Competition Bureau

Section 52 and 52.1 of the Competition Act

Introduction

The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice. Headed by the Commissioner of Competition, the Bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

The purpose of the Competition Act is to maintain and encourage competition in the Canadian marketplace. Section 52.1 is part of the false or misleading representations and deceptive marketing practices provisions of the Act. These provisions aim to improve the quality and accuracy of marketplace information and discourage deceptive marketing practices. The Act applies to most businesses in Canada, regardless of size.

Telemarketing is defined as the practice of using "interactive telephone communications" for the purpose of promoting directly or indirectly any product or business interest. Telemarketing is made subject to disclosure requirements, and specific offences are created with regard to certain deceptive telemarketing practices.

The attached publication outlines the approach that the Commissioner of Competition is taking in enforcing the telemarketing provisions of the Act. The guidelines contained in this publication are not law. However, they may be relied upon as reflecting the Commissioner's interpretation of how the law is applied on a consistent basis by Competition Bureau staff.

The Telemarketing Provisions of the Competition Act

Section 52.1 of the Competition Act is a criminal provision. It prohibits the making, or the permitting of the making, of materially false or misleading representations in promoting the supply of a product or a business interest during person‑to‑person telephone calls. Telemarketers are also prohibited from engaging in certain practices including: requiring payment in advance as a condition for receiving a prize that has been, or supposedly has been, won in a contest or game; failing to provide adequate and fair disclosure of the number and value of the "prizes"; offering a "gift" as an inducement to buy another product, without fairly disclosing the value of the gift; and offering a product at a grossly inflated price and requiring payment in advance. This provision also requires that telemarketers disclose: the name of the company or person they are working for; the type of product or business interest they are promoting; the purpose of the call; the price of any product being sold and any restrictions or conditions that must be met before the product will be delivered. Directors and officers of a corporation may be held liable for offences committed by the corporation under this section. Subsection 52.1(4) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect.

Any person who contravenes section 52.1 is guilty of an offence and liable to a fine of up to $200,000 and/or imprisonment up to one year on summary conviction, or to fines in the discretion of the court and/or imprisonment up to 14 years upon indictment.

Section 52.1 of the Act reads as follows:

  • Definition of "telemarketing"
    52.1 (1) In this section, "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.
  • Required disclosures
    (2) No person shall engage in telemarketing unless
    1. disclosure is made, in a fair and reasonable manner at the beginning of each telephone communication, of the identity of the person on behalf of whom the communication is made, the nature of the product or business interest being promoted and the purposes of the communication;
    2. disclosure is made, in a fair, reasonable and timely manner, of the price of any product whose supply or use is being promoted and any material restrictions, terms or conditions applicable to its delivery; and
    3. disclosure is made, in a fair, reasonable and timely manner, of such other information in relation to the product as may be prescribed by the regulations.
  • Deceptive telemarketing
    (3) No person who engages in telemarketing shall
    1. make a representation that is false or misleading in a material respect;
    2. conduct or purport to conduct a contest, lottery or game of chance, skill or mixed chance and skill, where
      1. the delivery of a prize or other benefit to a participant in the contest, lottery or game is, or is represented to be, conditional on the prior payment of any amount by the participant, or
      2. adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the person's knowledge, that affects materially the cs of winning;
    3. offer a product at no cost, or at a price less than the fair market value of the product, in consideration of the supply or use of another product, unless fair, reasonable and timely disclosure is made of the fair market value of the first product and of any restrictions, terms or conditions applicable to its supply to the purchaser; or
    4. offer a product for sale at a price grossly in excess of its fair market value, where delivery of the product is, or is represented to be, conditional on prior payment by the purchaser.
  • General impression to be considered
    (4) In a prosecution for a contravention of paragraph (3)(a), the general impression conveyed by a representation as well as its literal meaning shall be taken into account in determining whether or not the representation is false or misleading in a material respect.
  • Exception
    (5) The disclosure of information referred to in paragraph (2)(b) or (c) or (3)(b) or (c) must be made during the course of a telephone communication unless it is established by the accused that the information was disclosed within a reasonable time before the communication, by any means, and the information was not requested during the telephone communication.
  • Due diligence
    (6) No person shall be convicted of an offence under this section who establishes that the person exercised due diligence to prevent the commission of the offence.
  • Offences by employees or agents
    (7) Notwithstanding subsection (6), in the prosecution of a corporation for an offence under this section, it is sufficient proof of the offence to establish that it was committed by an employee or agent of the corporation, whether or not the employee or agent is identified, unless the corporation establishes that the corporation exercised due diligence to prevent the commission of the offence.
  • Liability of officers and directors
    (8) Where a corporation commits an offence under this section, any officer or director of the corporation who is in a position to direct or influence the policies of the corporation in respect of conduct prohibited by this section is a party to and guilty of the offence and is liable to the punishment provided for the offence, whether or not the corporation has been prosecuted or convicted, unless the officer or director establishes that the officer or director exercised due diligence to prevent the commission of the offence.
  • Offence and punishment
    (9) Any person who contravenes subsection (2) or (3) is guilty of an offence and liable
    1. on conviction on indictment, to a fine in the discretion of the court or to imprisonment for a term not exceeding 14 years or to both; or
    2. on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year or to both.
  • Sentencing
    (10) In sentencing a person convicted of an offence under this section, the court shall consider, among other factors, the following aggravating factors:
    1. the use of lists of persons previously deceived by means of telemarketing;
    2. characteristics of the persons to whom the telemarketing was directed, including classes of persons who are especially vulnerable to abusive tactics;
    3. the amount of the proceeds realized by the person from the telemarketing;
    4. previous convictions of the person under this section or under section 52 in respect of conduct prohibited by this section; and
    5. the manner in which information is conveyed, including the use of abusive tactics.

How to Contact the Competition Bureau

Anyone wishing to obtain additional information about the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act, the Precious Metals Marking Act or the Bureau's program of written opinions, or to file a complaint under any of these Acts should contact the Competition Bureau's Information Centre:

Web site
www.competitionbureau.gc.ca

Information Centre
Competition Bureau
50 Victoria Street
Gatineau, Quebec K1A 0C9

Telephone
Toll‑free: 1‑800‑348‑5358
National Capital Region: 819‑997‑4282
TTY (for hearing impaired):1‑800‑642‑3844

Facsimile
819‑997‑0324

http://www.competitionbureau.gc.ca
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03123.html