CANADA
Annual Report on Consumer Issues
2000
The Competition Bureau
Conformity Continuum
- The Commissioner of Competition in Canada is responsible for the administration and
enforcement of the Competition Act, the Consumer Packaging and Labelling Act,
the Textile Labelling Act, and the Precious Metals Marking Act. The
Commissioner, operating under the assumption that most businesses prefer to comply with
the law rather than to become involved in enforcement proceedings, has adopted a
conformity continuum in undertaking his duties. The continuum offers a variety of
education, compliance and enforcement instruments in achieving the ultimate goal of
conformity with the legislation. It allows the Bureau to choose, for any specific
situation, the appropriate instrument, or combination of instruments, to address the
issues raised.
Enforcement Activities
- On 18 April 2000, a consent order was registered with the Competition Tribunal
against Universal Payphone Systems Inc. and its president, George Katsoulakis under the
deceptive marketing practices provisions of the Competition Act. Under the terms of
the consent order, Universal Payphone Systems Inc. and Mr. Katsoulakis are prohibited from
carrying out any and all marketing activities in Canada regarding their payphone business
for a period of ten years. The order further prevents the company and its president from
engaging in the marketing of any business in Canada by using similar techniques as those
used by Universal. Universal was engaged in the sale and promotion of payphone business
opportunities throughout Canada. The company promoted its business through the use of
radio, television, Internet and print advertising. In its application, the Bureau alleged
that Universal made several misleading representations in the promotion of its business
opportunities, including exaggerating the potential earnings to investors; using
non-independent accreditation agencies to endorse its business; misrepresenting the type
and quality of payphone the investor could expect to receive; selling the
"turnkey" nature of the investment; misrepresenting the length of time the
company had been in business; and providing guarantees of initial investment made by
investors when there was no reasonable likelihood that such guarantees would be fulfilled.
- On 30 August 2000, 3181731 Canada Inc, doing business as Direct Health
Organization, Columbus Health Centre, New Opportunities Publications and Canadian Shipment
Centre, pleaded guilty to a misleading advertising offence under the Competition Act
and was fined CAD 500 000. The Bureau commenced an investigation in December
1997 after receiving a number of complaints from people who had received samples in the
mail. Consumers were being urged to purchase various weight-loss products and a get-rich
quick program. The investigation revealed that the representations made to the public in
connection with these methods and products were not based on adequate and proper tests.
- On 21 September 2000, a total of 35 criminal charges under the telemarketing provisions
of the Competition Act were laid against two Montreal-based telemarketing companies, their
principal director, and five individual telemarketers. The charges stem from a Bureau
investigation into nationwide deceptive telemarketing practices carried out by F.D.G.
Fortune One Group and F.N.G. First National Galleries between March and August of 1999.
Consumers claimed that during that time, telemarketers phoned to tell them they had been
chosen to receive valuable awards or "premiums". However, consumers were
required to buy the companies' promotional products, such as reproduction artwork, before
they could collect any prizes. The charges allege that the companies’ telemarketers
misled consumers about the nature, value and quality of the awards at the time of the
transactions, and left out or only partially disclosed extra conditions and restrictions
required to collect the prizes.
- On 30 November 2000, eight charges under the misleading advertising provisions of the Competition
Act were laid in Toronto against three individuals and two companies for allegedly
invoicing businesses for unsolicited Internet directory listing services. The charges stem
from a Bureau investigation of complaints it received related to documents mailed under
the names "Yellow Business Pages" and "Yellow Business Directory" to
more than 500 000 businesses and charitable organizations across Canada between
May and September of 2000. The mailings asked recipients to send a payment of
CAD 25.52 to a Postal Box in the Toronto area for an Internet directory listing
containing their business information. The charges allege that the mailings were made to
appear as invoices or bills when they were in fact solicitations, and that recipients were
misled to think they were existing customers of the Internet directory service.
- On 1 December 2000, the Director of three Montreal-based telemarketing companies
was sentenced to pay a CAD 300 000 fine after pleading guilty to three criminal
charges of misleading advertising under the Competition Act on 22 September
2000. This amount represents the highest fine ever imposed against an individual for
deceptive telemarketing under the Act. The guilty plea follows a lengthy criminal
investigation conducted by the Bureau, and relates to deceptive telemarketing and direct
mail practices carried out by S.S. Viking Industries, S.C. Canadian Clearing Centre Inc.,
and Exclusive Premium Distribution Centre S.C. Corporation during the period of
1 March 1994 to 7 November 1997. During that time, the company phoned and sent
letters to consumers telling them they would get valuable awards or "premiums"
if they bought promotional products such as pens and coins that the company was selling at
what turned out to be inflated prices.
- On 1 December 2000, telemarketing company C.S.R.H. Heritage Group Inc. was fined
$700,000 and the company's manager, Ronald Howell, was sentenced to a six-month
conditional jail term for misleading advertising under the Competition Act. The sentences
follow guilty pleas entered by the company and Mr. Howell on 13 July 2000, and relate
to deceptive telemarketing and direct mail practices carried out by the Montreal-based
company between November 1997 and March 1999. During that time, the company phoned and
sent letters to consumers telling them they would get valuable awards or
"premiums" if they bought promotional products such as pens and coins that the
company was selling at what turned out to be inflated prices.
- On 1 March 2001, the Competition Bureau filed an application with the Competition
Tribunal for an order against P.V.I. International Inc. and two corporate officers. The
application relates to the promotion of the "Platinum Vapor Injector ", a
fuel-saving device. The application alleges that certain claims made about the
device’s ability to save fuel and reduce harmful emissions were false or misleading,
and were not based on adequate and proper tests. The application also alleges that false
or misleading representations were made in the promotion of the device which gave the
general impression that it had been approved by various levels of government in Canada and
the United States. The respondents have 30 days to file a response to the
Application.
Internet Sweeps
- In order to promote the OECD Guidelines for Consumer Protection in the Context of
Electronic Commerce, the Fair Business Practices Branch of the Competition Bureau also
conducted a domestic Internet sweep to see if the requirements of the Guidelines were met.
During the month of August 2000, the Bureau examined 292 Canadian Web sites which
were assessed on the basis of what information was easily accessible before entering into
a transaction. Ten officers examined various categories of e-commerce websites such as
sport and fitness, books, CD’s, clothing and health and beauty products, and
completed a checklist of 18 questions regarding website information, contract information,
transaction information and the privacy policy. The Bureau also participated in an IMSN
sweep in February 2001 on this topic.
Policy Development Activity
- In May 2000, the Bureau launched the draft Guide for the Labelling and Advertising of
Pet Foods and sought public comment from interested parties on the Guide. The guide
reflects the approach the Bureau will take when evaluating allegations of false or
misleading advertising representations under the Consumer Packaging and Labelling Act
and the Competition Act. The guide provides a set of general principles for pet
food labelling, guidance on using specific claims, and examples of acceptable claims. The
examples illustrate the type of claims manufacturers and importers may wish to use to
reduce the likelihood that their labelling or advertising will mislead consumers. The
guide was prepared in collaboration with several governmental and non-governmental
organizations including: Health Canada, Agriculture and Agri-Food Canada, the Pet Food
Association of Canada, the Canadian Veterinary Medical Association, the Canadian Kennel
Club, the Canadian Animal Health Institute and the Pet Industry Joint Advisory Council.
Latest update 28 March 2001
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