Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 23 - Evidence - November 15, 2005
OTTAWA, Tuesday, November 15, 2005
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-37, An Act to amend the Telecommunications Act, met this day at 9:05 a.m. to give consideration to the bill.
Senator Joan Fraser (Chairman) in the chair.
[Translation]
The Chairman: Honourable senators, today we are beginning our consideration of Bill C-37, An Act to amend the Telecommunications Act.
[English]
For the study of this bill, Mr. Pickard, the Secretary of State to the Minister of Industry, is here this morning. He is joined by officials from Industry Canada. We have with us Mr. Michael Binder, Assistant Deputy Minister, Spectrum, Information Technologies and Telecommunications; Mr. Len St. Aubin, Senior Director, Business and Regulatory Analysis, Telecommunications Policy Branch; and Mr. Steve Williamson, Senior Advisor, Business and Regulatory Analysis, Telecommunications Policy Branch.
This bill is known as the do-not-call bill, to consider a do-not-call list concerning unsolicited telecommunications. Mr. Pickard, we are glad to have you with us.
The Honourable Jerry Pickard, P.C., M.P., Parliamentary Secretary to the Minister of Industry: With me is Glenn Sheskay. He is legal counsel for Industry Canada.
Bill C-37 before us today will help protect Canadians from unwanted telemarketing phone calls by establishing the legislative framework for the creation of a national do-not-call list. To achieve this end, the bill would provide the Canadian Radio-television and Telecommunications Commission, the CRTC, with the powers necessary to establish a more effective regime to protect consumers against unsolicited telemarketing while also protecting their privacy.
At the outset I want to assure honourable senators that we are proposing, through this bill, a proven model for regulating telemarketing.
It is similar to the model already in place in the United States and seeks to balance the wishes of Canadian consumers for privacy and protection from unwanted calls while at the same time recognizing the need for legitimate telemarketing companies to conduct their business in a regulatory framework that enables them to do so.
Let me explain the current legislation/regulatory framework governing unsolicited telemarketing. Parliament has already granted the CRTC the broad authority to regulate or prohibit unsolicited telecommunications under section 41 of the Telecommunications Act. This section gives the commission the authority to prevent undue, inconvenient or nuisance calls, given due regard for freedom of expression.
In 1994, the CRTC implemented regulations that defined a telephone call as ``unsolicited'' when explicit consent has not been obtained from the called party prior to the call. They defined ``solicitation'' as selling or promoting a product or service or soliciting money or money's worth, whether directly or on behalf of another party. CRTC restrictions do not apply to unsolicited calls that do not solicit. These include, for example, calls for emergency purposes, account collection and market survey research.
Under the 1994 rules, telemarketers are required to maintain individual do-not-call lists. These are the rules now in place, but in the 10 years since they were implemented by the CRTC they have been found to be quite ineffective. First, the rules have resulted in some confusion among consumers. For one thing, few consumers know that they have the right to register on a do-not-call list and very few know how to go about doing it. Consumers who do not want to receive calls need to manage their registration on do-not-call lists of hundreds of companies and telemarketing agencies. These registrations are in place for three years, after which the consumer must register again.
The current regime is ineffective because it is difficult to enforce. When consumers receive further calls from firms for which they registered on do-not-call lists it is hard for them to prove that they have registered on a specific company list. The idea of a national do-not-call-list regime is not new. Other countries have introduced regulations to protect consumers from unwanted telemarketing calls.
In 1999, the United Kingdom passed legislation to create a telephone preference service to protect people against receiving unwanted telemarketing telephone calls or faxes. The legislation was updated in 2003 to include all telecommunications.
In 2003, the U.S. Federal Trade Commission launched a national do-not-call registry. The operation of the United States registry is straightforward. Consumers register their home telephone numbers online or via a toll-free telephone number.
For an online registration, consumers must fill out a form and confirm the information they have provided. During a telephone registration, consumers are required to use the key pad on their telephone to enter their telephone number and then it is added to the U.S. do-not-call registry.
The U.S. telemarketers are charged fees to access the registry and have to check the do-not-call database once a month to scrub names from their own call lists. Those telemarketers who do not obey the registry can be fined for non- compliance.
The U.S. do-not-call registry has been remarkably successful. In the first two years of operation, over 92 million telephone numbers have been registered. A Harris Interactive poll reported 92 per cent of consumers received fewer telemarketing calls and 52 per cent say they had stopped receiving telemarketing calls altogether.
Last June, a Consumer Care Alliance survey reinforced the Harris Interactive poll results, indicating that 87 per cent of consumers received fewer telemarketing calls. In fact, those who subscribed to the registry have reported unsolicited calls dropped from 30 calls per month down to 6.
Do-not-call schemes in other countries are proven systems. They are an effective way to protect consumers from unwanted telemarketing. The experience of other countries gives us examples we can use to implement a Canadian national do-not-call list.
Much like the proven system in other countries, Bill C-37 creates a do-not-call framework. The bill enables the CRTC to do three things: impose fines for non-compliance; establish a third-party administrator to operate a database; and set fees to recover costs associated with maintaining the list.
The CRTC requires legislative authority to impose administrative monetary penalties — fines on businesses that continue to make unsolicited calls to persons who have registered on a do-not-call list. Fines will act as a significant deterrent to violations.
The costs of maintaining such lists would include database maintenance, complaint processing, and investigation and enforcement costs. The CRTC has recommended that a third-party administrator be selected to maintain the national do-not-call list. The bill would amend the Telecommunications Act to allow for a third-party administrator and cost recovery. It is expected the costs will be recovered from the telemarketing industry. Although the precise cost of running the list will be dependent upon the implementation details to be determined by the CRTC, I believe proven examples from the U.S. and the U.K. show this will be a straightforward system when complete.
During the committee review stage of the bill in the House of Commons, the Standing Committee of Industry, Natural Resources, Science and Technology recommended legislative exemptions to the national do-not-call list for registered charities as defined under section 248 of the Income Tax Act, companies with existing business relationships and calls from newspapers and political parties. Exempt organizations would be required to maintain individual do- not-call lists. In addition, survey and polling firms would also be exempt from the do-not-call list and would continue to be allowed to collect views of Canadians.
Once the bill has been passed, the CRTC will undertake consultations to find an administrator of the do-not-call list. It will also determine how the list will operate and how much it will cost. The CRTC expects that it will have a national do-not-call list up and running within 19 months of when the bill is passed.
The public opinion poll tells us that unsolicited telecommunications are an inconvenience and a nuisance for the majority of Canadians. In 2003, Environics conducted a survey on consumer attitudes toward telemarketing: 97 per cent of the respondents reported a negative reaction to unsolicited calls. Of those, 38 per cent said they tolerated the calls; 35 per cent said it was annoying to them; and 24 per cent said they hated them.
Bill C-37 responds to these concerns of Canadians; they are fed up with unwanted, unsolicited telemarketing calls and they want an effective solution. Based on the proven systems in other countries, for those who opt to register on a national do-not-call list, it will mean fewer mealtime interruptions and quieter evenings in the home.
Canadian consumers are overwhelmingly in favour of a national do-not-call list for controlling unwanted telephone solicitation. Survey results indicate that 79 per cent of respondents support the creation of a do-not-call list; some two thirds have indicated that they would likely sign up for the do-not-call list. This bill responds to what individual Canadians want — an easy, effective way to reduce intrusive telemarketing while protecting their privacy.
There is one last issue I would like to speak to. It has come to my attention that there was an oversight in the amendments to Bill C-37 in the other place. Proposed section 41.6(3) requires the CRTC to file an annual report on the operation of the do-not-call list. It should have specified that these reports be tabled by the minister before both Houses of Parliament. I understand a technical amendment will be proposed at the clause-by-clause stage to address this situation.
I hope you have found the overview useful, and I expect that between me and my colleagues here, we could answer questions that you may have on the do-not-call list.
Senator Tkachuk: I want to go through what this bill does. Who owns the telephone numbers in Canada? Is it I when I rent the phone or is it the telephone company?
Mr. Pickard: That is an interesting question; I am not sure it has been raised before. If we do not have someone who can give a direct answer now, we will find an answer for you.
Len St. Aubin, Senior Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Industry Canada: The telephone companies are allocated telephone numbers to be used by subscribers. Technically, the numbers are held by the companies and can be reassigned as required. For example, when you move or change your telephone number, that number can be used by someone else several months later. To say that individual subscribers own the numbers would suggest that they can keep them forever, but that is not necessarily the case.
Michael Binder, Assistant Deputy Minister, Spectrum, Information Technologies and Telecommunications, Industry Canada: To add to that, in the era when numbers were not transportable, they were allocated globally. There was a global international agreement as to how you allocate a number and it was on a North American basis. We shared this allocation with the U.S. and some Caribbean countries. Now it has been allocated to Canada, so that Canada has the ability to use a certain set of telephone numbers. Then there is a system of allocating to the various telephone companies.
However, it is getting more complicated because we are moving into a regime where numbers are transportable. Technology allows you to carry the numbers with you, but I do not know if it is a legal property right. I think it is a kind of regulated access; but I am not a lawyer, so I am on thin ice.
Senator Tkachuk: I thought I would ask because we are saying telemarketers cannot call. However, if people themselves do not own the phone numbers, the telephone company does. That is why I wanted to clarify that.
Mr. Binder: It is more important as to the behaviour.
Senator Tkachuk: It would be helpful if we could have that information before next week's clause-by-clause consideration of the bill.
Mr. Pickard, you talked about the U.S. and, I believe, Britain having do-not-call registries. Do they have the same exemptions as we do, such as newspapers and charities?
Mr. Pickard: They have charity and survey exemptions in the U.S. I do not believe that newspapers are in the same category.
Senator Tkachuk: Are political parties exempt?
Mr. Pickard: I believe that political parties are exempt in the United States. Newspapers might be the only ones not exempt in the United States that we have introduced in the bill. Newspapers were introduced into the bill because it was perceived that they constitute a public good, in that they transmit information to the public in many ways. As a teacher, I had many newspapers in the classroom to help to educate the students. In many respects, newspapers add value to society.
Senator Tkachuk: Anyone could come forward with a public-good reason to be exempt, such as people who sell drugs or cable companies. I do not understand why exemptions exist, because if people do not want to be called, they simply do not want to be called. Who or what remains after this list of exemptions is considered, the small mom-and- pop operation? How will that work for a person who owns a neighbourhood pizza takeout? Will he have to go to the national call registry to call people in his neighbourhood or will he be fined for making calls? Are you saying that we will cut him off, but newspapers, charities and political parties will be free to make those calls? How will that work?
Mr. Pickard: Many businesses, such as Bell and other large corporations, do a great deal of telemarketing in many different areas. There are high numbers of telemarketers. The obvious answer is that when we take the example of the United States, with similar exemptions to those we have placed in the bill, the reduction was from an average of 30 telephone calls per month to 6 calls per month. Obviously, there are more groups than the ones you are hearing about today. In fact, they have reduced the telemarketing calls for most people by five times, which is a huge reduction. The factual reduction is the basis upon which the bill has been designed. The drafters determined that it appeared reasonable if that reduction is indeed the actual practice.
When we discussed this with the committee in the other place, we included the operations in U.S. areas and tried to make consistent decisions, so that companies in Canada and the United States would basically have similar ground on which to work. Committee members were convinced that it was good practice to allow charities such latitude — as has been done in other jurisdictions — and it has not overburdened the telecommunication area.
Senator Tkachuk: I would disagree with you on the basis that perhaps in the United States telemarketing is utilized differently. My information is that over 60 per cent of the telephone calls in Canada are from people exempted in the bill. That is the case in my home and likely in most homes. These calls are from businesses, such as insurance companies wanting to upgrade your coverage, or from charities, political parties, newspapers, et cetera. If you take them away, who will be allowed to call?
Mr. Pickard: Almost every business in the country that puts their name forward. The exemptions listed are consistent with those in a country that has a national do-not-call registry. There must be a similarity between what happens in U.S. cities and Canadian cities. We would use that as the rule. Most people would agree that experience is the teacher. Therefore, we have gone forward by learning from the U.S. experience.
I would also point out that if the system does not work as well as it should, because there might be some differences between Canada and the United States, then we would initiate the review mechanism recommended by the House of Commons and the committee. That review system would provide opportunity for correction as required. Obviously, when we head into new territory, we do not know what the future will hold. We begin by basing our direction on the experiences of others.
Senator Tkachuk: I would like to come back to this line of questioning later.
Senator Munson: Good morning and welcome to the committee.
I read a Globe and Mail article by Mr. John Ibbitson who wrote:
...Senator Tkachuk, one of that chamber's most able members, has qualms about the bill because he is concerned that the CRTC would be responsible for consulting various interests before establishing the do-not- call list, something for which, he argues, Parliament should take responsibility.
Do you think Parliament should take that responsibility?
Mr. Pickard: Thank you for the question, senator. I believe that Parliament has taken responsibility for the do-not- call list on the basis of clearly defining who would be on the exempt list. I do not believe that the bill gives that role to the CRTC. We have considered the CRTC in an administrative role. Public consultation is always important when we talk about how we administer and apply regulations of proposed legislation. That is critical. However, Parliament did take the bull by the horns, in my view, and determined that these groups would be the only groups exempted by legislative authority. That is before the committee today.
Senator Munson: Some commentators are talking about the fear or the perception that the amended bill draws parallels with the gun registry. Do you have any estimate of the costs associated with this national do-not-call bill?
Mr. Pickard: There will always be those who would look at costs as a critical component. I believe that the Commons Industry Committee took a serious look at this aspect. It was suggested that as we develop the do-not-call list the CRTC have the latitude to examine the cost of administration for application back to the corporations. I suggested that the model used in the United States would be used in Canada. As well, I could suggest that the changes to the gun registry were made after the bill was passed.
Quite frankly, to reduce the negative move-forward on the gun registry, ministers decided to take the cost out of the system and have government pay for it over the first several years. The end result was a huge cost to the taxpayer. Certainly, I do not believe that mistake would be made here.
Mr. Binder: Any comparison between this scheme and the registry is outrageous. The cost in the first year of operation in the United States, according to AT&T, was $3.5 million, just to put things in perspective. We are managing the telephone numbering system; the CRTC is managing it now, as we speak. You never hear about this because it is running well. It is being run by the CRTC and the industry without any problem.
We are not talking about anything complicated that we have to reinvent. We know how it is done. We have seen how it is done in the States. There are 100 million telephone numbers registered and it is running without problems. This is not a heavy-duty new discovery. We think we know how it will operate and we think it will be modest in cost.
Senator Munson: How will start-up companies in this industry compete with existing arrangements, existing business relationships? Are they exempt? If only companies with existing business relationships are exempt, does this not give them a competitive advantage?
Mr. Pickard: Possibly we need more explanation on existing business relationships. If a group of people have contact with an insurance company or a doctor's office or a dentist's office or whatever, you have a client relationship. To make sure that client relationship continues, there is an eighteen month time frame. If you contact clients within the eighteen months, you can go forward and set up appointments for children, dental appointments or whatever type of contact is required. It is not a means of restriction. It is a means to allow the communication that is required between corporate entities or professional people and others to keep society moving.
It has been found in other jurisdictions that that is clearly a requirement. Some professional organizations would like that to be extended, but I think the U.S. and the experience that we have seen in other jurisdictions have helped to create a timeline on that.
Again, it will be looked at as the review of this bill goes forward.
Senator Tkachuk: I have one point with regard to maintaining relationships. My optometrist says ``Come back in two years'' and phones me two months before my appointment to remind me that I am to be there on April 10; that is now 22 months. Is he within the eighteen-month framework?
Mr. Pickard: No, he is not. Clearly, if somebody told you to come back in 10 years, is that the same kind of scenario? It is an arbitrary number that has been set on the basis of experience, which would indicate that eighteen months was an appropriate timeline. That will be reviewed, but we could come back and say 20 years, which means nothing if you do not have some experience to put it in context.
If we find that eighteen months is not the time limit that appropriately handles most of the cases, then we could move that on, but frankly, I think it is a point of argument.
Senator Tkachuk: From the optometrist's point of view it would not be a point of argument. They are concerned about it, and that is why I bring it up.
Mr. Binder: If you have an ongoing relationship, without consent you can phone within eighteen months, but if two parties agree to an appointment, I do not think it falls under the same eighteen-month timeline. It is a contractual issue. We can give you clarification on that.
Senator Tkachuk: You are sure about that?
The Chairman: That would be excluded because this is about unsolicited telecommunications, and if you had said at your last appointment ``Call me in 22 months,'' then you have solicited the call.
Mr. Binder: That is correct.
Senator Merchant: My unease with this kind of legislation is about interfering with commerce. I think that communication of ideas is always good for consumers.
It leads to a diversity of products and lower costs to consumers; I am talking here about legitimate commerce. Would you agree that it is good for consumers?
Mr. Pickard: When we have done our surveys and asked consumers about what they feel is best for them, they overwhelmingly have told us that this is the type of system that works. I believe when we look at the U.K. and the United States, overwhelmingly the consumers said this is a system that we appreciate. Both surveys have told us that Canadians want this system and we have statistical information from the United States and the U.K. that tells us this is very positive for consumers.
Senator Merchant: When you say ``this system,'' to which system are you referring?
Mr. Pickard: I am referring to the do-not-call registry.
Senator Merchant: So you think consumers appreciate not having enough information? If we look at examples, I think I have to agree that this does not punish the well-established, big companies. In fact, they must be happy with this kind of system. First, they are able to advertise and reach consumers in different ways because they have the means. I think this kind of system penalizes the people who want to get into the market, have a product to sell, who are not well established and maybe do not have the means to take on a big advertising campaign. This does favour the well-established businesses.
Mr. Pickard: I believe that anyone starting up a business must do as much consumer contact as possible, and there are means through media to do it.
Consumers seem to consistently agree that telephone surveys through their homes are quite intrusive. How do we balance the intrusive nature of telephone calls with new companies coming forward? I believe there are means by which new companies can do advertising. We also must realize, looking at statistics, that if 25 per cent of people say ``We just hate these telephone calls,'' some of the calls will turn people off. The second point is that many of them just do not like them.
What the do-not-call list will do is leave those people who are receptive to the telephone calls to be contacted. If they have not registered on a do-not-call list, that is the prime territory for a new company wishing to pass information along. To me, rather than make four telephone calls and get three negative slams of the phone, it is better to call people who are receptive. There are still a large number, aside from the 25 per cent who say they would not register on the list, who would be receptive, and maybe new technologies will make it easier for new companies to reach the people they need to reach, those who will not be angry over the call.
Senator Phalen: You said there are a number of people who are receptive to these calls. Do you have any statistics on that?
Mr. Pickard: I am saying when people suggest they would not register, or if we have numbers that suggest 70 per cent of the people would register on the list, that means there is a network of people out there who feel it does not cause them much of a problem. Through the numbers that we have talked about, I would suggest that there will be a number of people who would still receive those telephone calls. Therefore, they probably would be the targeted groups.
Senator Merchant: How would you feel about an individual sunset clause because we do not know how the system will work? Everyone's name would drop off the list in five years and people would have to re-register. Do you think there might be some value in that?
Mr. Pickard: I am not sure.
Senator Merchant: People would have the opportunity in five or six years to re-register if they want to remain on the do-not-call list.
Mr. Binder: This is a case where the CRTC would hold hearings and decide on the practical management of this database. Should it be five or three years, what is the right number? You want to refresh it — people move, the numbers become stale, so you want some system of —
Senator Merchant: The individual would be responsible for re-registering.
Mr. Binder: Yes, some scheme like that. It will not be in perpetuity.
Senator Merchant: That is what I was asking.
[Translation]
Senator Tardif: Some people have expressed concerns about the impact that creating a list like this could have on call centres in various regions of the country. What do you think about these concerns?
[English]
Mr. Pickard: I come from an area with one of the larger call centres in Ontario now. Call centres are of two types. One is cold calls going out and the other receives telephone calls and administers programs. For instance, you could phone in to pay a bill with a company and they would take the payments and the various incoming calls.
Seventy-five per cent of call centres in Canada receive telephone calls. They would not be affected by this proposed legislation because it is people phoning about a company with which they have a relationship; it is client oriented.
The other 25 per cent that make the cold calls may be affected somewhat. However, again, if you have ever spent time making cold calls — and some folks in politics have done that — you will know it is a very negative process in many respects. You could end up with as many as 50 per cent of the people angry that you phoned.
I believe this will allow those call centres to continue cold calls but avoid those who would be angry, the really strong responses. I believe those would be eliminated and it would make the time spent more productive. We have discussed that with some of the call centre people and I have not heard a strong negative from them.
[Translation]
Senator Chaput: The bill explains the procedure to follow starting with the development of the list through to exemptions and penalties. Is there a clear and complete enough definition of what penalties mean and what may happen if both parties do not agree? If, for example, you say that I have not respected the procedure and I say that I did, who will decide then? How long might that take?
[English]
Mr. Pickard: I will turn this over to our legal counsel or Mr. Binder to answer. The CRTC will appoint an administrator to set up the program and operate it. However, I believe that public hearings will be in place to look at the nuances of the type of administration that is required. Beyond that, I would like our answers to come from the officials.
Mr. Binder: If an individual is deemed not to be compliant, there is a process of appeal, either to the CRTC or the court. It is described as a procedure in the bill.
Senator Eyton: I apologize; I was a little late so I may have missed some things.
How does it work? If an individual wants to be on the do-not-call list, that is registered somewhere; then there are exemptions. There are many people who may not call that number, but there are exemptions. I take it that all of them can make those calls, notwithstanding the list, but it is an offence or it is prohibited for some businesses or parties. Are the penalties fines?
Mechanically, there is no difference. The bill is passed, and everyone can call anybody, whether they are exempt or not. It is only the prohibited calls that are subject to some kind of fine. We are not sure what those are at this stage, I suppose; is that correct?
Mr. Pickard: I will go back to legal counsel. There is a structure in place for putting together the do-not-call list. Presently, companies are required to maintain a do-not-call list. However, there are many reasons why that process does not work well. In creating a national do-not-call list on which anyone can register, corporations would be required to bring their do-not-call list up to date on a monthly basis.
Corporations are also required to keep an individual list. Corporations have to check in with the administrator of the national list and have their lists updated each month. If a person is in contravention or there are complaints, then the processes engage.
Senator Eyton: Technically, you still make the call but you are subject to some kind of penalty.
Mr. Pickard: That is correct.
Senator Eyton: What is the rationale for the exemptions? I have received calls that I did not want to receive, and I suspect I would go on the do-not-call list. However, among the most annoying are the calls from the political parties or the charities. It seems to me the charities should want to know that I do not want to hear from them, as should the political parties, because they have nil chance of being successful in their calls with someone like me. Therefore, I am saving them money, time and effort. What is the rationale for saying we can still bother you because we are a charity or a political party?
Mr. Pickard: No, they cannot. If you check what we are doing with charities, if someone says they do not want those charities phoning, the charities have to maintain a do-not-call list as well. They are exempt from the national list, but if a charity phones and you say ``I want to be exempt from calls from charities,'' they are required to maintain a list as well. The exemption is not a broad one that says there is no getting around it. It is stated that charities would have to maintain a list.
Senator Eyton: An individual list for that particular charity.
Senator Tkachuk: For that one charity.
Senator Eyton: They will not have a blanket exemption.
Mr. Pickard: Right; if a charity phones, you can stop them, basically. The reason — and I think it is a logical one — that charities were given an exemption is the public good that charities often do.
If someone from a charity or other organization annoys you, you can have it stopped.
Senator Eyton: From that particular charity.
Mr. Pickard: From any charity that calls you.
Senator Eyton: I would still receive the call.
Mr. Pickard: You can say to that charity that you would prefer they not call you again.
Senator Eyton: That would be the end of it. They would be obliged to record it.
Senator Tkachuk: Would they be fined?
Mr. Pickard: Yes.
Senator Phalen: Who would deal with the charities?
Mr. Pickard: It would be the CRTC administrator.
Senator Phalen: If you believed that you were on the call list of charities, you could appeal to the CRTC.
Mr. Pickard: That is correct. You could appeal a direct list in the same way that you could appeal the national list.
Senator Tkachuk: What would be the point of exempting charities if individuals could exempt themselves from their calls? To clarify this, if someone wanted to avoid calls from a charity telemarketer, he would have to consult the national registry first. Is that correct? Would there be a fee for consulting the national registry to ensure the exemption? In reality, you would be exempting people from the fee, not from the phone call. In other words, the newspaper would not have to check with the national registry, and therefore would not have to pay the fee. However, if people were to tell the newspaper that they did not want any phone calls, the newspaper would exempt them in any case. The system would exempt the fees, not the telephone call process.
Mr. Pickard: In some ways, you could say that the fee would be exempted; that is correct, senator. In addition, I believe that people's perceptions of telephone calls from charities are such that they are more acceptable than telephone calls from other groups. This is why charities have been given that opportunity. You have to remember that the consumers still have control, with latitude to say they do not wish to receive any more telephone calls from that group. The bill would provide the consumer with that determination.
Senator Tkachuk: A giver is a giver; that is how charities approach it. I do not want to imply that all charities necessarily do this, but many do the following: If they identify Senator Zimmer as a charitable person, he is known as a giver. They will pass their list of givers to another charity and that other charity will also telephone Senator Zimmer; then the list will be passed on to another charity. That is why we receive so many of these telephone calls. Once you give to one charity, your number is passed along to other charities. Hence, senior citizens receive many telephone calls from charities because they tend to give regularly.
Would one then have to exempt every charity specifically when it would be simpler to contact the national call registry?
Mr. Pickard: If you receive a telephone call, you can say immediately, without further question, please take me off your list. That is all you have to do.
Senator Tkachuk: That can be done when the Heart and Stroke Association calls, but it will pass the list on to the Cancer Society and the calls continue.
Mr. Pickard: The experience is such that if you say no, they might pass that information on. I do not know. I will not debate how they operate. It is important that the consumer have the ability to stop any telephone calls from charities.
The Chairman: Senator Tkachuk, we are out of time.
Senator Tkachuk: I do not understand why newspapers, charities and others cannot be put on the national list.
Mr. Binder: The formula on cost recovery has not been determined. It does not mean that one will be levied and the other will not. There might be a fee associated with access to the database but the CRTC will decide how the running of a telemarketing business, even a charity, will be cost recovered. That has not yet been determined because it will be done on an operational basis.
Senator Tkachuk: We should know because it is important. It is not operational.
Mr. Binder: Charities did not want to fall into a black hole because consumers chose to be on the national list immediately without thinking about the implications. Charities want consumers to make their decision about being on the list on a charity-by-charity basis.
Senator Tkachuk: Government is saying that consumers might not know what they are doing. Consumers would be able to change their minds.
Mr. Binder: Charities decided that they would like such decisions to be made on a case-by-case basis. On such a basis, a consumer can say no. That is the philosophy behind the special treatment.
Senator Zimmer: Yes, consumers could simply ask charities to take them off the list. That information would be passed along to other charities, which would do the same. However, it is necessary to answer the question beyond that step: What is the time frame in which this would occur? Consumers could ask to be taken off the list, but for how long would that be effective? What would be in place beyond that? How actively would the charities comply with the wishes of the consumer? Would there be penalties for non-compliance, and who would police that?
Mr. Pickard: There would be penalties. Organizations would be required to update their lists every 30 days. It is my understanding that when a charity receives a direct indication from people that their name should be removed, the CRTC would make the final decision. I see no reason to think that it would not be immediate, although it might take a couple of days to administer the paperwork. I do not know whether that would be a requirement. I would think that immediacy would be the case in that example.
Mr. Binder: I have one point for clarification. The Personal Information Protection and Electronic Documents Act, PIPEDA, prohibits the passing of lists from charity to charity without consent.
The Chairman: Mr. Pickard, does the bill apply to unsolicited faxes?
Mr. Pickard: I do not believe that it does at this time. In the United Kingdom, for example, they have stepped it up from telephone calls to faxes and all telecommunications. Certainly, there would be an annual review and any broadening of the applications would have to be determined with time, as with any piece of legislation.
The Chairman: An unsolicited fax is an unsolicited telecommunication.
Mr. Binder: The fax machine telephone number could be placed on the national registry and receive the same kind of treatment.
Senator Tkachuk: With all due deference to ministry officials, I am unsure about their comment on faxes because there are telephone lists and fax lists. Would we keep a fax list in the national registry as well? It is still unclear just how Canada compares to the United States in terms of exemptions. What are the exemptions in the U.S. and what are the exemptions in Canada?
The Chairman: I would ask departmental officials to provide the committee with written explanations of precisely how the American exemption system works, this afternoon, if possible, because I believe that does exist.
Senator Eyton: If a charity is making the call, is it affected?
Mr. Pickard: We will have an answer for you on that particular point.
The Chairman: It is frustrating, but we do thank you very much. It has been a lively and instructive session. We look forward to getting those answers from you.
Mr. Pickard: I would like to thank you, Madam Chair, and your colleagues for listening and working along with us. There are a lot of issues when new legislation comes forward and I appreciate the questions.
[Translation]
The Chairman: I would ask our next witnesses to come forward. They are representatives from the Canadian Radio- television and Telecommunications Commission.
[English]
We will have four senior representatives of the Canadian Radio-television and Telecommunications Commission, whom I invite now to come forward.
We have with us this morning Mr. Richard French, Vice-Chairman, Telecommunications; Ms. Elizabeth Duncan, Regional Commissioner for the Atlantic Region; Mr. Allan Rosenzveig, General Counsel, Telecommunications; and Mr. Gerald Lylyk, Director, Consumer Affairs. Thank you very much for joining us today.
[Translation]
Richard D. French, Vice-Chairman, Telecommunications, Canadian Radio-television and Telecommunications Commission: Madam Chairperson, we are happy to be here today. I hope that we will be in a position to help the committee and its members understand the role of the CRTC in this somewhat complex and new issue for Canada.
[English]
I will be short because I see there is no shortage of questions and I would not want to disappoint senators. Secondly, I will simply note that the commission, after the passage of the proposed legislation, would envisage, in a parallel process, on the one hand beginning a series of public hearings with respect to the detail of the implementation of the bill and touching on some of the issues that interest senators, while at the same time preparing the administrative foundations for an independent delegate of the commission who would manage the database, given that the commission does not regard itself as an expert in managing databases.
We can discuss issues of costs and timelines, but on the whole it looks as if that process will take 19 to 24 months to complete, so that we could expect that amount of time after the passage of the bill before Canadians could register on a national do-not-call list.
There have been discussions about parallels with the gun registry. These are understandable given the name ``registry,'' but I would second the strong view of Mr. Binder, the assistant deputy minister of Industry Canada, that the parallels are fairly fragile and this is quite a different enterprise. We would be delighted to discuss that in detail.
Finally, there have been a lot of concerns about the letter of the law and what that means for certain actors out there in Canada. Allow me to try to clarify that. It is true that if the mothers of the peewee hockey team of Corner Brook want to send the team to St. John for a tournament and they start calling the local merchants or other people in their homes, they might, technically, be in some violation of the letter of this law because they are not a registered charity. What we are looking for in this proposed legislation is a pattern of abuse by a commercial telemarketer that occasions a number of complaints and suggests to us that there is some systematic for-profit or for-gain attempt to circumvent the law in ways that invade people's privacy.
I want to emphasize that, because I appreciate that merchants need to contact their customers. We do appreciate that there are unregistered charities that do good work out there in the country; they do engage in some limited, voluntary non-remunerated telemarketing within the meaning of the law and are most unlikely to create a pattern of complaints such that we would wish to pursue them.
With those short comments, I should like to volunteer to answer any questions. I will probably pass the questions on to the experts, but I would be delighted, on behalf of the commission, to discuss this matter with the senators.
Senator Tkachuk: You used the example of the hockey team being exempt from the letter of the law. You then went on to explain that the letter of the law must be a pattern of abuse. Please help me focus here on what is the pattern of abuse. How many phone calls do you have to get? Is there a number? Can I phone people five times before I hit the pattern of abuse? How does that work?
Mr. French: I did not say that the mothers of the peewee hockey team of Corner Brook were exempt. They are not a charitable organization. They engage in a series of calls to other parents and to other people, and technically, they are not exempt. However, the issue as a matter of public policy would be, for us at least: Do the parents of Corner Brook who have been called rise as one and complain to the CRTC or to the national enforcement agency that there have been abusive calls in Corner Brook with sending the peewee hockey team to St. John? The answer, to me, is, highly unlikely, and therefore it is not something that would attract the attention of the enforcement agency or the commission.
Senator Tkachuk: What would?
Mr. French: A pattern of abuse that would indicate to us that a commercial telemarketing firm was involved in systematically avoiding using the database and therefore calling people on the do-not-call list.
Senator Tkachuk: It is fairly subjective, is it not?
Mr. French: It is as subjective as a policeman deciding whether or not to apply a jaywalking law or the Competition Commission deciding whether or not it is —
Senator Tkachuk: No; a person is either jaywalking or not. If he is jaywalking and there is an anti-jaywalking law, he gets a ticket; it is pretty clear.
It is important that I know as a consumer — or as a business or charity. I am a citizen. I have the right to know when you will come down on me if I do break the law. In other words, I know that if I jaywalk and I get a ticket, I can either take it to court or pay the fine; I know it is against the law.
However, you are saying ``a pattern of abuse.'' Tell me what it is. How does that person who is making the phone calls know? Can he get away with it once or twice? How many times does he get away with it before there is a pattern? Do you have to get 1 telephone call, or 10 or 15? How many complaints?
Mr. French: It is complaints, not phone calls, senator, is it not? If they are phone calls, we will not know about them; if they are complaints, we will. The elements that would guide us — and we will discuss in a public hearing what will be applied and what will not, what kinds of behaviours ought to be subject to coercive or enforcement action and what kinds of behaviour are passed to the side — are, first, it would have to be a series of complaints, probably 10, 15, 20, which would indicate to us —
Senator Tkachuk: How many?
Mr. French: As I said, we will have public hearings.
Senator Tkachuk: So that has not been decided?
Mr. French: It is not in the legislation, senator. Second, we would be interested in the kind of behaviour that seemed to us to involve a commercial telemarketing company whose purposes were to avoid or ignore the do-not-call list. If those two elements could be taken together, then probably we would have a situation that we would want to pursue. However, I repeat, this would be subject to the views of consumer groups, direct marketing organizations, telecom companies and others who will participate in the public hearings.
Senator Tkachuk: All right. I will pass and come back to it, maybe. I am quite confused now.
[Translation]
Senator Tardif: The CRTC already has some experience in administration. Could you say a few words about how your administration works? I understand that, for example, you administer a telephone system. How does that work?
Mr. French: Are you referring to our telemarketing regulations?
Senator Tardif: Yes.
[English]
Mr. French: Mr. Lylyk, would you help the committee to understand our past experience in the regulation of telemarketing, please?
Gerald Lylyk, Director, Consumer Affairs, Canadian Radio-television and Telecommunications Commission: Throughout the years, there have been various proceedings and decisions dealing with telemarketing and there are specifics in place today.
Our concern has been enforcement. We find that, in certain instances, there is confusion with respect to what is in place. On a going-forward basis, we think that these issues could be more appropriately addressed by a do-not-call list.
[Translation]
Senator Tardif: Your experience also extends to administering other systems. The proposed national list is a new project. You also have past experience in administration. For example, you manage a telephone number system. Is that going well?
[English]
Mr. Lylyk: That is correct. We would like to draw upon those experiences. In the model that we are looking at — and we have had an independent consultant look at this for us — we would like to draw upon our experiences with, for instance, a local number portability consortium, the numbering administration consortium. We would see a consortium as a key aspect of this. We would also see a list operator as a key aspect.
While we have expertise, it is not specifically in the context of databases. It is in those areas that we would see ourselves working with the consortium and the list operator and drawing upon the experiences of the U.S. and U.K. lists. Our independent consultant has looked at these issues as well and has advised us on them.
Senator Tardif: What do you mean by ``the consortium''? What would that represent in this case?
Mr. Lylyk: One recommendation that was put forward to us was for a consortium of interested parties made up of, for instance, telemarketers, consumer organizations and service providers. Their first role or responsibility would be to determine the list operator for this venture; but they would have ongoing functions, some of which would be addressed and determined in the context of the public proceeding that Mr. French has referenced. There would be roles and responsibilities of oversight to ensure that the list operator and the various people involved, from the consumer registrants to the telemarketer, are operating and being treated in a fair and equitable manner.
Senator Munson: I am curious about how your communications plan will work. What kind of program do you have for setting this up? You have heard a lot of questions this morning and people are rather irritated about the exemptions, and so on. Some people feel it is a watered-down list and some are confused about what they are about to buy into. How do you tell Canadians in a very simple manner what this is all about?
Mr. Lylyk: One of the things that we have looked at in the context of the experiences of other jurisdictions is a public awareness campaign. In fact, we had our independent consultant budget for this. For example, a public awareness campaign was pulled together for the U.S. do-not-call list. We would see the list operator doing that; but again, there would be oversight by this consortium and we would have a role to play as well.
The specifics of this public awareness campaign have not been addressed. However, it is clear that the rules and such that will be coming out of this public notice proceeding that Mr. French has talked about will have to be clearly communicated; people will have to know what is at stake and what penalties apply. That is a key aspect of what our independent consultant was asked to look at, but the details of that have not been addressed yet.
Senator Munson: Speaking of penalties, we are walking around the issue, unless I am missing something in the bill. What kind of penalties are we talking about? What kind of serious money are we getting into to penalize people who abuse this list?
Allan Rosenzveig, General Counsel, Telecommunications, Canadian Radio-television and Telecommunications Commission: In every contravention, the party, in the case of a corporation, is subject to an administrative monetary penalty of $15,000. This is modeled on the U.S. legislation, where it is U.S. $11,000. It is considered a sufficient deterrent and is not a punitive amount.
Senator Munson: Speaking of costs, we have not heard any numbers on what it will cost to implement this program. I know that the previous witness used the word ``outrageous,'' that this cannot be like the gun registry, and so on. However, Canadian taxpayers are always worried about money. Do you have any idea what it will cost, both for a communications plan and implementing this right down the line?
Mr. French: We think the run rate will be between $5 million and $7 million a year. The expectation would be that that money would be recovered in the fees charged to telemarketers for downloading the lists from the national do-not- call list. For example, let us take an area code; they would have the complete list of the phone numbers in that area code and would have to remove the numbers on the national do-not-call list; they would call the balance of the numbers in the area code, assuming they wanted to cover that area. The price to the telemarketer would be calibrated to recover those costs.
There would be a small, additional annual cost for the CRTC's role in overseeing this activity. It would be recovered in the same way as the CRTC's existing costs — from the telecommunications operators.
The Chairman: I have a supplementary question. Have you any idea how many firms would be involved in this proposed $9-million cost?
Mr. French: In effect, you are asking how many telemarketers there would be.
The Chairman: Yes.
Mr. Lylyk: We do not have an exact number, although it would be substantially fewer than in the U.S. In the context of information provided to us by our independent consultant, initial estimates were subject to a check. The consultants' initial estimate was 6,000 to 10,000 telemarketers who would be downloading. This figure was built into some of his estimates.
The consultant was cognizant of the fact that our system would be significantly smaller than the U.S. system. The number of expected registrations in year one would be 8 to 10 million, as opposed to 82 million in the U.S. at the end of 2004.
Senator Merchant: How would this proposed legislation affect the offshore telemarketers? I receive many telephone calls from an offshore telephone company. How would they fit into this?
Mr. Rosenzveig: We consider a telemarketer that calls a Canadian in Canada to have a large connection with Canada, and so the bill should apply to them. Of course, there are practical considerations in dealing with offshore firms or firms in the United States, such as whether they have assets in Canada against which one could execute, et cetera. Those issues always arise.
Senator Merchant: How would such companies be penalized for non-compliance with consumers' wishes? I have said no to one firm that continues to call me most evenings. When I said ``Do not call'' to one telemarketer, he said that he would call me in the morning so that I could have the night to think about it.
Mr. Rosenzveig: If you were on the national do-not-call list you would be entitled to complain, which would initiate contemplation of enforcement action should a sufficient number of complaints about that telemarketer be received. If the telemarketing company has assets in Canada, something could be done to enforce the penalty.
Senator Merchant: If they do not have Canadian assets, then nothing could be done.
Mr. Rosenzveig: That matter is unclear at this time.
Mr. French: Senator, we are in conversations with the Federal Trade Commission and the Federal Communications Commission. It is clear that should there be problems of extra-territorial enforcement, we would find ways to work with our American colleagues to ensure that they are resolved in both directions.
Senator Merchant: I presume that people with unlisted telephone numbers do not receive such calls. Many people work from cell phones, and I presume that they are not bothered by telemarketers. Many telephones have call display to help recipients avoid certain calls.
You said that we are including faxes, but what about emails? Why not include all methods used by these advertisers to contact consumers?
Mr. French: The panel of witnesses that preceded us today is responsible for proposing legislation to Parliament. They are working on the problem of spam. It is different from the one with which we are coping at the moment. The CRTC is not responsible for the spam issue. Unfortunately, I have to give you a bureaucratic answer and suggest that you ask the departmental officials who preceded us.
Senator Merchant: Are faxes included?
Mr. French: Yes, to the extent that if a fax number were in the registry, it would not be called. Other things could likely be done if faxes become a more serious problem. Bill C-37 authorizes the power to deal with faxes. That is the fair message at this time.
[Translation]
Senator Chaput: I put myself in my parents' shoes, older people who receive a number of unsolicited telephone calls. If I understand correctly, if my father receives the telephone call, he can say that he is not interested and that he does not want to be called again.
[English]
You have said that if consumers were to receive such telephone calls, you would not know about it unless a ``series of complaints'' were made. Does that mean a consumer would be required to lodge a complaint? How many times would that complaint have to be made before a consumer would stop receiving such telephone calls?
[Translation]
Mr. French: First of all, your father could be registered on the do-not-call list, and that being the case, any call he receives apart from the exemptions would, by definition, be a prohibited call and therefore subject to our monitoring.
Once a complaint is lodged, we become aware of the phenomenon. We receive about 9,000 or 10,000 comments and complaints each year. Our experience shows that abuse is not at the individual level, but at the corporate level, which bothers a number of individuals, including some who lodge complaints. These complaints are what guide us in the steps to take for using our resources for identification and charges.
Senator Chaput: If I understand you correctly, it is large companies that abuse the ordinary citizen.
Mr. French: What is unfortunate is that it does not have to be a large company. It can be a very small company that makes a lot of calls and that bothers a lot of people. The people who create the problems and are being targeted by this legislation are not the Bank of Montreal or Bell Canada, but rather fly-by-night telemarketing companies that operate with a short-term perspective, for short-term profits.
The clients of these companies will probably be rather small firms that are not very well informed and do not really know what they are venturing into and who were probably pushed into telemarketing by the aggressive sales tactics of the telemarketer himself.
That is the type of company that we are going to catch in our net and that we hope to control. The others will continue, but will be knowledgeable of the law, will proceed in an orderly manner in full awareness of their responsibilities and obligations.
The Chairman: A single advertising campaign will not be sufficient for the consumer to know that it is possible to file a complaint and to find out how to do so. Have we given any thought to communicating with the public more regularly, without this costing outrageous sums?
[English]
Mr. French: The experience in the United States has been favourable in this regard. Close to 100 million registrations are on the U.S. list. That is a huge proportion of all households.
If we have the impression that Canadians do not know, we will certainly expend the resources necessary to inform them. Word of mouth will move this matter very quickly. I must say I do not believe we will have a major problem after the first 18 months.
Senator Eyton: As I understand it, there are now what I think you referred to as company-specific lists. That is monitored by the CRTC and there is an entire set of rules that apply. You take action depending on —
Mr. French: I am sorry to interrupt, senator. We cannot take action because we do not have the means. This bill will give us that.
Senator Eyton: You cannot do anything with these company-specific lists.
Mr. Rosenzveig: We can, but there are problems. It is sometimes a question of proof as to whether people actually asked to be taken off the list and to not be called. With a national do-not-call list centrally administered, it is clear whether they should have been called or not.
As well, the sanction available is criminal prosecution with maximum fines that are not very high. The administrative monitoring penalty system power, or AMPS, which is used by many other departments and agencies in the federal government, will provide an efficient and effective deterrent. We do not have that power right now to deter people from violations. That is why the commission thought a national do-not-call list would be not as effective without an AMPS power. This bill would provide that power to the commission.
Senator Eyton: It makes more significant exemptions than are in the national list. There is no meaningful penalty when you are on a company-specific list. I am not sure, how, for example, you would monitor charities.
Mr. Rosenzveig: The bill provides that if you are exempt from the national do-not-call list you are required to have a company- specific or a charity-specific list. The bill also requires people who are exempt to state at the beginning of each call on whose behalf the call is made, whether it is the Kidney Foundation or whoever. The bill provides for a company-specific do-not-call list. The penalty is the same. For any violation of the telemarketing rules, it is a $15,000 penalty for each call. The bill provides for the same penalty whether you are exempt or not.
Senator Eyton: You have a list of exemptions. We talked about the American experience, which I gather has been favourable — 100 million households is almost everyone. That is most impressive.
Are our proposed exemptions the same as in the U.S.; and if not, to what extent do they differ?
Mr. French: The one difference is the exemption for newspapers in this country. The others, for all intents and purposes, are the same.
Let us recognize that the pattern of telemarketing may turn out to be different, something Senator Tkachuk suggested. It might turn out to be different in Canada, but we do not know that yet. The exemptions are virtually identical except for the newspapers.
Senator Eyton: There you are referring to?
Mr. Rosenzveig: The provision in the bill that provides an exemption where the call is made for the sole purpose of soliciting a subscription for a newspaper of general circulation.
Senator Eyton: Is ``newspaper'' a generic term? Does it apply to magazines, periodicals and booklets? How broad is that definition?
Mr. Rosenzveig: I do not read ``newspaper'' as applying to magazines or booklets.
Senator Eyton: To what extent can the Heart and Stroke Foundation of Canada — not to abuse that worthy organization — sell subscriptions to the National Post? Is there an advantage in them doing it over somebody else?
Mr. French: That is a legal question. I do not know if my colleague wants to take it on. I would think they cannot.
Mr. Rosenzveig: There is an exemption for calls made for the sole purpose of soliciting a subscription for a newspaper. I assume it would be covered if the purpose of the call is to sell a subscription to a newspaper.
Mr. French: I believe the intent of the question is this: If they were selling something other than an exempted item like a newspaper, given that they are a registered charity, would they be permitted to do so? Given we are exempting registered charities, I suspect they would be.
Mr. Rosenzveig: If it is made by or on behalf of a registered charity, there is an exemption according to the bill.
Mr. French: National Revenue will have fun checking the registration of new charities.
Senator Eyton: It may be one way in which a charity is trying to raise money. They may get a commission for each sale, which might be worthwhile.
Senator Zimmer: Many individuals have unlisted numbers. Even if they are told not to call, a lot of marketing firms do it by randomly generated numbers. They do not need numbers. They do it by random generation. They just go down the list. Do you have any controls on that or plans on how to deal with that?
Mr. Lylyk: Right now, we have rules in place with respect to automatic dialing and announcement devices, ADAD. We expect that to be continued going forward.
In addition, one concern is things that might get dropped into people's mailboxes. Rather than disrupting someone in real time, it would go directly into the mailbox. That is something we might want to explore further in the context of the proceeding into which we are moving.
You raise a good point with respect to privacy, and in the consultations we will be holding in the context of the public notice, we would see issues relating to that being specifically addressed and rules and such being put forth.
Mr. Rosenzveig: For the first time, this bill will provide a more effective enforcement mechanism for the commission — not just with regard to a national do-not-call list, but our existing telemarketing rules. If an ADAD call is made that is prohibited by our rules, we will have an AMPS power to provide a fine of $15,000. This is an important tool to safeguard against invasions of privacy contrary to the rules.
Mr. French: It is not the source of the number, but whether the number is on the list. If automatic dialing devices dial numbers on the list and that occasions complaints, they will be detected and pursued.
[Translation]
The Chairman: We have a few minutes left. We will therefore go on to the second round of questions, with Senator Chaput and Senator Tardif.
Senator Chaput: In the case of administrative penalties, you have the $1,500 penalty per person and $15,000 per corporation. There is also a provision in the bill that states that an employer is responsible for any violation committed by his employee. Therefore, if I work for a given company, if I make the call and I am violating the law, the company will have to pay the $15,000 fine because I am its employee.
In the case of an individual, what definition are you referring to? Can it be just anyone?
[English]
Mr. Rosenzveig: ``Personne physique'' is the legal term. In English, it is ``an individual.'' If I were to telemarket, as opposed to setting up a corporation, then I would be responsible for my actions as an individual, as a person.
[Translation]
Senator Chaput: Does there have to be a link with a business?
[English]
Do you have to be the owner?
Mr. Rosenzveig: No. It is any individual. If I am acting on behalf of someone else, clearly, the person we would look to for responsibility is the principal, not the agent. Generally speaking, you look to the person who is responsible for the behaviour.
The Chairman: Which is to say employees dialing the numbers they have been told to dial, if they are using old- fashioned technology, are not the ones you will go after.
Mr. Rosenzveig: We will be looking at the corporation for whom they are working.
Mr. French: We will be looking for the telemarketing corporation, the commercial enterprise of telemarketing for whom they are working, and not necessarily the sponsoring corporation on whose behalf they are operating.
[Translation]
Senator Tardif: I only had one point of clarification to raise regarding the distinction between the $1,500 fine for an individual and the $15,000 fine for a corporation.
Mr. French: Senator, it should be pointed out that the fine is $15,000 or $1,500 per incident. Therefore, that sum can accumulate.
[English]
Senator Tkachuk: I asked the previous witnesses who owns the phone number; whether it is I as the person who rents the phone. I know there were court cases about this. You might be able to answer that since that is your area of expertise. This phone number is then put into a phone book, and if I do not want it in there because I do not want people to call me — that is why I have a phone —they charge me for that. If I put the phone number in the phone book, it means I want people to call me. It is public. It is out there on the Internet, on software and in the phone book.
Why do we not just say that telephone companies cannot charge people for not putting their name in a phone book, and then people will not be called?
Mr. Rosenzveig: Telephone service is valuable in allowing people to communicate with each other. The more phone numbers that are public, the more people can call each other. There are costs associated with it not being listed, with removing it from databases and protecting the confidentiality and the privacy of the individual who wishes it, and the commission has taken steps to ensure it is still affordable.
Senator Tkachuk: The point being, though, that when I had an unlisted number, I did not get calls from charities, but I had to pay for it. When I published my number, then I got phone calls. Why do we just not publish the numbers? Is it to keep the telephone-book industry going? We publish the numbers and say ``Phone us,'' but on the other hand, if you do not want anybody to call you, ``Put your name on the registry.''
Mr. French: Most people fall somewhere in between the two. We define basic service as including a telephone book, which permits you to use the instrument to contact people. It turns out that roughly 80 per cent of people want their number in the book and about 20 per cent do not.
It is more expensive not to be in the book because even the people with unlisted numbers want a phone book. The incremental cost reflects the cost to the telephone company of removing and protecting the confidential number.
If Canadians were to say, ``No, we want it the other way around,'' we would be attentive and so would the companies.
Senator Tkachuk: I want the phone book to phone businesses. I do not use it to phone anybody else. I have my own phone book and the directory on the Internet. I want the phone book so I can acquire consumer products, so I can phone the garage and the dry cleaner and restaurants, et cetera. That has nothing to do with it, really.
Mr. French: The Internet may make the phone book obsolete, but it has not yet. Leaving out the Internet, the opinion you have expressed is not necessarily the opinion that all consumers have expressed to us through the phone companies.
Senator Tkachuk: Maybe they have not thought of it.
Mr. French: If this argument is made to us, we will be attentive; however, at the moment this is not what Canadian consumers are telling us they want. They say they want the Yellow Pages and the residential White Pages.
The Chairman: This was very interesting and helpful.
We covered a lot of ground in a concise manner.
Colleagues, we will take no more than a two-minute break. Then I will invite our next witnesses to join us. They can come forward now. They will be representing the Canadian Marketing Association, the Canadian Federation of Independent Business, and Eden Clean Air and Heating.
Honourable senators, we resume our study of Bill C-37, an act to amend the Telecommunications Act, otherwise known as the do-not-call bill. We are fortunate to welcome a panel of witnesses.
We have from the Canadian Marketing Association, Mr. John Gustavson, the President and CEO; and Mr. Wally Hill, who is the Vice-President, Public Affairs and Communications. From the Canadian Federation of Independent Business we have Mr. Rob Taylor, Senior Policy and Communications. From Eden Clean Air and Heating we have Mr. Allen Futerman, owner.
Welcome to our committee. I know you have been following the proceedings. Time is tight, as you can see. I will ask each of you to make a statement not exceeding five minutes. I will be quite ruthless because, as you have seen, the senators all have many questions.
[Translation]
John Gustavson, President and Chief Executive Officer, Canadian Marketing Association: Madam Chair, the Canadian Marketing Association is pleased to present its position regarding Bill C-37 to this committee.
[English]
We are here to support Bill C-37, as amended by the House of Commons, and ask for its expeditious passage by the Senate.
It may seem somewhat surprising that Canada's largest marketing association supports the establishment of a national, compulsory do-not-call program, but it is simply not good business to annoy consumers who might be better reached through other marketing channels. A national do-not-call service will level the playing field for all marketers in Canada.
In fact, CMA has operated its own do-not-contact service since 1989. It is free to consumers and mandatory for our members to follow. We have over 500,000 households registered, and we receive 6,000 additions each month. Judging from the feedback we get from consumers and members, the program is quite effective in significantly reducing the number of phone calls people receive. Although some non-members do subscribe, it is not comprehensive.
We believe a national do-not-call service will be good for consumers as well as for marketers. As far back as 2001, we asked the CRTC to establish a national do-not-call service. We believe it is consistent with our position as a proponent of responsible marketing, and therefore we support this bill.
However, I must remind senators that sales of goods and services by telephone are big business in this country. We are not talking about a few thousand companies making a living from telephone sales.
Virtually every business and charitable organization in this country utilizes the telephone at some point to market its goods and services or solicit donations. Canadians buy over $16 billion in goods and services every year over the telephone.
The Chairman: $16 billion?
Mr. Gustavson: Yes. That generates employment for over 250,000 Canadians. Therefore, this proposed legislation can have serious economic impacts in this country if not carefully handled.
We felt it was crucial to amend the first draft of Bill C-37 to clarify Parliament's intent not to inadvertently harm this major Canadian industry. We believe it was important to amend the bill to make it clear it does not apply to communications where there is an existing business relationship. We are pleased with that amendment, but as noted in previous testimony, marketers must still respect individual requests not to be called even if an existing business relationship exists.
The amended Bill C-37, in our opinion, better defines its scope and application. Is the bill perfect? It probably is not. For example, CMA will work with the CRTC to address the issue of business-to-business calls that have not been exempted in Canada but are exempted in the United States by regulation.
We believe Bill C-37 is a solid base on which to build a national do-not-call service, and there is within the proposed legislation a mandatory parliamentary review after three years, should it require further adjustments.
In conclusion, we believe that this bill strikes a proper balance between protecting consumers and business interests. We think it is a good balance, giving Canadian consumers a choice while protecting the $16-billion-a-year industry. We respectfully encourage the Senate to pass this bill at the earliest opportunity.
Rob Taylor, Senior Analyst, Policy and Communications, Canadian Federation of Independent Business: I would like to begin by thanking the committee for the opportunity to address this important proposed legislation. Like the others you will hear from today, we did not have that opportunity to express our concerns during the Commons committee's expedited consideration of Bill C-37.
The Canadian Federation of Independent Business represents the interests of over 105,000 independent business owners in every sector in every region across Canada. Like the Canadian economy, the majority of our members are small businesses with fewer than 20 employees.
My remarks today will focus on the potential impacts of Bill C-37 on SMEs. I say ``potential'' because the rules and regulations are still to be written, and yet the government is asking you to use blind faith and write a blank cheque to the regulators at the CRTC to use their discretion in designing and implementing this registry.
This is unsettling news for SME owners and professionals already subjected to SOCAN fees, which are far from a model of fairness and accountability.
What the government does set out clearly in this bill, however, are harsh, cumulative $15,000 penalties for each call offence. The proposed legislation also conveniently sets out well-defined exemptions for political parties and pollsters from the scope of the registry in the interests of democracy.
Bill C-37 provides only a basic framework for the CRTC and its agents to design and implement a do-not-call registry. The rules and structure of the registry are to be based on consultations and recommendations conducted after the fact, far removed from the scrutiny of Parliament. If the government had taken the time to conduct meaningful consultation prior to the bill being introduced, its drafters would have learned that common marketing and promotion techniques used by SMEs include word-of-mouth referrals and telephone follow-up.
As an example, many leads-driven businesses use raffles and draws at trade shows, fairs and other events to build potential client lists. These practices had to be altered in order to comply with the Privacy Act, which allows for the use of negative-option techniques on raffle tickets. These include a box on the ticket stating, ``If you do not want your information shared with a third party, check here.'' If the box is not checked off, the information can be used.
Bill C-37 defines an ``existing business relationship'' as one formed by voluntary two-way communication between the person making the telecommunication and the person to whom the telecommunication is made. Following current practices, if a business prints a box on a raffle ticket stating, ``If you do not want to be called regarding our special offers, check here,'' and the box is not checked off, does a raffle ticket constitute a business relationship based on an inquiry or application, or would the business owner be subject to a $15,000 fine for pursuing this traditionally viable lead? Is this decision to be left to the discretion of the regulators? Is it a $15,000 gamble per call for legitimate business people trying to make a living and support their families?
By not defining any of the processes associated with the do-not-call list registry, Bill C-37 raises more questions than it answers. Will businesses have to purchase lists from the registry? How much will it cost businesses to cross-reference their lists with the registry? If a business purchases a list from a research company, who is liable for ensuring that the do-not-call list registry was consulted? How will the registry and its procedures be communicated to SME owners?
Will the registry operate under the federal government's cost-recovery guidelines? If so, what performance measures will be put in place to ensure fairness? What dispute-settlement mechanisms will be put in place to provide recourse and oversight? How often will businesses be required to update their lists? What will be the extent of the compliance burden associated with the new regulatory regime accompanying the registry?
Regulatory and paperwork burden is a high-priority concern for small-business owners, second only to the overall tax burden. Paper burden reduces productivity, limits growth and costs the economy billions of dollars in lost opportunity every year.
Only yesterday in his economic statement, the finance minister reconfirmed the government's commitment to reducing the regulatory compliance burden on SMEs. CFIB currently co-chairs an advisory committee on paperwork- burden reduction with the government. Its mandate is to measure, report and reduce the compliance burden on SMEs. How will Bill C-37 meet these regulatory reduction objectives?
As a consumer, I understand the desire for such legislation. However, bad legislation, no matter how earnest in its intent, is still bad legislation.
Reading this bill led me to conduct a little research at my home, where I logged calls over two weeks. They included one consumer survey, one political candidate demon-dialer call, a call from a political riding association seeking donations, two calls from registered charities, one call from my financial institution marketing a new product, one major retailer offering me insurance on my store credit card, and one call from a local snow-removal company seeking new clients.
Of all the calls I received, only the last one falls under the scrutiny of Bill C-37. When homeowners are at their wits' end due to telemarketers and driven to act, it is the small-business owner who will bear the brunt of the frustration and be subjected to a potential $15,000 fine. I fail to see the fairness in that.
There is also the issue of the 18-month time frame, but I am sure Mr. Futerman will deal with that.
We recommend that the committee send Bill C-37 back to the House of Commons for proper scrutiny and consultation. I will be happy to cover the rest of my comments in questions.
The Chairman: Do you not think we can do a proper scrutiny?
Senator Tkachuk: He is in favour of the consultation process. That would be good.
Allen Futerman, Owner, Eden Clean Air and Heating: Members of the committee, thank you for inviting me to appear before the Senate committee. We feel the basic objective of Bill C-37 is desirable, but we also feel there is a major problem with the current draft provision relating to existing business relationships.
Certain types of small businesses operate on a recurrent or cyclical service interval. For instance, dentists usually see their clients once a year, and heating system cleaners, which is our business, once every two to three years. The current bill proposes that a business may maintain telephone contact with an existing customer for up to 18 months from the date of last service. However, many small businesses have an inherent service interval longer than 18 months.
By mimicking this arbitrary, U.S. 18-month line, those cyclical businesses with shorter service intervals can operate as usual while those with longer service intervals are penalized. For example, a dentist whose services are usually provided on an annual service interval could continue to remind a patient by phone once a year that his annual dental checkup is due; yet an optometrist, whose eye examinations are usually done once every two years, could no longer remind a patient by phone once every two years without risking a fine of $15,000 per call. Identical legitimate business practices that result in hugely different treatment under the law is bad legislation.
The current bill provides an exemption for pollsters, charities, politicians and newspapers, who may do random calling. Not only are calls from cyclical businesses not random, those who are calling once every two to three years are calling much less often than these already exempted groups.
The Canadian Association of Optometrists stated in their written submission to the Industry Committee:
Professions or businesses that communicate with patients/customers on a less frequent basis to remind them of the need for reoccurring services should not be penalized by provisions of the new legislation.
As noted in our submission to your committee, which you should all have a copy of, lawmakers have told us — and when I say'' us,'' I mean legitimate small businesses that have a service interval longer than 18 months — that we are not the objective of this proposed legislation, yet the current letter of the law would catch us.
Mr. French recently said that a prosecution will not be triggered until there is ``a series of complaints.'' A small- business person needs to have that specifically defined in the letter of the law.
Legitimate small businesses are up for harsh fines of $15,000 per call. This is a business killer. We are being asked to somehow operate in this huge grey zone. We need this mystery number of complaints specifically defined; and we need a mechanism by which we are informed immediately on a complaint-by-complaint basis. How else are we to know to curb our behaviour?
These $15,000 fines will be tallying up in this mystery grey zone. We will find out one day that our livelihoods have been obliterated by this bill when the mystery grey zone suddenly triggers a prosecution. This is absurd.
Timelines longer than 18 months exist on the books of many state jurisdictions in the U.S., and these available alternative models are workable. Most of the U.S. states that have an existing business relationship exemption do not have a timeline limitation. In other words, a business can call four to five years after the date of last service, as long as there is an existing business relationship.
The provision in the bill could be more carefully tailored to protect cyclical small businesses in Canada. This is not only the fair thing to do, but the Supreme Court of Canada said under its minimal impairment test that it is the obligation of Parliament, given that this bill restricts a Charter-protected right, that is, freedom of expression.
Canada is different from the U.S. In addition to the Charter, small businesses play a much larger role in the health of our economy. No studies have been done on the impact of this bill on small businesses in Canada. We believe the reasonable approach is to proceed cautiously, and if a line must be drawn at this time, it should be set more broadly at 36 months, as exists, for example, on the books of Arkansas and Kansas.
Parliament can observe what happens over the next three years and re-evaluate, as needed, with collected data in 2008 when this bill is up for review. This broad-to-narrow approach will ensure that the learning curve over the next three years will not be accomplished at the expense of a roll call of victims and livelihoods in the Canadian small- business sector.
The Chairman: I do not know if you were here earlier today when the secretary of state and the officials appeared before us to discuss the bill. The question concerning the 18-month business relationship arose. At that point, they agreed that what this bill is about explicitly in law, in the Telecommunications Act, is unsolicited communications. If you have a customer whose system you know has to be cleaned in two or three years and you say to him in December 2005, ``Do you want me to call you in a couple of years?'' and he says yes, then you are in the clear.
Mr. Futerman: Let us say we do that at a two-, three-year mark and the consumer says, ``I never said that.'' We would be up against a $15,000 fine.
The Chairman: Perhaps there could be a box to check off on the bill. I am not sure.
Mr. Futerman: That would be one solution.
The Chairman: I am wondering if you have heard that.
Mr. Futerman: It is a good suggestion. We have thought of it. It may work for people who are in the know. However, the vast majority of small businesses are not in the know. Under the letter of the law, they will be caught by this proposed legislation.
Senator Tkachuk: I find it interesting that the Canadian Marketing Association would be in favour of the bill as it stands now and the Canadian Federation of Independent Business has problems with it. I am concerned about that. If you heard my earlier questions, you would realize that.
Is the Canadian Marketing Association being looked at as a potential manager of this system?
Mr. Gustavson: Because we have rather successfully run our own do-not-call list since 1989, it is possible that the CRTC might turn to us to do that. However, many others have suggested that they would also be willing to run it, including one of our major telephone companies. In the United States, a major telephone company actually looks after the administration of the list. I have no indication from the CRTC, other than a statement by its chair in May 2004, of what their expectations are.
Senator Tkachuk: If you did run it once the bill is passed, would it be a bit of a money-maker?
Mr. Gustavson: I believe in our earlier discussions with the CRTC they agreed that any private enterprise that ran it would be entitled to some return on investment, but the amount would be controlled by the CRTC and whatever contract they entered into. There would be no windfall profits. We are a not-for-profit organization. My only concern would be not to put the existence of the organization at risk, since there is a downside to this. For example, how many people will subscribe to it? From our own experience of running this national do-not-call list for our members, most do not subscribe. The large call centres, the data houses subscribe, and then include that in their services to their customers. Thus, our members receive the benefit of it but they do not subscribe directly. They access it through a major call centre they have retained or their data processor has subscribed to our list. They are sure that it is used.
Similarly, for small business, I would suggest that many of these data houses will access the list and resell to them the small portion they need, for example, one, five or six area codes, whatever they want. There is enough competition in that field that we feel the prices for small business would be reasonable.
Senator Tkachuk: Earlier, I raised the subject of the brief submitted to us by the optometrists. I also had trouble with the definition of the law as the CRTC was interpreting it, which is ``a pattern of abuse.'' That means nothing to me. I do not know if that means one call or five calls. It is in the definition of the beholder, I would think, and the one receiving the phone call, as to whether it fits. Mr. Futerman, is your main concern that the law is not clear? Is that what causes you the problem? Or is it the fact that there are exemptions for some but not for you?
Mr. Futerman: We have two concerns. First, we feel that the time limitation of 18 months excludes businesses like ours from protection. Second, as mentioned, we are asked to operate in this grey zone. We have no idea what number of complaints will trigger a prosecution. With a $15,000 fine floating over our heads — or an accumulation of $15,000 fines — we feel that that should be defined in the proposed legislation.
Senator Tkachuk: In other words, if there is a complaint you would like to know right away?
Mr. Futerman: Yes.
Senator Tkachuk: Rather than waiting for an accumulation of complaints that would lead to a pattern of abuse?
Mr. Futerman: I do not think there is any legislation that can apply to small businesses, especially if this is a strict liability offence, which means that you are guilty until proven innocent, under the letter of the law. Once a complaint is made under the letter of the law, the onus is on small-business people to prove on a balance of probabilities that they did not commit that act and/or they had a good reason to commit the act.
There is a huge burden being put on regular small-business people, with a $15,000 fine at the end, which is clearly not designed for us. One fine would blow us out of the water. This is meant to apply to huge corporations. This is a regulatory offence being applied to mom-and-pop small businesses. It is clearly not designed for small businesses. It would be one thing if we were to receive a $100 fine and then a warning. Even if the $100 fines were cumulative, we could maybe absorb that kind of cost and readjust our behaviour. However, this means a $15,000 fines that accumulate over our heads with each complaint under the letter of the law. Once that prosecution is triggered, we could have $50,000 in fines applied against us. It will destroy livelihoods instantaneously.
Senator Tkachuk: Mr. Gustavson, a previous witness said that in the States some 100 million households subscribe to the do-not-call registry. That covers almost everyone in the country. Does anyone in the States get called? What is going on here? Or do they have so many exemptions, like we have before us here, that it will not matter anyway? Why do we have a law that everyone thinks works so well when everybody registers, and yet everyone is receiving calls?
Mr. Gustavson: It represents one third of the telephone numbers in the United States, and many people have multiple telephone numbers.
Senator Tkachuk: We were specifically told 100 million households.
Mr. Gustavson: We have 100,000 listings.
Senator Tkachuk: That is a little different, in that it includes business listings.
Mr. Gustavson: Business communications are exempt by regulation in the U.S.
Senator Tkachuk: Are they exempt here?
Mr. Gustavson: No.
Senator Tkachuk: Should they be exempt?
Mr. Gustavson: We would argue that, but it was not in the American legislation. The CRTC said that our exemptions are virtually identical, except for newspapers, which is correct vis-à-vis the legislation. However, the U.S. has added a regulatory exemption for business-to-business communications. That is an important point. There will be many opportunities to make telephone calls to those who have not registered. As well, you can always call on consent, such that people might agree to calls even though they are on the list. That option exists. There will still be quite a vibrant commerce using the telephone for marketing services.
Senator Tkachuk: How many households in the United States are on the do-not-call registration list?
Mr. Gustavson: They are talking about a primary registration of telephone numbers. I cannot tell you how many households that equates to because many have three or four telephone numbers. It would be difficult to determine the exact figure.
Senator Tkachuk: We should clear that up. I am certain that a previous witness said 100 million households, which I thought was strange.
Mr. Gustavson: It might be that because some might not telemarket using cell phone numbers. Those might have been excluded from the calculations. Again, that point should be clarified.
Senator Merchant: I am likely one who will not register my number with the do-not-call list because most of the calls I receive now will continue unless I register a complaint or an objection with the callers.
Mr. Gustavson, you represent large companies and you think this bill would level the playing field. How would that work for the smaller businesses? I was raised in a household that was supported by a small business. My parents are Greek immigrants and ran a small restaurant, where they had one employee. I am sensitive to how small businesses can survive. Mr. Futerman said that these penalties would be onerous for small businesses, although larger businesses could absorb such a cost more readily. I do not understand how this bill would level the playing yield for businesses.
Mr. Gustavson: We represent a combination of large businesses but we also include small businesses within our 800 members. The majority of our members would be considered small or mid-sized businesses. All of our members must comply with our do-not-call service and the 500,000 members are on that list. However, many others do not have to comply and so are free to call whomever they wish, while our members are trying to act responsibly. Our members are ethical marketers and those that do not comply cause the problem. Having legislation that requires all businesses to comply with the national do-not-call list would ensure that everyone plays by the same rules. I do not think it is unfair to expect small, mid-sized and large businesses to comply with the law. I do not think the cost to small businesses would be as onerous as Mr. Futerman has put forward. First, the cost to access the list would not be high, and it could be done through a databank, list broker or anywhere else. A business would not be forced to pay the national fee to download everyone on that list. Second, with respect to penalties, yes, they would need to be fairly high, not only to combat violations so that it is not simply a licence to ignore the national do-not-call service, but also so that there is responsible administration of the penalties. There is still a standard of proof to be made and the intents. As far as I know, it is not a matter of strict liability and there must be some evidence that this was a deliberate violation of the requirements of the do-not-call service. Warnings of misconduct could be issued rather than moving directly to prosecution. In our society we sometimes have to rely on the reasonable administration of the law, but if problems arise, the proposed legislation would come before Parliament in three years for a review.
Senator Merchant: You stated that sales of goods and services in Canada total $16 billion per year. How will this proposed legislation affect commerce in Canada, or will it not make much difference because so many exemptions exist?
Mr. Gustavson: It will prevent people with whom you have had no business relationship from calling you unless they represent a charity or a newspaper. It is an unusual exemption, but it would be the law. You would see a significant decline. Certainly, feedback on our do-not-call list, which governs only member companies that engage in telemarketing as well as other forms of marketing, indicates that consumers are satisfied. It is not complete, but it creates a reduction in the numbers of calls. It can be effective. Other marketing channels provide access if your small business is restricted by this bill. They range from direct mail to other forms of advertising. It is also important to remember that if you have consent, you can call anyone you want. If you are operating a small restaurant where people drop off their business cards, you are free to call your customers. The bill provides a balance in that respect.
Senator Tardif: Mr. Taylor, you indicated that small businesses would be penalized by this bill. Would you not be more comfortable making calls to those whom you know would be receptive rather than to those who would be irritated? Would it not be easier to make a sale? If I understand correctly, the intent of the bill is to reduce annoyance experienced by customers at the hands of telemarketers. If a small business were calling consumers who were not on a national do-not-call list, it would have a much better chance of making the sale.
The CRTC will begin a process of public hearings in its deliberations on the implementation and operation of the act, when that occurs. Most of the concerns you raised deal with the regulations and the operational side of the bill. The bill calls for a review of the proposed legislation in three years. As with anything, it can be difficult to foresee all of the implementation problems.
Could your concerns be raised in the process of public hearings on implementation and at the three-year review of existing procedures and regulations?
Mr. Taylor: We reviewed the proposed legislation under the scope of the small-business perspective. A number of government initiatives that usually target the big fish can, unfortunately, catch the small fish in their nets. From the perspective of small-business owners and the cumulative impact of government regulations and initiatives on their daily lives, they currently bear a high cost. For the most part, small businesses are not high-volume callers, so it is a low-cost way to establish and grow a local business. Having to go through a number of government regulations or to a third-party provider to obtain the list, in addition to payroll and health and safety issues, adds to the sole proprietor's burden that many of our members face. We will be involved in the public consultations with the CRTC to try to ensure that implementation would reflect the needs and wants of the small-business owner.
However, past experience tells us that they do not often take into account the individual needs of the small-business owner because the legislation is targeted at catching the big fish.
The same goes for many border programs that are focused on just-in-time manufacturing. The small, low-volume and low-risk shipper gets caught at the border because he does not know how to comply with the regulations; it has not been communicated to him. He therefore gets penalized, and it is a detriment.
Senator Tardif: Could a communications or public information campaign targeted at small business address some of those issues?
Mr. Taylor: That would be a great initiative. We work with a number of government departments on a number of initiatives to help them communicate through our membership. We communicate information from the CRA and Industry Canada and a number of other governmental departments to our members.
We are asking for the bill to be looked at across the board as to how it will impact each individual business in Canada, especially the vast majority that are micro businesses that build and sustain local economies, creating jobs and economic growth across the country.
Senator Eyton: I have a number of unrelated questions, but I hope they make sense.
Mr. Taylor, you commented that you and your organization had not had an appropriate opportunity to appear before the Commons committee that was considering this bill. The bill itself was introduced almost a year ago. It went to committee in February and was reported on in June. You must have been aware of the bill some time ago.
Can you comment on why you did not have the opportunity to appear before the Commons committee considering this bill?
Mr. Taylor: We wrote a letter to the committee outlining our concerns with the bill, and we are expecting to hear back from them at a later date.
I was not on the file at the time. From my reading of the file, when the bill went through the House of Commons, the only business association that was invited to appear before the committee was the CMA. We wrote a letter to the committee, and that was not reflected.
Senator Eyton: Did you protest that?
Mr. Taylor: No.
Senator Eyton: I would like to go to Mr. Futerman, because he is representing a real live business, Eden Clean Air and Heating.
How long have you been in business? How do you solicit new customers? How would that come under the purview of this proposed legislation?
Mr. Futerman: We have been in business for nine years. Because we are a cyclical service, our model of growth is such that we see our customers every two to three years. That is how our business has grown over the last nine years. Does that answer your question?
Senator Eyton: How do you contact customers in the first place?
Mr. Futerman: We have a big Yellow Pages ad. I will not say we have not done telemarketing, but at this point, we have enough customers to keep our work schedule saturated without doing any other types of marketing.
Senator Eyton: You are not too concerned about the original solicitation of the business?
Mr. Futerman: No.
Senator Eyton: Your main concern is being able to deal with the customer on a regular basis?
Mr. Futerman: Yes.
Senator Eyton: Eighteen months seems to me to be pretty wild. Personally speaking, I would rather be bothered on the telephone once every three years than once every 18 months. I do not know why anybody would pick the figure of 18 months. It seems arbitrary and unfair to some types of businesses.
Mr. Futerman: I have looked into the root of this figure of 18 months. If you read the rationale that the FCC used in drawing that line, it is essentially arbitrary.
Senator Eyton: Personally, I have a number of contracts and warranties with different merchants, and they typically run for two or three years. I do not remember one that ran for only 18 months.
Mr. Futerman: That point was made by the Canadian Association of Optometrists as well: Businesses or entities that have a longer inherent service interval are, ironically, penalized by this proposed legislation. Those who call less often are penalized.
We offer less of an irritant than the exempted groups who, theoretically, do unfettered calling under the current exemptions. In our case, we call once every two or three years, and we are the ones who are subjected to the potential fines.
Senator Eyton: That seems odd.
My last question is for Mr. Gustavson. He and our chairman have both stated no problem arises as long as the call is made with consent.
I looked at the bill, and it lists three categories that comprise an ``existing business relationship.'' The first category addresses a business deal occurring within 18 months; the second category is essentially an application made within the preceding six months; and the third category is a written contract that is either in place or has expired within the 18 months. I do not see any room there for saying there was consent. It seems to me you are then left with trying to generate business in other ways. You mentioned business cards, for example.
What if a business has a practice of generating new business by soliciting over the telephone, and to obtain consent, they have to use another approach to get people to ``give their consent'' and avoid the strictures of the bill itself?
I do not understand why both our chairman and you stated that as long as there is consent, there is no problem.
Mr. Gustavson: To directly address that question, when you enter into a business relationship with somebody, as long as it exists, you are entitled to call within 18 months after the end of either the transaction or the contract. If the contract is a four-year insurance contract, for example, you have another 18 months to call. That seems to be reasonable.
However, if you are a business that calls every three years, when you make the original transaction you simply ask if it is okay to call back in three years. You may want to make a note of it in case of a credibility issue if a complaint arises. However, unless there is a pattern of complaints, there will not be a problem.
It is fairly simple to obtain consent to call people when normal servicing is required, whether it is to replace a water heater or to schedule a checkup with the optometrist. People are making too much of both the difficulty there might be in obtaining consent and consumer expectations.
When somebody calls to remind me to get my eyes checked after three years, I am grateful; I do not find it annoying. I do not think reasonable consumers will file a complaint when the optometrist calls to schedule a checkup.
Senator Eyton: It still comprises a breach.
Mr. Gustavson: Not if you consider yourself as having an existing business relationship that requires a three-year reminder and there is consent.
There is no magic to the 18-month figure. The FCC agreed with that. When they examined the issue, they looked at businesses asking for various times, such as 36 or 60 months, as well as consumers asking for no extension beyond the end of the business relationship; why should they be entitled to call at all after the business relationship is over?
The FCC said openly that there is no magic to this. We think on balance, however, that 18 months is a reasonable expectation of consumers for a follow-up call from somebody they have chosen to do business with after the end of the transaction or business relationship.
Consumer groups will argue as to why there should be any extension. There are two sides to that one.
The Chairman: Just to clarify, Senator Tkachuk, as you have quoted me several times here, the point I made at the outset was related to the fact that this bill essentially consists of amendments to the sections of the Telecommunications Act that deal with unsolicited telecommunications. The entire thing is about unsolicited telecommunications.
The point I was querying the parliamentary secretary and the officials on was whether that meant that if there was consent — you have said you want me to call you back in three years when your furnace needs cleaning or in two years when your glasses need changing — then you are in the clear.
They said, ``Yes, you are in the clear.'' I think Mr. Gustavson is agreeing with that, but I did not make that assertion on my own. I did check it before I suggested it.
Senator Tkachuk: The interesting thing is that the CRTC witness said that the lady who was organizing the local hockey club was technically breaking the law by using telemarketing to fundraise for an event.
How can you be technically breaking the law? You are either breaking it or not. That shows this is very fuzzy. I can see why the Canadian Federation of Independent Business is concerned about this, because it represents small business. It is not clear what the law is. Our responsibility as legislators is to ensure that the law is clear.
The Chairman: I am not disputing that.
Senator Tkachuk: We are not to leave it up to the CRTC to dispute it. I do not think it is clear. Even the witnesses seem to disagree this morning. I do not think the privacy information is correct either. I am concerned about how this entire thing is being approached. There seems to be a bit of a rush and we should slow it down.
Senator Eyton: My last question is to draw attention to the fact that we heard previous testimony that there were 100 million households registered in the U.S. We now understand that that may not be households. It may be listings, which is different.
I had asked about the similarities between the U.S. legislation and our own. We were told that the only significant difference was the newspaper exemption. I now have heard it suggested that there is also, by legislation, another exemption in the U.S., for business-to-business communication. Again, that would be a significant difference. I say that for the record.
Senator Munson: We talked to many witnesses this morning, from the government, as was mentioned, and the CRTC. We have all these exemptions. Who are the bad guys? For the people who are watching, I want to know who they are. For example, are credit card telemarketers the bad guys? After receiving a telephone call during which they have not agreed to anything, all of a sudden some people have insurance coverage on their credit card. They are compelled to call back and say that they did not accept that charge. It has happened to many people. I do not know if this proposed legislation covers that situation.
I would like someone to tell me specifically who those rotten people are who are doing these evil things, taking advantage of seniors and so on, selling their product through this campaign that we are supposed to be putting a hammer to.
Mr. Gustavson: Senator, you are touching on two separate issues here. One is control of the abuse of telephone marketing that constitutes fraud or misleading advertising. The Competition Bureau has been enabled through amendments to the Competition Act to take strong action with respect to abuses that amount to telemarketing fraud. We have done so in coordination with our American colleagues, as well, to try to combat cross-border fraud. That is a different issue from the one before us today, which is to control the receipt of unwanted, annoying telemarketing calls. It is solely that. It is not a law enforcement issue or a fraud issue; it is simply to get rid of calls consumers find annoying and that come at inopportune times. Consumers only want to hear from a limited number of people by telephone.
You have raised two different issues. The other is dealt with through the Competition Act by the Competition Bureau, and there is also an inter-jurisdictional police task force on that.
Senator Munson: For the record, can you give me some examples of who the bad guys are? Tell me who we are chasing here with this proposed legislation.
Mr. Taylor: We would like to know the answer ourselves.
Mr. Gustavson: This proposed legislation is not chasing those people. It is solely trying to limit consumer annoyance from unwanted telemarketing calls.
Senator Munson: Who are they?
Mr. Gustavson: There are calls from many people consumers find annoying, whether it is with regard to cleaning their carpets, fixing their roofs or repairing their driveways. Frankly, many of the complaints we get are from small businesses that are not using proper lists or proper targeting. Many of the complaints the CRTC gets are about small business, not large ones.
This bill is specifically designed to control high-volume telemarketing calls Canadians find annoying but that may not constitute fraud or misleading advertising. The problem to which the senator is referring has to do with those who engage in high-pressure sales tactics, especially with those who are vulnerable in our society, such as senior citizens, disabled people and people who are lonely. There is a huge problem out there in other areas with which the government is trying to deal, but this is simply to avoid the annoyance of phone calls that Canadians do not seem to want.
The Chairman: Would this list apply to those high-pressure, dare I say, bucket shots?
Mr. Gustavson: Absolutely, yes, it would.
Senator Tkachuk: What Canadians do not want is to be called and disturbed on a consistent basis. They do not say, ``I do not want the guy to call because he is offering to clean my driveway. I do not want the driveway cleaning guys to call me.'' That is not what people say in the telephone survey. They do not say, ``I do not want the pizza parlour to call me.'' Those are the calls I like, about the two-for-one pizzas, especially before dinner rather than after.
They are complaining about the very people we are exempting. That is who people get all the phone calls from. They are getting calls from the people we are exempting. What is the point of the bill? I do not see the point. I do not care who you ask, people do not get many annoying calls from the small-business person. People may want to have their driveway cleaned.
Mr. Gustavson: Senator, I think you are wrong. Surveys out there indicate Canadians want this bill. It is one of the most popular to come before this Parliament.
Senator Tkachuk: We have all these exemptions. It is like tax cuts 10 years from now. People want tax cuts, but not 10 years from now.
Mr. Gustavson: With respect, you are exaggerating the extent of the exemptions. I do not know about newspapers, but certainly in the case of charities, where there is an overwhelming public good, surveys indicate people do not resent those calls. Some would like to avoid cold calls from people of whom they have not heard, offering an irrelevant service. This bill simply gives consumers a choice.
Senator Tardif: I wanted to provide a piece of information that I received that indicated that the CRTC has received up to 9,000 complaints a year from people who are unsatisfied with the current arrangements for telemarketing. I do not know who the bad guys are specifically, but there are many people complaining.
The Chairman: That is even though a similar survey shows that hardly anyone knows you are allowed to complain.
Senator Tkachuk: What are they complaining about? Is it about charities, political parties or small business?
Senator Tardif: I do not have that detail.
Senator Tkachuk: It is not valid then.
The Chairman: This has been fascinating; absolutely fascinating. Thank you all very much. It is frustrating, because we could spend one full day with each of you, but we do not have that time. That is the nature of the parliamentary process, but you have all done a good job of getting your core points across in a succinct and intelligible fashion.
I will now invite our next witnesses, who are from the Public Interest Advocacy Centre, to come forward.
Welcome. You have five minutes, and then we get to ask questions.
John Lawford, Legal Counsel, Public Interest Advocacy Centre: The Public Interest Advocacy Centre is the first, and I believe the only, consumer group that has testified before either committee so far, and I wish to underline that.
Consumers do want this bill. That I will make clear. The most recent survey from the Environics poll also makes it clear. However, there are certain elements to this bill that we would like to deal with in your committee rather than in the public notice process before the CRTC. Our submissions are highlighting three — but there are now four — concerns that have come up in the deliberations so far.
I will add one right off the bat, that is, through all of the committee hearings we have heard this list will be run at no cost to consumers. Our concern is that there is nothing in the proposed legislation to guarantee that. I believe the experience in the United States was that Congress gave some seed money to start up their do-not-call list in case there were not enough funds from telemarketers to actually run the list. Our concern is that there may be a facility within the proposed legislation to charge consumers, or there is nothing in there that actually prohibits it; that is a new addition to our submissions.
The other three concerns we have in representing consumers are, first, the exemptions under the bill are wide and do not constitute a proper balance between consumer privacy interests and businesses' need to contact existing customers.
I would like to deal with the issue that has not been dealt with, and you will hear about it, I believe, from the next panel, and that is charitable solicitation telemarketing. Charities represent 44 per cent of calls. That is what the latest Environics poll has shown us. These calls are currently exempted almost completely, except the charity has to keep a secondary list under this proposed legislation. Our concern is that charitable organizations may not be able to keep their lists up to date in the necessary fashion and will run the risk, through lack of resources or negligence, of continuing to call consumers who have expressed a concern about being called and would like to be placed on the secondary list. We propose an amendment to have the do-not-call administrators keep the secondary lists for the charities. Whether that is feasible is something I would like to explore with you in questions.
Second is the exemption for existing business relationships. The existing business relationship is not exactly parallel to the United States' existing business relationship in at least one aspect, inquiries and applications. My understanding is that in the United States, you have three months to call after an inquiry or application. In our bill it is six months. I do not see why, if we are using their model and trying to keep the systems parallel, there is this difference.
We feel that the existing business relationship exemption in general is long and that 18 months is not a reasonable amount of time to call customers after they have had a relationship with a business that has ended. Eighteen months of ``tail'' calling is a long time and we think that most consumers would consider that to be incompatible with the creation of a do-not-call list.
Finally, we are concerned about the consent issue. You have heard about consent in cyclical businesses. Our concern is more from a privacy point of view, that is, that often in the business card in the fishbowl example that has been given, people do not know that that will lead to telemarketing; that consent is not clear. If you are to address a consent override in this bill, perhaps you could consider putting in an amendment to clarify how long that consent is good for. We would like it to be very short — actually, non-existent — but we realize that there are some practicalities involved with people who need to call in two years, for example.
Our last two concerns deal with issues that have been touched on only once. First, who will run this database? Our concern is that the administrator of this database should be truly independent.
The Canadian Marketing Association has expressed some interest in running this database. We do not think they are a proper administrator for the database. They will not look after the public interest because they will be in a conflict position, given that their own members are telemarketers or heavy users of telemarketing services. In that instance, we ask the committee to consider moving an amendment that will make the independence of the administrator from all forms of telemarketing a requirement, so that you cannot be in the business of marketing or representing telemarketers and be the administrator of the list.
Finally, one issue that was briefly touched on by the representative of the CRTC is voice casting, or leaving voice mail in people's voice mailboxes without ringing the telephone. At the moment, the CRTC has allowed that to occur outside of the telemarketing rules. We are not pleased with that result. It would surprise people if the do-not-call list covered telephones ringing but not voice mail messages left in their voice mailboxes. We think a technical amendment is needed to specify that in the definition of ``telecommunications,'' these voice mail messages directly to voice mailboxes without ringing the phone would be covered by the do-not-call list.
Those are our submissions and I welcome any questions from the senators.
Senator Tkachuk: The Environics poll indicated that not only did 44 per cent of calls come from charities, but 24 per cent are from companies with which the callers have an ongoing business relationship, which are also exempt. In addition, about 27 per cent were cold calls from companies they had never heard of before, which could also be newspapers or, perhaps, polling firms. We have a situation where that represents 68 per cent of all the telemarketing calls that people get. The others could be political parties or from the other exempt list. Do you favour all these exemptions?
Mr. Lawford: No. Our position before the committee in the other place is that we do not want any exemptions at all. The exemptions train seems to have left the station, and we are taking a more pragmatic approach here before you.
If it were possible to run the lists for the three years with no exemptions, that would be our favoured position. However, given the fact that we are here today and the bill is as far along as it is, we thought that taking that position would be viewed as unreasonable. It would be interesting to see the results on the calls, because as you say, that involves the majority of calls, and what are we really cutting out here if we do pass it with exemptions. That would be somewhat addressed by reducing the existing business relationship from the rather lengthy period suggested by the marketing association; that would help. It would also help somewhat if we were to consider a narrower charitable exemption, but I will stop there.
Senator Tkachuk: Are you concerned about the vagueness of the law? It is not very specific and people could get caught up in this. Are you happy with the law the way it is? Would you like to see some improvements? Do you care, since you are just protecting consumers and not necessarily the people who may be caught in this web?
Mr. Lawford: By ``the law,'' you mean the new proposed sections of the Telecommunications Act?
Senator Tkachuk: Yes.
Mr. Lawford: We would like to have more detail. We look forward to seeing some of that in the regulations before the CRTC. For example, someone raised the issue of once I call a business, how many other related businesses can call me? If it is Bell Canada who calls me and I say no, would Bell Mobility be able to call me and then Bell ExpressVu? The bill talks about how any person or organization may call me. What does ``organization'' mean? We would like it to be simply ``that organization.'' In that way, if Bell Canada calls me because they have my consent or we have an existing business relationship, that does not give a separate legal entity like Bell Mobility the right to call me just because they both use the word ``Bell'' in their names. I believe that is the rule in the United States. There is a test whereby a reasonable consumer would consider the two entities somewhat related. We would prefer a stricter test whereby an existing legal relationship does not cover both businesses.
Senator Tkachuk: Were you concerned about what the Federation of Independent Business said about some of the problems they might experience? There is even some confusion about the $15,000, whether it is a $15,000 fine for the infraction or $15,000 per call, which is an entirely different story. If it is per call, which I think it is, three calls is $45,000. The fine is per call, not $15,000 for the actual event. That can be a substantial amount of money.
Mr. Lawford: It is a difficult situation to set up. Perhaps it could be refined by creating a middle category. The fine must be high enough to deter hard-core telemarketers who will continue despite the prohibitions. On the other hand, if it is a small business making a genuine error, you do not want to penalize them with such a high fine. Perhaps we could consider a middle ground. I do share those concerns to that extent.
However, small-business owners who cold call people would be caught by the proposed legislation. From a consumer point of view, we feel that that method of first contact is to be balanced against its intrusiveness.
Senator Tkachuk: Why do you put your name in the phone book unless you want people to call you? I do not understand this. I am a consumer, too. Once I put my name in the phone book, I want people to call me. I do not put my name in the phone book so people will not phone me. Why should the small business not be able to call to see if they can sell you a car, some insurance or a pizza? Take your name out of the phone book and then you will not get the call.
Mr. Lawford: Consumers are saying that cumulatively, those calls are annoying.
In the surveys they say they would like to be able to reduce the calls. Perhaps those surveys were not refined enough in the sense that maybe they would like to reduce calls from large organizations who will be exempted by this business relationship provision even more than those from small businesses, but we do not have that information. It is difficult; I can see where you are coming from.
Senator Tkachuk: People do not like advertising on television, either. They do not like anything. They do not like all the flyers in the paper. You have to be more precise than that.
The Chairman: Many people like the flyers.
Senator Tkachuk: I do, too; I like the coupons.
[Translation]
Senator Chaput: Yours is a non-profit centre and your association exists on a national level throughout Canada. Who are the consumers you represent and how many of them are there? You must surely consult them, so how do you go about that? What kind of process do you follow in order to report back the concerns of your consumers?
Mr. Lawford: Our association has about a thousand members. We receive complaints directly from consumers by e- mail or by phone.
We also have some experience as consumer representatives at CRTC hearings. We have conducted consultations with various consumer groups such as the Union des consommateurs du Québec, Option Consommateurs and the BCPIAC in British Columbia. Very recently, we put forth an initiative to form a collective of various groups.
We are not completely at the bottom of the ladder. Our centre is there to discuss these issues.
Senator Chaput: You referred to a number of groups and associations.
Mr. Lawford: Option Consommateurs and also the Union des consommateurs du Québec.
Senator Chaput: Are these groups in every province or right across Canada?
Mr. Lawford: No, unfortunately. The Consumers' Association of Canada has regional branches in a number of provinces. These groups are to be found especially in Quebec, in British Columbia, and Ontario.
Senator Chaput: How do you consult the consumers who live in provinces where no consumer group exists?
Mr. Lawford: There are scant few people working at the Public Interest Advocacy Centre. Only three people in fact. Through our board, we get nominations for various regions. We accept complaints lodged directly by consumers from these regions. However, there is no formal process which exists.
[English]
Senator Munson: Do you think we are moving too fast, that we should sit back and reflect and make amendments to send back to the House on this entire issue? If so, what should they be? We have heard so many diverse voices. At the beginning of the day it was almost a slam dunk. It does not seem to be that any more.
Mr. Lawford: That is an interesting set of tactics.
When we started this process, I believe the CRTC initially testified before the Commons and expected the first draft of the bill would go through. It was just ``Give us monetary penalties, let us set up the list and trust us to do the rest in a public notice.'' Then the Commons committee heard from charitable groups and business organizations that there should be exemptions and, for some reason, did not hear from us. Now you are hearing from us and from other groups that seem to have had some difficulty in getting their concerns heard.
Yes, I believe it is moving very fast. We were prepared to live with the process of the CRTC public notice situation because the CRTC has dealt with it for 12 or 15 years. However, we were expecting the bill to come back without amendments. Coming back with a few amendments that we do not like is not our preferred option, and having it go through so quickly is doubly bad. At this point we are asking for amendments favourable to consumer groups before it is sent back, or a plain vanilla version of the bill as it was, and let the CRTC go through all of these questions.
We would prefer it if you were able to make the amendments that we felt were important and get the list done now, because the clock is ticking.
Senator Munson: Could you walk us briefly through that again? I would like to know.
Mr. Lawford: Sure. The first issue is that there is a secondary list requirement for both businesses and charities. We are concerned that that secondary list requirement will not be effective because the charities and businesses themselves are responsible for keeping those lists. They then face enforcement if they do not keep them up to date. We have heard from the independent business people that it would be difficult to keep their lists up to date. I suspect it would be the same for charities, small or large. Why not consider an amendment that lets the do-not-call list administrator keep individual names associated with individual charities? You would have to be careful about keeping that information private, but perhaps they could run it. In that way, the secondary lists would also be administered by the national do- not-call registry. That is the first concern.
Our second concern is the need for an amendment to the existing business-customer relationship clause. First, for inquiries and applications, at the very least, it should be reduced from a six-month window after an inquiry or application to three months. We would prefer it did not exist at all. However, if you want to line it up with the United States' registry, it should be three months.
We would also like you to consider a shorter exemption than the current 18 months after a contract ends, which seems a long time to be taking calls from a business with which you may or may not have severed ties, voluntarily or otherwise.
As a side note, it seems that the issue of waivers of consent — in other words, a business can ask for an exemption from the list — is not dealt with in the bill. It seems that parties have many different opinions on that. We would like it to be a clear exemption, if at all, so that consumers know, and they opt in rather than opt out. Perhaps that should be dealt with here.
We do want to keep the do-not-call list out of the hands of marketers just because they are the other side, and we need an independent administrator. We would like that to be someone who does not have a marketing relationship.
The final one is if voice mail is to be the new way of marketing, it is a good way to avoid this list if it is not covered by the bill, and we would like to be darn sure that that loophole, if you will, is closed.
Those are our four suggestions for the bill. Otherwise, we do want the list to go ahead.
The Chairman: Thank you for an interesting presentation. We are grateful to you. I am sorry not to be able to keep you longer, but we are running out of time.
Mr. Lawford: I appreciate that.
The Chairman: I would now ask our next large batch of witnesses to come forward.
We are pleased to welcome, from Primerica Financial Services Ltd., Mr. Peter W. Schneider, Executive Vice- President, and Mr. Hande Bilhan, Senior Vice-President, Government Affairs. From Canadian Life and Health Insurance Association, we welcome Mr. Jean-Pierre Bernier, Vice-President and General Counsel, and Mr. Peter Goldthorpe, Director, Marketplace Regulation Issues; and from the Ottawa Chapter, Association of Fundraising Professionals, Mr. J. Boyd McBride.
J. Boyd McBride, Chair, Ottawa Chapter, Government Relations Committee, Association of Fundraising Professionals: I am here as the National Director of SOS Children's Villages, which is the world's largest orphan charity. Today, however, I am also representing the Association of Fundraising Professionals, which is a 27,000- member-strong organization committed to advancing philanthropy. We have 2,700 members across Canada and chapters in almost every Canadian city and province. We are here because a national do-not-call list would detrimentally affect the operations of non-profits and charities across the country. For that reason, we urge the Senate committee considering this bill to uphold the exemption for registered charities contained in the House of Commons version of Bill C-37. That is essentially what I am here to talk about. I am happy to continue for a few minutes and perhaps answer questions when the opportunity presents itself.
You should know that the AFP, Association of Fundraising Professionals, is committed to protecting the privacy and confidentiality of all donor transactions and deeply committed to meeting the wishes of donors. Our organizations could not function if we continued to annoy our supporters by doing things that they have indicated they do not want us to do. We are very much dependent on public trust and confidence in order to continue the work of charity in our sector. Privacy is an issue that we really do understand. Our organization, you might know, was one of the driving forces behind the creation of the Donor Bill of Rights, which guides thousands of charitable organizations in their relationships with donors across the country.
We have also taken other steps within our organizations to protect donor privacy. We know how important telemarketing is to the voluntary sector and how sensitive it can be for people answering the phone.
I want to emphasize that in our view, not all telemarketing calls are alike. There is a distinction between calls made on behalf of private sector interests and those made on behalf of charities, which, in a real sense, represent the public interest.
The United States Congress listened to the same kinds of concerns expressed by charities south of the border and created certain exemptions from the do-not-call list requirements. We are urging that you consider the same.
We do feel that a national do-not-call list that includes charities would hamper non-profits in being able to ask people to give in the first place and would lead to declines in contributions. We know the fundamental issue is being able to ask the question: Will you support our cause? If we are denied the opportunity to do that over the telephone it will have a detrimental effect. Right now, ours is a significant sector in the economy, with over 2 million full-time equivalent workers, 12 per cent of the economically active population and almost 7 per cent of the gross domestic product. Decisions like this, while significant for everyone, are certainly significant for the voluntary sector. This is a sector that Canadians know and trust. A recent survey indicated that 90 per cent of respondents said that charities are playing an increasingly important role in our society. Almost 60 per cent reported that they felt charities did not have enough funding.
The federal government has, for many years, been very supportive of our sector and most recently in its work on the Voluntary Sector Initiative. Our request that registered charities be exempted from this bill is another opportunity for the federal government to indicate its commitment to strengthening and enhancing the work being done by the sector on behalf of all Canadians.
[Translation]
Mr. Jean-Pierre Bernier, Vice-President and General Counsel, Canadian Life and Health Insurance Association Inc.: Madam Chair, the Canadian Life and Health Insurance Association appreciates this opportunity to appear before the committee as it considers Bill C-37.
At the outset, I would like to note that Canada's life and health industry is strongly committed to high standards in relation to marketing and communication with existing and prospective clients. The industry also has an extensive history of constructive cooperation with federal and provincial governments on matters relating to protection of privacy and consumer interests more generally.
CLHIA is a voluntary, non-profit organization that represents life and health insurance companies in Canada. The industry's products include life insurance, disability insurance, supplementary health insurance, annuities, RRSPs and pensions. These products provide protection to about 24 million Canadians. Last year Canadians received just under $45 billion in life and health insurance benefits.
[English]
An important part of providing this protection is maintaining an open dialogue between advisers and clients. I am sure you can appreciate that short of sitting down for a face-to-face conversation, one of the most effective ways of communication is over the telephone. This is why the industry was concerned when it viewed the original bill that proposed to give the CRTC authority to establish a do-not-call registry. There was just too much uncertainty on important issues affecting access to clients and prospective clients. Fortunately, when the bill went to the House committee it was amended to include an exemption that would allow calls to individuals in an ``existing business relationship'' with the caller.
As you know, there is a three-part test for existing business relationships in the bill itself. Of particular importance to Canada's life and health insurance industry is the third element of this test: The existence of a written contract between the caller and the individual who is called. This reflects the long-term nature of the relationship between insurance companies and their clients. This exemption for calls to individuals in an existing business relationship simply ensures that the industry will be able to continue providing a high level of service to potentially vulnerable individuals. The exemption enables life insurers to effectively communicate with clients who might, for example, have difficulty reading written notices. It also protects individuals who place their names on a do-not-call registry mistakenly believing that their financial adviser can continue to phone them.
For both of these reasons, the industry believes that the exemption of existing business relationships serves an important public policy interest.
Now I will turn it over to my colleague, Mr. Goldthorpe, who will address another matter important to the Canadian health and life insurance industry.
Peter Goldthorpe, Director, Marketplace Regulation Issues, Canadian Life and Health Insurance Association Inc.: As committee members are aware, at the beginning of the legislative process for Bill C-37, we wrote to Minister Emerson and suggested that the bill be amended to clarify the status of referrals.
Referrals are important in the selling of life insurance to Canadians. It is important for the industry, for the people purchasing the policies and for the beneficiaries of those policies. I will defer to my colleagues at Primerica Financial Services Canada Ltd. to tell you how the referral system works in detail.
I did want to underscore the importance of referrals to the industry and our interest in that issue. That concludes our remarks, and we will be happy to answer any questions.
Peter W. Schneider, Executive Vice-President, Primerica Financial Services (Canada) Ltd: It is exciting to be here, and I have been fascinated by the discussion. It is also nice to see snow. I am from Atlanta, Georgia. I know you are used to it, but I am not.
Primerica Financial Services (Canada) Ltd. is a member of Citigroup. We are the largest financial services sales force in North America and the largest life insurance company in Canada measured by the number of agents. We have over 100,000 agents in North America.
We are a big business, but our agents are small agents. They are individual, independent agents affiliated with us, each of whom has obtained a licence. We cater to a middle-income market. We achieve that by setting up appointments to meet with clients across the kitchen table. We are not a telemarketer. We do not sell insurance over the phone. You really cannot sell insurance over the phone. You have to sit down with people and address their needs. That is what we do.
The problem is not that there are too many calls; there are actually too few. People are terribly underinsured in North America, and that creates a governmental burden.
In the U.S, we worked extensively with the Federal Communications Commission in fashioning the do-not-call laws because it is important for our individual agents. Following those communications and thinking about it, the FCC created an exemption that is in the regulation as opposed to the enabling act.
The exemption they created was one for personal relationships: Friends, family and personal acquaintances. If you think about it, that is logical because these are not the kind of telemarketing calls that are unwelcome. That is how insurance agents operate. Especially when they are new in the business, they call their friends, their relatives, their cousins, and those are not the kinds of calls that give rise to complaints.
The trouble with Bill C-37 as currently drafted is there is no such exemption. Those calls cannot be made. Literally, you could not call your mother, brother or cousin.
When the FCC looked at this issue, they specifically found that these kinds of calls were okay because they are expected by the recipient. They are not subject to abuse by telemarketers using backroom dialing machines. They are limited in number. They are important to get businesses going. They are not a source of consumer frustration, and there are no real privacy concerns.
Then the practical question arises: How do you police this? Will you get complaints? Can you police it?
Earlier today we heard about a peewee hockey team. A personal relationship exemption would allow that group to call people on the team to raise money or get folks together, and it works for them. It is a common-sense exemption.
Otherwise, you end up legislating against common sense and human nature. There are terrible consequences when you do that. A business like ours that needs to give clear guidance to its agents needs those kinds of exemptions in the law. We write 30,000 insurance policies a month. In the U.S., where we have these exemptions, we have not had a single complaint to the FCC relating to it.
I can tell you are thoughtful about looking at this bill. As you consider it, we ask that you balance the need for protecting the public against unwarranted intrusion with the practical side of ensuring people have access to financial services; that people whom they want to call them can do so. Our view is that would result in an exemption for personal relationships and, as the CLHIA pointed out, referrals, which is simply a subset of that.
Senator Tkachuk: I have a couple of questions for clarification of what you have said, Mr. Schneider.
Is the exemption you are seeking for referrals? For example, I buy insurance, and the agent asks me if I know anybody else who might be in the same boat and would like insurance. ``Oh, Senator Merchant is a friend of mine, and she would be interested.'' Is that one exemption you are seeking?
As another example, I get a job selling Primerica Financial Services (Canada) Ltd. insurance, and I phone my relatives because they are a prime market for me.
Mr. Schneider: The FCC rules provide for an exemption when you call someone with whom you have a personal relationship. They define what that means.
The referral exemption, which the CLHIA talked about, can be viewed as an extension of that, because it is conceivable you could get a referral by calling people with whom you do not have a personal relationship but someone you do have a relationship with knows them. I think that is going one step further.
From our standpoint, we are advocating and requesting an exemption for persons with whom you have a personal relationship. I do believe referrals are important, and those calls are welcome as well.
A typical insurance agent will ask for a list of names and ask if they can call those people, but sometimes your client will make those phone calls in advance. For example, I will have Mr. Schneider call the senator to see if she is interested in insurance.
To be clear, the exemption that exists under the FCC deals with personal relationships.
Senator Tkachuk: I have one more point for clarification. We should understand that people phone because telemarketing works. They are not phoning because they do not have anything else to do and they want to waste some money. People are buying products even though they are complaining about the phone calls. Telemarketing obviously works.
I find the case of the registered charity intriguing. In that instance, you do have an exemption. What about non- profit organizations that are not registered charities?
What about the high school that is fundraising for graduation? What about the soccer team phoning businesses in any small town in Saskatchewan to fundraise to go to a soccer tournament? What about the ballet schools and the hockey schools? None of these are registered charities. Can they phone? Are they exempt from the law or are they caught by the law? We are talking about $15,000 a phone call here.
Mr. McBride: Under the existing draft legislation, without the exemption, they would be caught by the law. Even with the exemption for registered charities, you are correct; there is a distinction between a registered charity and a not- for-profit unregistered organization, and they would be caught if you did not choose to broaden that exemption beyond strictly registered charities.
Senator Dawson: That point brings me to the distinction that you made between the exemptions that are in the law versus the exemptions that exist in regulations. I think the CRTC will be going forward, after having studied it, with exemptions in the rules and regulations. What is the distinction in the U.S. legislation?
Also, since you have operated both before and after this type of legislation, how has it helped or hindered the way you can market your services in the United States? How would you frame an exemption for referrals from family?
Mr. Schneider: With respect to the enabling legislation versus having the rules established by the regulatory body, in the U.S., the approach was to have the enabling legislation and then have the regulatory body deal with it.
It is a problem. These are important public policy judgments that legislators should make. That is my view. The problem with the regulatory bodies is they do not have the same sensitivities to the public.
They have different experiences. They are often from the enforcement side and do not see the subtleties of small businesses and people who are struggling to earn a living. Here there is a concern that if there are some exemptions in the law but not others, the regulatory body might think it has all been taken care of and they do not need to consider other regulations. Therefore, I would urge you to look at the exemptions and put them in the law.
With respect to how we have operated, do-not-call has been a very expensive undertaking for us, even though we have the exemption. If you are calling someone with whom you do not have a personal relationship, you have to check that do-not-call law. How will you do that? Many of our agents are part time and some work from their homes. How will you check it from your home?
You have to have computer access, so as a business we had to contract for a very large sum of money with a third- party service. When you telephone, you have to do it through that service. They charge us for every phone call we make through them. The service will automatically check the do-not-call law, so the call will not go through if the name is on the log. We pay per call and they add tariff charges; we also have a licensing fee and that kind of thing.
Unfortunately, there is sometimes non-compliance in certain areas — not from us, I hope. However, when you are calling someone you know or think you know, there can be non-compliance; and if there is no complaint, there is no complaint. That is not an effective way for us to operate. We need guidance on that.
As an aside, someone told me an interesting thing about their business. A small-business owner had a gas station. He let his employees have free gas and they asked him why. He said, ``If I did not give it to them free, they would steal it and I do not want dishonest employees.''
You need practical guidance in the law. As you look at this, I urge you to think about the practical issues. It has been hard and expensive, but we have done it and we have not had complaints.
Senator Dawson: Since 50 per cent of the households have been taken out of your marketing targets, you are targeting those who are more sensitive to buying, are you not? The ones that do not want calls, like Senator Eyton, say ``Do not bother me.'' If you stay on the list, it means you accept these types of calls.
Mr. Schneider: We have an exemption for personal relationships, which is our business. We have found that those calls are not unwelcome; the recipient is not bothered by the calls. The kinds of calls that people in the U.S. were upset about were calls from time shares, automatic dialling calls, where you hear a recording. Those are big problems.
It is not your cousin who says ``I am now an agent; can I come over to your house and talk about your insurance needs?'' Those calls are not upsetting, and that is why we have not had complaints.
We have prohibited cold calling. You cannot call people you do not know. Has that shrunk our market? Maybe a little; but that is the law and it is very important that we comply with it.
[Translation]
Senator Tardif: My question is directed to Mr. McBride. Currently, registered charitable organizations must keep individual exclusion lists. How do you let the public at large know whether or not they are entitled to be on such a list? The level of awareness doesn't seem to be very good as many people do not seem to know that they have a right to have their name put on such a list. What approach are you taking in order to better communicate with the public?
[English]
Mr. McBride: Across the voluntary sector, there may be differing practices. However, in the organizations that I am familiar with, we typically respond to any request from donors to have their name taken off the mailing list or a phone list by telling them that we will do that for our organization. If their name is not on our list, if we have borrowed or rented a list for purposes of mailing, we urge them to contact the Canadian Marketing Association, which maintains those do-not-mail, do-not-call lists, and have their names put on those lists so that the calls or the mail will ultimately slow down or cease.
[Translation]
Senator Tardif: Do charitable organizations share such lists among themselves? Is that common practice?
[English]
Mr. McBride: The exchange of lists for one-time use among charitable organizations has been a common practice over the last 10 or 15 years. Under the new privacy legislation, we are seeing far less of that now. There are many more hoops for a charity to go through to ensure that the supporters on their list are truly willing to have their names exchanged for the benefit of the charity.
Senator Tkachuk: But it still happens.
Mr. McBride: It still happens.
[Translation]
Senator Tardif: Currently, some charitable organizations are unregistered. Why would a charitable organization decide not to register with the Canada Revenue Agency?
[English]
Mr. McBride: That is a fairly broad question; there are literally hundreds of thousands of organizations involved, so I am afraid I cannot respond for all of them. It is fair to say there are some unregistered organizations that would like to be registered, but whose purpose or reason for existence does not qualify under Revenue Canada's regulations.
There are some who are so relaxed and casual in their operations that they do not feel the need to register, and do not want to incur the expense of doing so.
The Chairman: As a matter of curiosity, when charities and non-profits exchange lists, are they likely to have stripped out unprofitable names? I do not mean people who ask to be taken off the list, but just people who do not give. In other words, are you trading rich lists or just mass lists?
Mr. McBride: I cannot speak for all charities on this, but it is fair to say that charities understand that their donor lists are an extraordinarily valuable resource and they are careful about the terms and conditions under which they might let portions of that list go to another charity for purposes of building donor files.
It is also fair to say that within the charitable sector, we recognize that someone who is on another charity's list but has not given even to that charity for five or seven years is probably not a valuable name to bring into a trading relationship.
Parameters are set to ensure that the people whose names are exchanged have, first, agreed that that is acceptable, and that their behaviour as donors makes it sensible for an exchange relationship to take place.
Senator Merchant: Mr. Schneider, you have had a do-not-call list in the U.S. for how many years now?
Mr. Schneider: It was passed in 2003 and went into effect in 2004.
Senator Merchant: Therefore the government has not had a chance to evaluate or revisit the legislation. I am interested in what kind of changes they have made.
Mr. Schneider: There is not a lot heard about it in the U.S. There is a sense that it has been positive legislation and people have received fewer calls. There are not a lot of complaints. There is no sense that it is not working, but the FCC has not looked again at exemptions. I do think it is a complaint-driven process. Earlier today, a gentleman spoke about looking for a series of complaints, and I believe that is what regulators are doing. If there are a few they will not follow up; if there are a lot they will think it is a problem. That does make it subjective on the part of the regulator, but I think that is what the FCC actually does. They have assessed some large fines and then they have ignored a lot of small problems.
Senator Merchant: Is there any value in letting people's names drop off the list after X number of years and having them re-register, just to see how the system is working and whether the consumer sees some value in all this legislation? Would there be anything to gain from that?
Mr. Schneider: Re-registration processes could become a difficult practical issue. I do not know. There are many issues, one of which is the length of time you are on the list can affect life insurance. We sell 20-year level term insurance. After 20 years we would like to call up our customers and ask whether they want to buy a new policy or continue their insurance. Otherwise, the insurance will come to an end.
We have made those people vulnerable. That is a call that we should make as part of our fiduciary duties. No one will say we have a 20-year existing business relationship.
Senator Munson: Do any of you have views on who should manage the do-not-call list? What do you say to those groups here this morning who feel we are going too fast, that we should put the brakes on before allowing this to become law and make some amendments to protect small business and others who feel they are not protected? Do you have any views on who should manage the do-not-call list?
Mr. McBride: I cannot help you on that, Senator Munson.
Senator Eyton: I understand you are monitoring this through the marketing association; is that correct?
Mr. McBride: They do maintain a list and it is available to some charities.
Senator Eyton: Does your association have some relationship with Canadian Direct Marketing?
Mr. McBride: Any association that uses mailing can access their do-not-mail list.
Senator Eyton: Would most of your members belong?
Mr. McBride: Most of them do not belong, but most of them that are doing serious mailings would be using that list, yes.
Mr. Schneider: In terms of going too fast, that is a question of how you as legislators feel about the issue. It is a quick process. The FCC took a long time to go through their rules. They are 150 pages long. A lot of thought was given to them. It is a question of whether you feel as legislators that all the interests have been heard.
Senator Tkachuk: Maybe I should have asked the direct marketing association; I feel bad about this. It came up because we were talking about the list itself.
Correct me if I am wrong, but probably one out of three Canadians moves every year. There is a change of address and a change of phone number. This is going on constantly. I put my phone number on the do-not-call list and then I move. No one knows I have moved. I go to Calgary and I put my Calgary phone number on there. I am on the do-not- call list, but no one is phoning me, so how do they know that I am registered at two places?
In other words, how legitimate are these lists? I have heard it will only cost 3.5 million bucks. Give me a break. If it is legitimately managed, and not just a case of taking every phone number and putting it on the list and adding it to the total — these are real people behind these phone numbers — this will cost a lot of money. In Canada there will probably be 5 million or 6 million people registering on this do-not-call list if we use comparative numbers from the States, and that is probably a low estimate. One third of that list every year is inaccurate. Therefore, over the years, no one has a clue — and I would guess it is the same in the States — whether there are any people behind those phone numbers. That is a fact.
The Chairman: What is your level of confidence in it?
Mr. Schneider: It is just a number. If someone moves and leaves the old number on that list, then the new person in the house may be reassigned that number. There is no provision that I am aware of to ask that new person if he or she wants to be on the list.
Also, cell phones are an issue in the U.S. because people tend not to think about their cell phones. There is no cell phone directory. At one time in the U.K., where we also do business — I am not sure it is this way today because I think they now have do-not-call — if your name was in the phone book then you could be called. If your name was not in the phone book you were, essentially, on a do-not-call list and you made that decision. That is how it was once done there. I do not know if it is done that way today.
The Chairman: Colleagues, and ladies and gentlemen, it has been a most interesting session, informative and helpful. We are grateful to you, especially to someone who comes all the way from Atlanta.
The committee adjourned.