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September 2008 | Volume 27 / Number 4
Compliance Desk

Get Ready for Canada's New Telemarketing Regulations (eh?)

By Brendan B (News - Alert). Read
Senior Contributing Editor, Customer Interaction Solutions


On September 30, 2008, Canada will flick the switch on a longanticipated new set of tougher telemarketing regulations including a national Do Not Call (DNC) list and calling hours, backed up by tougher enforcement including stiff new fines on violators.

These measures are intended to better enable the country's 33 million+ consumers to limit unwanted telemarketing calls and to halt annoying practices such as ‘dead air' from abandoned calls that had been made by predictive dialers, and early morning or late evening calls.




Up until now, Canada's telemarketing regulations, administered by the Canadian Radio-television and Telecommunications Commission (CRTC), Canada's communications regulatory agency, have been fairly lax and enforcement restricted.

The CRTC's rules primarily focused on auto-dialers, known as automated dialing and announcing devices or ADADs in Canada and junk faxes. Like in the US, the CRTC has also required telemarketers to keep individual DNC lists. Yet the CRTC relied on telcos to enforce individual DNC requests by suspending or disconnecting telemarketers. Consumers could then contact the CRTC if the telcos were not able to stop the unwanted calls.

The Canadian telemarketing industry also policed itself. Canadian consumers can register their contact information on the Canadian Marketing Association (CMA)'s Do Not Contact Service. CMA members are required to scrub their contact lists against the database as well as to follow set calling hours and other stipulations outlined in the CMA Code of Ethics and Standards of Practice.

Even so, the combination of limited regulations and self-regulation did not prove sufficiently effective in meeting Canadian consumers' desires in not being bothered by telemarketers.

"Telemarketing was far and way top source of consumer complaints to our organization," admits Wally Hill, CMA Vice-President Communications & Public Affairs.

The new rules
The Canadian rules are largely based on US legislation and American practices. Here are the key features of the new rules and how they contrast with US regulations:

* Do Not Call List (DNCL)

Canadian consumers will be able to register on the DNCL any number: landline, wireless, or fax, up to three numbers at a time. The registration will be valid for three years and will expire automatically unless individuals re-register the numbers.

Canada's DNCL has exemptions for firms that have existing business relationships (EBRs) with consumers, defined as 18 months from the last transaction and six months from the last interaction. There are also exemptions for registered charities, political parties (including candidates, nomination, and leadership contestants), polling, and newspapers.

Most organizations including those that are exempt must keep their own individual DNC lists for three years. The most notable exception is for those collecting information for surveys.

US Laws: Congress has now made the federal DNC list permanent; the federal government will now be responsible for ensuring the database is scrubbed of abandoned numbers. Consumers cannot register their fax numbers on the DNC. Both the US and Canada have specific provisions in their regulations covering faxes.

"The concern in Canada was to keep the costs of the DNCL registry down, and we felt that it was not an unwarranted imposition on consumers to re-register," explains the CMA's Hill.

Also, the EBR in the US from the last interaction is three months. Canada's longer interaction period reflects the more defined seasons in most of the country that for example would otherwise prevent lawn care firms that shut down in the fall from calling their clients in March or April, when the ground begins to warm up.

* Calling Hours

These are 9am to 9:30pm local time Monday-Fridays and 10am-6pm Saturdays and Sundays. The hours follow those set in the CMA Code of Ethics and Standards of Practice.

US Laws: the federal regulations set calling hours as between 8am and 9pm seven days a week.

* Explicit Consent

Canada, like the US, allows companies to explicit obtain consent from consumers whether they would like to call them even if the consumers have registered on the DNC list, and give them a chance to say no. An example could be asking them "would you mind if we called you from time to time?"

* Outbound Introductions

All calls must have either the real or fake names of the agents, the name of the marketer, and if being made by a third party e.g. a teleservices firm, that vendor's name. US Laws: there is no specific requirement for naming third parties.

* Consumer Feedback

Telemarketers must have consumer-accessible local or toll-free numbers. Calls must be answered either by a live agent or a voicemail system to take messages for the consumer, and be returned in three business days.

US Laws: there has to be some means of contacting consumers but the regulations do not spell this out.

* Abandonment Rate

The predictive dialer abandonment rate is five percent, with abandoned calls defined as those that are not connected to agent within two seconds.

US Laws: The abandonment rate is no more than three percent.

* Fees

The DNCL fees range from $55 per month for one area code to $11,280 for all area codes annually. Telemarketers also can obtain up to 100 individual numbers at $.50 per number per query session.

US Laws: Data for up to five area codes will be available for free. Beyond that, there is an annual fee of $62 per area code of data, with a maximum annual fee of $17,050 for the entire U.S. database.

* Jurisdiction

There are no allowances for separate or supplementary provincial regulations. There is also only one federal agency, the CRTC, in charge of telemarketing legislation, unlike the US where it is split between the FCC (News - Alert) and FTC. That means the Canadian DNCL and other regulations are a one-stop-shop, thereby simplifying compliance and enforcement.

US Laws: Individual states are allowed to have DNC registries, calling hours, and enforcement provisions.

There is, however, telemarketer registration similar to that in many US states, which provinces are allowed to do as with any other business. So far British Columbia is the only province that requires it, according to CMA's Hill so far other provinces have not actively considered following suit.

The CMA, he says, has monitored the development, implementation, and administration of BC's registry to make sure that the provisions and costs are fair to telemarketers while maintaining the aim of the regulations, which is to protect consumers against unscrupulous firms. It had contacted the province during the drafting of these rules to help ensure this.

"British Columbia felt it was dealing with a different fraud-related challenge because it has a large percentage of seniors living there who are especially vulnerable to these criminal activities," explains Hill. "The government felt that having a licensing regime would allow it to identify the bona fide telemarketers as an additional step to limit that from happening. Other provinces, however, may have taken the view that they can go after the perpetrators through law enforcements and consumer education, which BC also does, but without having a registry."

* Enforcement and Penalties

The CRTC will, as of Sept. 30 have fining authority for all telemarketing regulations that it did not have before. It will have a third party, that it is in the process of seeking, to investigate DNCL and other telemarketing complaints.

This firm will work closely with Bell Canada (News - Alert), the national DNCL operator and the CRTC to ensure that complaints are dealt with consistently and in a timely manner.

The CRTC will have a third party to investigate DNCL and other telemarketing complaints. All telemarketers, including those making exempt calls, will pay fees to the investigator to cover its costs. The fee amount will be determined once the successful bidder has been selected and is expected to be approximately $100.

If the CRTC finds that a telemarketer has not followed the rules, it will issue a notice of violation and impose penalties for each violation of up to $1,500 for individuals and up to $15,000 for corporations.

US Laws:

Telemarketers who violated Federal telemarketing regulations are subject to fines up to $11,000 per violation. States may levy penalties on top of that if there are also violations of state laws.

The Direct Marketing Association (DMA) has been watching the Canadian regulations very closely as many DMA members have operations in and market to Canada.

Jerry Cerasale, senior vice president, government affairs, points out that there have been problems with maintaining a clean DNC list in the US. The government gets lists of abandonment numbers from the local phone companies and then scrubs the DNC registry for them.

Unfortunately in too many instances ‘abandoned' doesn't mean that at all. When a carrier disconnects a customer's number for nonpayment but is reconnected when the customer pays up that number is still abandoned even though it is the same number.

"Canada was following the US with these regulations as our marketers have had to live with them," says Cerasale. "There are two main positive approaches in Canada and they are one national standard and the shortened registration period that avoids the list cleansing issue. Time will tell if the latter is a better solution than cleaning the list. In the long run the Canadian approach will probably be the better one rather than a permanent filing as the US list may turn out to be full of errors."

Compliance advice

To get ready for the new Canadian rules, the CMA's Hill recommends telemarketers, and teleservices agencies to get their legal, operations, HR, and technical teams to review the regulations and requirements and make any changes to Canadian-targeted programs to ensure compliance.

For example these organizations would need to look at revising consumer agreements and or applications, supplier contracts, and scripts. They may need to implement toll-free or local numbers or adjust faxes. They should prepare for list download and new record keeping. Staff, both agents and supervisors would have to be trained on the new rules. Predictive dialers would have to be adjusted to meet the new Canadian specifications and records kept on their operation.

Also, US firms that are contracting with Canadian teleservices or American or other non-Canadian agencies to call on their behalf should make sure that the agreements cover off on Canada's rules.

The CMA's Hill is confident that most Canadian firms, and US and other foreign companies operating in Canada will follow the new regulations. He strongly recommends that telemarketers calling into Canada from the US and other countries obey the rules, including downloading the DNCL.

"While the CRTC does not have any jurisdiction outside of Canada we hope that companies calling into Canada will abide by them so that they don't annoy Canadian consumers, which will generate complaints to the CRTC and hurt their own brand," says Hill.

(Ed. Note: this article is for general information only. For specific details please contact the regulatory agencies or consult with attorneys who are well-versed on these laws and regulations)

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