
Telemarketer.
British Columbia Telemarketer Licensing Regulation: “’Telemarketer’ means a supplier who engages in the business or occupation of initiating contact with a consumer by telephone or facsimile for the purpose of conducting a consumer transaction.”
CRTC, National Do Not Call List: “If you make telemarketing calls or send telemarketing faxes on your own behalf or on behalf of one or more other businesses (i.e. clients), then you are a telemarketer.”
Telemarketing.
Competition Act, section 52.1: “’telemarketing’ means the practice of using interactive telephone communications for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest.”
Competition Bureau, Enforcement Guidelines, Telemarketing – Section 52.1 of the Competition Act: “’Interactive telephone conversations’ will be interpreted as live voice communications between two or more persons. The Bureau will not consider ‘interactive telephone communications’ to have occurred with regard to: fax communications; Internet communications; or a customer’s interaction with automated prerecorded messages.”
CRTC, National Do Not Call List: “Telemarketing is the use of telecommunications facilities to make telephone calls or send faxes to consumers for the purpose of solicitation. Solicitation covers a wide range of activities, including sales calls, prospecting calls, and calls for charitable donations or volunteers. Any organization has the potential to be a telemarketer.”
Testimonial.
Competition Bureau, Misleading Advertising and Labelling: “The Competition Act prohibits the unauthorized use of tests and testimonials, or the distortion of authorized tests and testimonials. The provision also prohibits a person from allowing such representations to be made to the public.”
For more information, see: Canadian Misleading Advertising and Canadian Misleading Advertising FAQs. See also: Testimonials and Endorsements.
Tests and testimonials.
“The law prohibits the unauthorized use or the distortion of test and testimonials.” [Section 74.02, Competition Act]. For more information, see: Competition Bureau, Misleading representations and deceptive marketing practices.
Time Test (Canadian ordinary selling price (OSP) claims law).
Canada’s federal Competition Act contains “ordinary selling price” or “OSP” provisions, which are intended to prevent advertising inflated “regular” prices in relation to sales. In general, these provisions make it a reviewable practice to mislead consumers about the “ordinary” selling price of a product.
Claims relating to the ordinary or regular price of a product cannot be made unless one of two alternative tests is met: (i) a “substantial volume” of the product has been sold at the stated “regular” price (or higher) within a “reasonable period” of time before or after the claim (“volume test”) or (ii) the product has been offered for sale in good faith at that price (or higher) for a “substantial period of time” before or after the claim (“time test”).
With respect to the “volume test”, the Competition Bureau (Bureau) has taken the position that a substantial volume means more than 50% of sales at (or above) the reference price and that a reasonable period of time means twelve months before (or after) the claim (though this period may be shorter depending on the nature of the product).
With respect to the “time test”, the Bureau has taken the position that whether a product has been offered for sale in good faith will depend on a number of factors and that a substantial period of time means more than 50% of the six months before (or after) the claim is made (which may again be shorter depending on the nature of the product).
For more information about ordinary selling price (OSP) claims under the Competition Act, see: Ordinary Selling Price (OSP) Claims and Sale Claims.
Toggling (a Canadian anti-spam law (CASL) term).
Under Canada’s federal anti-spam legislation (CASL), express opt-in consent is generally required to send recipients commercial electronic messages (e.g., marketing e-mails), unless the sender of the CEMs can rely on one of the types of implied consent under CASL or a CASL exception. When requesting consent to send CEMs, one method to request consent is to use an online check box. In this regard, “toggling” refers to the process of checking or unchecking a check box to either provide consent (by checking an unchecked box) or withdraw consent (by unchecking a pre-checked box).
Compliance and Enforcement Information Bulletin CRTC 2012-549: Guidelines on the use of toggling as a means of obtaining express consent under Canada’s anti-spam legislation: “4. The Commission notes that toggling is a means of switching from one state to another. The Commission also notes that toggling has been used as an opt-out consent mechanism when the default toggle state assumes consent on the part of a person. A common example of such toggling is a pre-checked box on a website. The pre-checked box puts the onus on the person whose consent is being sought to take action in order to indicate that he or she does not consent, generally by unchecking the box. Consequently, inaction on the part of the person whose consent is being sought is considered to be equivalent to that person’s consent.
5. The Commission considers that in order to comply with the express consent provisions under [CASL], a positive or explicit indication of consent is required. Accordingly, express consent cannot be obtained through opt-out consent mechanisms.
6. The Commission therefore considers that a default toggling state that assumes consent cannot be used as a means of obtaining express consent under the Act for the purposes of sending CEMs [paragraph 6(1)(a)], altering transmission data in electronic messages in the course of a commercial activity (e.g. network re-routing) [paragraph 7(1)(a)], or installing a computer program on another person’s computer in the course of a commercial activity [paragraph 8(1)(a)].”
Tort of deceit / fraudulent misrepresentation
XY, Inc. v. International Newtech Development Incorporated, 2012 BCSC 319 (CanLII): “The tort of deceit, also known as civil fraud, is concerned with the intentional inducement of another person to rely upon a representation that the representor knows to be untrue. The elements that make up this tort are: (1) a false representation of fact by the defendant; (2) made with the knowledge of its falsity or recklessly, i.e., not caring whether it is true or not; (3) made with the intention that the plaintiff would act on it; (4) with the intention that the plaintiff would act on it; and (5) the plaintiff suffered damages.”
Derry v. Peek (1889) 14 App. Cas. 337 (H.L.) [Combining the fourth and fifth elements]: “(1) A false representation or statement made by the defendant; (2) the statement was knowingly false; (3) the statement was made with the intention to deceive the plaintiff; and (4) the statement materially induced the plaintiff to act, resulting in damage.”
Spencer Bower, Turner and Handley, Actionable Misrepresentation (4th ed., 2000): “An action for damages for fraudulent misrepresentation at common law was an action for deceit. The Court of Chancery exercised a concurrent jurisdiction with the Courts of Law in cases of actual fraud, and could award equitable compensation on similar, but not identical, principles, and also specific relief. In either case a representee must allege and prove: (1) a representation; (2) that the defendant was the representor; (3) that the plaintiff was a representee; (4) inducement; (5) falsity; (6) alteration of position; (7) fraud; (8) damage. The first six matters are common to all claims for misrepresentation … The seventh and eighth, fraud and damage, are peculiar to actions in deceit. From the earliest times it has been recognized that the concurrence of fraud and damage is essential to a claim for damages for fraudulent misrepresentation.”
Trade-mark.
Intellectual Property Institute of Canada (IPIC): “A trade-mark is a word, design, number, two-dimensional or three-dimensional form, sound or color, or a combination of two or more of these elements which a trader uses to distinguish his/her products or services from those of his/her competitors and serves to establish goodwill with the consumer. Almost every kind of company that operates a business uses a trade-mark of one kind or another to identify its products or services. The difference between a trade-mark and a trade name is that the first is used with specific products or services coming from a single source, the trader, while the second identifies a company and its business as a whole. Words can be used interchangeably as both a trade-mark and a trade name. Use as a trade-mark will depend on the context of its use.”
Trading stamps.
Sections 379 and 427 of the federal Criminal Code prohibits certain trading stamp promotions. Section 379 of the Criminal Code defines “trading stamps” to include: “… any form of cash receipt, receipt, coupon, premium ticket or other device, designed or intended to be given to the purchaser of goods by the vendor thereof or on his behalf, and to represent a discount on the price of the goods or a premium to the purchaser thereof (a) that may be redeemed (i) by any person other than the vendor, the person from whom the vendor purchased the goods or the manufacturer of the goods, (ii) by the vendor, the person from whom the vendor purchased the goods or the manufacturer of the goods in cash or in goods that are not his property in whole or in part, or (iii) by the vendor elsewhere than in the premises where the goods are purchased, or (b) that does not show on its face the place where it is delivered and the merchantable value thereof, [or] (c) that may not be redeemed on demand at any time, but an offer, endorsed by the manufacturer on a wrapper or container in which goods are sold, of a premium or reward for the return of that wrapper or container to the manufacturer is not a trading stamp.”
Section 427 of the Criminal Code sets out the substantive offence as follows: “Every one who, by himself or his employee or agent, directly or indirectly issues, gives, sells or otherwise disposes of, or offers to issue, give, sell or otherwise dispose of trading stamps to a merchant or dealer in goods for use in his business is guilty of an offence punishable on summary conviction. (2) Every on e who, being a merchant or dealer in goods, by himself or his employee or agent, directly or indirectly gives or in any way disposes of, or offers to give or in any way dispose of, trading stamps to a person who purchases goods from him is guilty of an offence punishable on summary conviction.”
Travel-Related Schemes.
Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Fraudulent telemarketers purporting to be travel agencies offer substantial travel packages at comparatively low cost. The use of travel as a commodity makes the long-distance nature of the transaction plausible. The fraud usually involves lies, misrepresentations, or non-disclosure of information about the true value of travel and accommodations, limitations or restrictions on when or where purchasers may go, or what awaits them at the destination. In some cases, the travel proves to be a complete fabrication or has so many terms and conditions as to be completely unusable.”
Trip/destination contests (Canadian contest/sweepstakes law).
Trip contests, which are sometimes called “destination contests”, are often run by local and international governments to promote tourism to their country or destination. Such contests may be either random draw or skill based but will award a trip(s) as the contest prize. Such prizes may include inclusive trips for one or more persons, trip vouchers or cash for a trip, which may be arranged by the contest sponsor or be the responsibility of the winner(s) (e.g., who merely receive cash or trip vouchers as the prize). The contest rules for trip/destination contests typically include a number of common types of contest rules, including a detailed description of the trip prize (and any carve-outs), description of any blackout periods, rules regarding the terms to redeem any flight tickets or travel vouchers (e.g., provided by third party prize sponsors) and indemnifications in favour of the contest sponsor in the event issues arise with the trip. Given that trip/destination contests also commonly award trips for two or more (including travel companions) and involve more potential risk for sponsors than other types of promotions, it is also generally prudent to require winners and their travel companions to sign winner and companion release forms as a condition of awarding the prize(s).
For more information, see: Trip/Destination Contests and the Canadian contest rules/forms we offer for sale for trip contests: Canadian Contest Forms/Precedents.
For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest Law FAQs, Contests and Social Media and Contest Law Tips.
Twisted text prize.
Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “You receive a text message. When you open it, you are surprised by a message informing you that you’ve won a major retailer’s gift card. You just need to go to a website and enter a PIN, and the card is yours. You are asked to enter the PIN and an email address. Then, you are taken to a form and instructed to fill out your name, cell number, mailing address and answer unrelated personal questions, such as ‘Are you interested in going back to school?’ and ‘Are you diabetic?’ When you reach the page to ‘claim your gift card,’ you instead find yourself directed to another site to apply for a credit card. In the end, you never receive a credit card and you have given out personal information.”
For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest Law FAQs, Contests and Social Media and Contest Law Tips.
For information about the Canadian contest/sweepstakes precedents (template rules) and checklists that we offer for sale, see: Canadian Contest Forms/Precedents.
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SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to anti-spam legislation (CASL), Competition Bureau complaints, the general misleading advertising provisions of the federal Competition Act, Internet, new media and social media advertising and marketing, promotional contests (sweepstakes) and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
