Eliminating Phonelessness in Canada: Possible Approaches Second Edition

By Philippa Lawson
While Canada prides itself on a 98% household penetration rate of telephone service, closer examination reveals a persistent problem of phonelessness among lower income households. This problem needs to be addressed if Canada is to achieve its goal of universal service. Bill management tools and other market initiatives (such as prepaid local service) while helpful to some users, have failed to close the gap. Other approaches deserve examination. In the USA, under the Lifeline and Link-Up assistance programs, low income households are offered basic phone service at discount rates. Studies indicate that these programs are successful in increasing subscribership among the low income population. Canada should consider implementing a similar program.The second edition of this report includes updated statistics and more analysis of the issue.
Hard copy, including Appendix B, 140 pp. price: $20
(Soft copy is 37 pages, without Appendix B)
March 2002

Eliminating Phonelessness in Canada: Possible Approaches Second Edition

Full report is available as a PDF [pdf file: 0.28mb]

EXECUTIVE SUMMARY

Phonelessness: The Problem
Phonelessness is a social policy problem that needs to be addressed by the federal government. In particular, it has serious implications for employment, skills development, and the delivery of social services, all of which are central components of HRDC’s mandate.
While overall household telephone penetration rates in Canada are high (98-99%), they are significantly lower among low income households (95-96%). The predominant characteristic of phonelessness in Canada is low income.
Based on Statistics Canada data, it can be conservatively concluded that at least 0.8% of Canadian households, or over 100,000 households, do not subscribe to residential telephone service because they can’t afford it. How many more can’t afford phone service is not clear, given important gaps in Stats Can survey samples.
Those without telephone service for affordability reasons constitute the mere “tip of the iceberg”; many more Canadian households are struggling to keep phone service in the face of ever-increasing basic rates.

Responses to the problem of phonelessness

In Canada

  • the CRTC has required telephone companies (a) to offer toll restriction and instalment payment options, and (b) to monitor penetration rates, disconnection rates and related data in order to track the affordability problem;
  • some companies offer bad debt repayment plans, aimed at helping customers pay off outstanding debts while still receiving phone service;
  • some communities offer free or low-cost voice mail for the homeless or those without telephones at home; and
  • a private company offers prepaid local-only phone service, as an alternative for those who face large security deposits and/or debt repayment in order to regain service from their local service provider.

In the USA

  • there is an extensive system of subsidies designed to assist low income households get on and stay on the telephone network, most of which fall under the FCC’s “Low Income Program”. The key programs, offered throughout the USA, are Lifeline (monthly rate discounts), Link-Up (installation fee discounts), and Toll Limitation Service (free blocking of toll service). Additional benefits and/or alternative discount rate plans are available in many states.

Eliminating Phonelessness in Canada: Possible Approaches

  • These programs are generally funded by revenue-based charges levied on telecommunications companies, and to some extent by end-user surcharges.
  • In 2000, an estimated 5.9 m. US households paid reduced local rates under the Lifeline program. App. 10.6 m. low-income customers have benefited from the Link Up program since its inception in 1987.
  • prepaid local service is available in at least one state (Texas);
  • metered service is an alternative option in many states;
  • some states offer equipment subsidies for visually and hearing impaired customers.

In the UK, -local service is metered, and mobile service is very popular; -local phone companies are required to offer customers “the option of a more restricted package at low cost”; such services include incoming-only service (not popular), prepaid local service with access code, and a
“light user scheme” which is attractive for those making little use of local phone service;

  • service providers are also required to provide alternative payment options, including pre-payment options.

The impact of assistance programs on subscribership

Targeted subsidies in the USA appear to have had at least some success in raising penetration levels. A recent study concludes that the Lifeline program “has raised penetration rates and the sizes of the increases are related to the amount of assistance provided”.
While phonelessness in the UK has dropped significantly over the past two decades, it is difficult to attribute this to any particular cause.
Penetration rates in Canada appear not to have been affected by the minimal efforts made to date to facilitate subscribership in this country.

Lessons to date

Phonelessness is inextricably linked to income. Any program designed to combat phonelessness should therefore focus on low income households.
There are at least three different aspects of the affordability problem, each of which requires its own solution:

  • inability to afford the up-front costs of connection or reconnection;
  • inability to afford the ongoing cost of basic phone service; and
  • inability to control the use of one’s phone.

Eliminating Phonelessness in Canada: Possible Approaches

The more generous the assistance, and the more effort that goes into promoting it, the more successful it will be in improving the affordability of phone service.
Challenges in designing and implementing a telephone assistance program in Canada
A preliminary challenge is a perception of many that no such program is needed in Canada, given our relatively high telephone penetration rates.
If the goal of the program is to close the phonelessness gap, rather than to make basic phone service more affordable for low income Canadians, a dilemma exists: making benefits available only to the phoneless will create a perverse incentive for subscribing households to disconnect.
If the goal is to make phone service more affordable for low income Canadians and to thereby bridge the phonelessness gap, the key challenge lies in targeting the program at those who need it while minimizing administrative costs.

Conclusions and Recommendations

In order to achieve the goal of truly universal telephone service in Canada, more effort is needed to close the phonelessness gap.
A program designed to reduce phonelessness cannot simply focus on the phoneless; it must focus on all those experiencing telephone affordability problems.
Lower-value, unsubsidized, “budget services” do not respond to the needs of all those experiencing affordability problems, and hence do not offer a full solution.
The two main options for funding a targeted subsidy program are (a) direct taxpayer-funded subsidies, or (b) a subsidy scheme administered via telephone companies, as in the USA. Providing subsidized service through telephone companies, rather than social assistance agencies, is likely to be the most efficient method.
Each of the three problems identified above (connection fees, monthly rate, toll bills) needs to be addressed if phonelessness in Canada is to be eliminated. Currently, only one of these three problems is being effectively addressed, through the CRTC-mandated toll restriction service. Statistics suggest that the other two problems are more significant, and therefore worthy of further attention.
Key elements of an effective program to combat phonelessness in Canada include:

  • income-based eligibility (self-certified), combined with automatic enrolment of social assistance recipients;
  • a variety of benefits designed to address each particular problem;
  • sufficiently generous benefits to attract non-subscribers;
  • ongoing promotional and outreach efforts; and -oversight by a multi-stakeholder Advisory Committee.

Public Interest Advocacy Centre March, 2002
 

Consumer groups call for telemarketing controls

CRTC Public Notice 2001-34: Telemarketing Rules
Comments of Action Réseau Consommateur, the Consumers’ Association of Canada, and Fédération des Associations Coopératifs d’économie familiale (“ARC et al”)
1. The following comments are submitted on behalf of Action Réseau Consommateur, Fédération des associations coopératives d’économie familiale du Québec, and the Public Interest Advocacy Centre (“ARC et al”) on the issues in the above-mentioned public notice, taking into account the submissions and interrogatory responses filed by other parties.

Introduction

2. The record of this proceeding is clear that telemarketing has become a serious annoyance for Canadians. The record also makes clear that more effective regulation is needed in order to better balance the rights of Canadians to freedom from such interference with their privacy, with the rights of businesses to use the public telecommunications network for private and commercial purposes. This proceeding is hence timely, and ARC et al are grateful for the opportunity to participate in the development of a more effective regulatory regime for telemarketing.
3. ARC et al have provided extensive comments already in this proceeding, by way of their initial submission and two sets of interrogatory responses. In addition, they filed two brief supplementary submissions, one providing the results of a nation-wide survey on point, and the other referencing recent statements by the Chair of the Federal Trade Commission in the USA on telemarketing. The Comments provided here are further to those submissions.

The need for a more effective regime

Canadians want the CRTC to act
4. There can be no doubt, based on the record of this proceeding, that the current regime governing telemarketing in Canada is not working. Not only has the CRTC received comments directly from the public and consumer advocates on this issue, it has also heard from Canadians across the country via a nation-wide survey conducted earlier this summer by Ekos Research for PIAC.
5. The Ekos survey probed public opinion on the issue of business use of customer data for marketing purposes, and in particular, on the question of how businesses should obtain customer consent to such marketing. As part of that survey, respondents were asked one question specifically on telemarketing. That question posed two opposite points of view regarding telemarketing, and asked respondents to choose the one that best reflected their views. Only 1% were unsure. 61% chose the statement:
“I would like to stop receiving all telemarketing calls to my household even if it means I may miss out on a really good opportunity”
while 38% chose:
“I don’t mind receiving telemarketing calls because I can always say no or not answer the phone”.
6. Clearly, a significant majority of Canadians are seriously annoyed by telemarketing, consider the current situation unsatisfactory, and would like to be able to stop unsolicited calls to their homes. This result was confirmed in focus groups, where most participants “expressed both concern and little usefulness for many of the calls they received”.

Telemarketing is a particularly intrusive form of marketing

7. In a submission dated Oct.1st, Telelink argues that there is no major difference between telemarketing and direct mail marketing from the perspective of the customer. ARC et al strongly disagree. While unsolicited direct advertising by mail is also of concern to consumers, it is distinct from telemarketing in a critical respect: unlike a telephone call, it does not involve an intrusion into one’s private space. Telephone calls interrupt the peaceful enjoyment of one’s private home and demand attention at the moment they are received. Mail does not. This is why telephone marketing evokes such negative reactions from so many consumers.
8. In addition, telephone marketing uses a finite resource: air time on a given telephone line. The Commission has a mandate to ensure that the public telephone network is used in a responsible manner, in the public interest. It is particularly annoying to consumers when they miss important calls due to unwanted solicitations occupying their line. Canadians rely upon the telephone network for emergency purposes, social interaction, personal health, employment and business dealings, civic engagement, etc. These important social and economic uses of the public network should not be compromised by irresponsible, unnecessary and excessive use by commercial entities for their own gain.

Scope of the Regime

9. ARC et al submit that a more rigorous regulatory regime is needed with respect to telemarketing through all three media through which it is currently conducted: telephone, facsimile, and electronic mail.
10. ARC et al further submit that the regime should cover all sources of unwanted unsolicited calls: for-profit solicitations, non-profit fundraising, and market research.
11. To the extent feasible, the regime should offer consumers the ability to opt-out selectively from these different media and sources of telemarketing. However, a basic opt-out regime should not be delayed for this purpose; greater selectivity can be added-on to the regime over time, as it proves feasible.

The Commission should initiate a proceeding on the growing problem of unsolicited electronic mail

12. In ARC et al’s submission, telemarketing includes all forms of electronic marketing, both over the telephone network and over the Internet. As noted in their April 24th submission, unsolicited email marketing has become a serious problem for email users, and needs to be addressed via regulation. As with other forms of telemarketing, industry self-regulation has proven inadequate.
13. Unsolicited e-mail is similar to facsimile marketing in that it shifts the cost of marketing from the sender to the recipient, albeit via the Internet Service Provider. In this respect, “spam” is particularly repugnant. As communication by e-mail becomes more of a norm, legislators and regulators in other jurisdictions are recognizing the problem and responding in a number of ways, including legislated requirements and civil rights of action. It is time that the CRTC recognizes this growing problem and takes action on it.
14. Despite ARC et al’s initial submissions on this point, it appears from the Commission’s interrogatories and other submissions that this proceeding (PN 2001-34) is perceived to be limited in scope to facscimile and telephone marketing. In particular, the Commission has not taken the opportunity of this proceeding to explore the problem of unsolicited email and potential solutions thereto. Hence, a separate proceeding should be initiated to examine this particular form of telemarketing. ARC et al urge the Commission to initiate such a proceeding coincident with its decision in this proceeding.

Consumers should be able to opt out of market research calls

15. In their April 24th submission and subsequent interrogatory responses, ARC et al took the position that legitimate market research has a social benefit, is not as problematic for consumers as is telemarketing, and therefore need not be subject to a “do not call” regime. Upon further reflection, ARC et al have changed their view on this issue.
16. Market research calls, for many consumers, are as annoying, intrusive and unwanted as are telemarketing and fundraising calls. Many consumers refuse to respond to telephone surveys for this reason. To provide such consumers with a mechanism to prevent such calls would therefore be to the benefit of the survey companies by reducing the number of wasted calls. Non-responsive parties would be screened out, reducing cost as well as consumer annoyance.
17. Another concern of ARC et al’s is that while such surveying is often done by or on behalf of government agencies in the public interest, it is also used widely by commercial entities for no broader social purpose or benefit. To permit an exception from an opt-out regime for market research would open the door to abuse by marketers who cloak their solicitations in the guise of market research. It will be difficult, if not impossible, for the Commission to distinguish between legitimate research and telemarketing wrapped in the cloak of market research.
18. If a new opt-out regime for telemarketing includes market research, ARC et al propose that there be an exemption for official government surveying for public policy purposes (e.g., Statistics Canada).
19. Should market research be included in the regime, as proposed, ARC et al further submit that selectivity by subscribers becomes more desirable, so that those who want to screen out commercial offers but not market research, for example, can do so.
h3, The Need for New Rules
20. In their April 24th submission, ARC et al set out the specific areas in which new rules, or expanded scope of existing rules, are needed. ARC et al refer the Commission to that submission; below is a brief list of our specific recommendations, in addition to those set out above:

  1. Fax solicitations should be banned.
  2. The prohibition on ADADs should continue and should apply to messages left on voice mail as well, for the reasons set out in The Companies (CRTC)-1403. Under no circumstances should ADADs be permitted for marketing purposes.
  3. Time restrictions should be imposed on telephone marketing, as proposed by the Canadian Marketing Association.
  4. Telephone marketers should be required to identify themselves immediately upon reception of the call by the called party.
  5. The CRTC should impose a zero tolerance rule regarding “dead air” caused by improper use of predictive diallers. ADADs are not an appropriate solution to this problem, since they raise issues of their own. ARC et al note that even the CMA is not 100% supportive of using ADADs to fill in gaps caused by improper use of predictive diallers by overly- zealous telemarketers.
  6. There should be no automatic expiry of consumer registration on a company’s “do not call” list; such requests should be respected until they are withdrawn.
  7. “Do not call” requests made by consumers to individual companies or associations of companies should be acted upon within a period much shorter than the 30 days currently permitted.

21. Furthermore, ARC et al submit that the CRTC should use its powers under s.41 of the Telecommunications Act to impose obligations directly upon telemarketers, as opposed to merely through Canadian carriers. Parliament gave the CRTC express powers to impose such obligations for a reason. The time has come to use those powers in an effective manner.

The Need for Effective Enforcement

22. The record is also clear that better rules won’t solve the problem alone. Effective enforcement of existing and new rules is badly needed. Already, there is widespread non-compliance with existing minimal rules. This needs to change, and can only do so under strong leadership by the CRTC. In the absence of a serious commitment to enforcement, the regulatory regime will provide no more than a façade of protection for consumers.
23. The CRTC has unused powers of enforcement which it can and should begin using. As noted in ARC/PIAC-1301, the CRTC can consent to a prosecution under s.73 of the Telecommunications Act, and it can issue mandatory orders under s.51, registering them with the Federal Court as appropriate. These activities should be undertaken by the CRTC and/or the Attorney General.
24. ARC et al submit that the primary mechanism for enforcement and deterrence should be monetary fines of a magnitude sufficient to constitute effective deterrence. In addition, individuals should have a statutory right of action for damages, with a minimum amount of damages for each instance of non-compliance. The CRTC should seek amendments to the Telecommunications Act as necessary to create these enforcement mechanisms.
25. Disconnection and other injunctive relief should also be available, but not relied upon as the primary enforcement mechanism. As the record shows, placing the onus on LECs to disconnect non-compliant telemarketers is ineffective for a number of reasons: it may be in the interests of the LEC to keep the telemarketer as a customer; it puts the LEC at risk of liability; and in any case, telemarketers can simply reconnect the following day and continue their business.
26. In order to make disconnection a more useful remedy, the CRTC should issue disconnection orders, thus removing liability from the LEC. Such orders should prohibit all LECs from reconnecting the telemarketer in question.
27. In response to CRTC interrogatory 1401, ARC et al have provided detailed procedural guidelines for enforcement under s.41 of the Act.
28. On the issue of enforcement procedures generally, ARC et al submit that:

  1. the Commission needs to respond more quickly and decisively to non-compliance by telemarketers with Commission regulations;
  2. there needs to be better and more formal co-ordination among LECs with respect to non-compliant telemarketers;
  3. the CMA’s role, if any, should be limited to the operation of a “do not call” list (assuming that the CMA wins the contract for this task through a public tender process), and dealing with complaints about its members;
  4. the CRTC and/or Attorney General should handle enforcement.

Proposal for Telemarketer Call Blocking mechanism

29. Parties have commented at some length about the desirability and feasibility of a technical mechanism by which subscribers could block telemarketing calls. ARC et al consider such a mechanism highly desirable insofar as it puts control in the hands of consumers. However, in order to be effective, such a mechanism would have to

  1. be easy to implement;
  2. be free of charge to consumers;
  3. not interfere with any other communications; and
  4. be effective in blocking telemarketing calls.

30. It is unclear to ARC et al from the record in this proceeding whether it is possible to construct a blocking mechanism that meets all of these criteria. A registration system for all telemarketers would have to be established, and non-compliant marketers pursued and punished.
31. It is essential, should this approach be pursued as the primary method of controlling unwanted telemarketing, that it not become a source of profit for LECs, and that consumers not be required to pay in order to protect their legitimate desire to prevent unwanted telemarketing.

Proposal for a national “Do Not Call” registry

A single national « Do Not Solicit » registry is needed
32. ARC et al submit that the record of this proceeding strongly supports the establishment of a single, national “do not solicit” (“DNS”) database, to which all telemarketers are required to subscribe. If effective, such a mechanism would respond to the demands of telecommunications users, as reflected in the results of the Ekos survey referred to above. It would go a long way toward meeting the policy objectives of privacy protection and responsiveness to the economic and social requirements of users, as set out in subs.7(h) and (i) of the Telecommunications Act respectively.
33. A mandatory, national « DNS » registry would benefit everyone. Consumers who do not want to receive unsolicited marketing would be able prevent it by means of a single request. Companies wishing to market to Canadians would be able to consult a single database in order to target their efforts toward receptive consumers, as well as to ensure that they are respecting the consumer’s wishes. Telecommunications service providers and regulators would have fewer complaints to deal with (assuming that the registry operates effectively).

Other jurisdictions have seen fit to establish such mechanisms

34. In the USA, numerous states have seen fit to establish centralized “DNS” registries. Unwanted calls have been identified as a major nuisance not only by those states that have developed their own “DNS” regimes, but also by the Federal Trade Commission. In a speech to the “Privacy 2001” Conference in Cleveland on October 4, 2001, FTC Chairman Timothy J. Muris indicated that his administration is recommending a “national, one-stop, “do not call” list”.

Individual telemarketers should still be required to maintain their own lists

35. The establishment of a national “do not solicit” database does not in any way eliminate the need for individual telemarketers to maintain their own, internal, « do not solicit » lists. In some cases, consumers will only want to screen out specific telemarketers. The national « DNS » list will not be sophisticated enough to accommodate such customized requests, hence these consumers will have to rely upon individual marketers respecting their wishes. For this reason, it is essential that the current requirement for each telemarketer to maintain and respect a « DNS » list should be maintained.

Key Principles for a National « Do Not Solicit » Registry

36. A national “do not solicit” registry should be based on the following principles:

  1. Comprehensive: subscription to the list should be mandatory on all telemarketers operating in Canada;
  2. Free: registering to the list should be free of charge to consumers;
  3. Convenient: registering should be convenient;
  4. Well-known: consumers should be aware of the existence of the registry, and how to get on it; and
  5. Effective:The registry should be effective in stopping unwanted calls.

1. Optimally, the « DNS » list should apply to all unwanted solicitations via telecommunications, including unsolicited e-mail. However, ARC et al recognize that e-mail may require a different approach. Hence, they propose a separate proceeding to examine the problem of unsolicited e-mail and potential solutions thereto.

All telemarketers, fundraisers, and market researchers should be required to use the list

2. It is notable that both telemarketers, through their representative body the CMA, and consumers, through ARC et al, are calling for a mandatory « DNS » registry, in recognition of the failure of voluntary efforts to deal adequately with unwanted telemarketing. Given that bona fide self-regulatory efforts in this area have proven insufficient, there is little point to the CRTC’s involvement if not to create a mandatory system.

Exemptions should be kept to a minimum

3. The CMA has proposed an exemption in cases where the organization has an “existing relationship” with the called party (CMA14Sep 01-1005). The CMA defines “existing relationship” as “when the consumer has purchased a product or service (or has made a donation) within the last six months or during a normal buying cycle”. ARC et al submit that such an exemption is neither necessary nor appropriate.
4. Many, possibly most, individuals who would take advantage of a « DNS » option want to be free of telemarketing from all organizations, including those from whom they have purchased or to whom they have donated. They do not necessarily distinguish among telemarketing on the basis of an « existing relationship » as the CMA suggests. These telecommunications subscribers should be able to achieve the level of privacy they desire through a national « DNS » registry.
5. At a minimum, any such exemption should only be adopted on the basis of firm empirical evidence showing that Canadian consumers want companies with whom they have recently done business (or organizations to whom they have recently donated) to be exempted from any « DNS » requests. Such evidence has not, so far, been forthcoming.
6. With respect to the issue of telemarketing to existing customers, ARC et al further note that companies can always obtain the customer’s explicit permission to such marketing, in which case it may not be considered unsolicited.
7. ARC et al submit that the only exemption to mandatory use of the « DNS » list should be for surveys conducted by or on behalf of Statistics Canada.

Opting-out should be costless to consumers

8. ARC et al submit that consumers should not have to pay to secure their privacy. As noted in ARC/PIAC14Sep01-1001, businesses and others who wish to use public communications systems for private gain via unsolicited calls should be required to ensure that such use takes place in a socially acceptable manner. It follows that they, not the objects of their telemarketing, should bear the costs associated with the creation and maintenance of a « DNS » list.

Opting-out should be convenient

9. In order to ensure that the regime achieves its goal of allowing all customers who want to stop telemarketing calls to their homes the same opportunity to do so, the regime must be convenient to users. In particular, customers should be able to register at any time by calling a toll free number, as well as by fax, mail or e-mail.

Consumers should be made aware of the opt-out regime

10. As noted in ARC et al(CRTC)14Sep01-1006, telemarketers should be required, when they receive an opt-out request from a consumer, to inform that consumer of the national opt-out registry. If the consumer wishes to be added to the national registry, the marketer should provide information to the consumer on how to do so. In any case, the telemarketer should continue to be obliged to honour the consumer’s request for no more marketing calls. If an opt-out request automatically expires after a given period of time (contrary to what ARC et al have proposed), the consumer should also be informed of this fact.
11. Consumer awareness should also be improved via notice in telephone directories, bill inserts, CRTC, industry association and individual company websites, and other relevant information channels.
12. In addition, the registry should be advertised in the general media. A portion of the budget for the national “DNS” service should thus be dedicated to advertising. The administrators of the list should evaluate the most efficient way to make the service known to the public and should include costs for that purpose in the yearly budget.

The opt-out service must be effective

13. There is little point in establishing a national “DNS” registry unless it promises to be effective in terms of stopping telemarketing calls to those customers who so request. Effectiveness requires not only that use of the service be mandatory on all telemarketers, and costless, convenient and known to customers, it also requires:

  1. that the opt-out requests be respected until withdrawn,
  2. that the “DNS” list be updated as frequently as possible, preferably weekly, and in any case no less then monthly; and
  3. that non-compliance be swiftly and effectively punished.

Opt-out requests should be respected until withdrawn

1. The CMA proposes that registration on a national « DNS » list automatically expire after three years. It is not clear to ARC et al what purpose automatic expiry of a customer’s « do not solicit » request serves, other than to open the door to more unwanted telemarketing. Once a consumer has chosen to be on the do not call list it is reasonable to assume that they wish to remain there unless they make an express decision otherwise. Unless the Commission is provided with clear empirical evidence supporting such an automatic expiry, registration on the list should be effective until withdrawn.
2. Requiring the consumer to renew every so often merely increases the burden on the consumer and complicates administration of the program. It is also likely to lead to consumer confusion and anger when be telemarketing recommences, after this arbitrary period.

Consumer « DNS » requests should be made effective as quickly as possible

3. It is in the interests of all to minimize the lag between the consumer’s opt-out request and communication of that request to all telemarketers. The more frequent the list updates, the more effective will be the regime in reducing consumer frustration and annoyance regarding unwanted calls. The Commission’s current telemarketing regulations require that opt-out requests be made effective within 30 days. In ARC et al’s view, this is longer than necessary for individual company « DNS » lists, and is a minimum standard on which a national « DNS » system should be based.
4. The CMA proposes that “Information would be distributed to subscribers on a quarterly or monthly basis according to their subscription profile (e.g. Internet vs. diskette or region) and ability to handle data.” ARC et al submit that this aspect of the CMA proposal is unacceptable. First, a delay of three months for activation of a customer’s opt-out request is inappropriate. Second, different frequencies of activation depending on the mode of communication used by the marketer would complicate enforcement. How is the consumer to know when his registration will come into effect if different subscribers to the list receive updates at different intervals? Such differences are not transparent and make no sense from the consumer’s perspective.

The regime should be vigilantly enforced

5. There is no point in establishing a regime which can be disrespected with impunity. Non-compliance must be deterred through effective sanctions which are imposed without undue delay on violators. In order to be effective, sanctions must be proportional to the gain that violators expect to achieve through their non-compliance. See above, under « The Need for Better Enforcement ».

Funding of a National “Do Not Solicit” Registry

6. Four sources of funding for a national “do not solicit” list have been identified in this proceeding: government funding, subscription fees for marketers, financial penalties levied on non-compliant marketers, and consumer user fees.

The national « DNS » registry should be funded by business subscription fees and financial penalties for non-compliance

7. ARC et al submit that neither taxpayers nor consumers should bear any burden of the cost of a « DNS » regime. The regime is necessitated by the desire of private parties to use the public telecommunications system for private gain. There is no justification for burdening consumers and/or taxpayers with the costs of a system designed to facilitate socially responsible private sector marketing.
8. In addition to annual subscription fees, financial penalties assessed on non-compliant marketers should be used to fund the program. ARC et al note that this approach might require legislation to allocate the penalty fees to support the cost of the do not call program. It might also require specialized ‘telemarketer tariffs’ which would bundle access to the PSTN with access to the do not call lists.

The CMA’s cost estimates are questionable and should be subject to further examination

9. The CMA has developed two proposals, both of which involve fees to both marketers and consumers. In presenting these proposals, the CMA argues that to place the entire funding burden on marketers would not be viable, given the CMA’s estimated cost of the system. ARC et al question the validity of the CMA’s cost estimates for this service, and submit that they should not be accepted without further scrutiny, and in particular without any comparative estimates from other list administrators.
10. It would be instructive in this respect to compare the CMA’s estimates with the budgets of similar services in the USA. Such information is not, unfortunately, on the record of this proceeding. However, information on fees charged to telemarketers for subscription to centralized « DNS » registries is readily available. Below is a table showing fees (in $US) charged to telemarketers for subscription to a central « Do Not Call » list in the states of Colorado, Florida, Idaho, Missouri, New York, Oregon and Tennessee.

State Annual Fee/Telemarketer Manager
Colorado 0$-500$ Consumer Protection
Florida $ 400.00 Florida Dpt of Agriculture & Consumer Services
Idaho $ 100.00 Attorney General’s Office
Missouri $ 100.00 Attorney General’s Office
New York $ 500.00 New York State Protection Board
Oregon $ 120.00 Private List Administrator
Tennessee $ 500.00 Tennessee Regulatory Authority

11. Clearly, further research is needed to determine what other sources of funding these systems rely upon, and indeed to compare their entire budgets with that proposed by the CMA. ARC et al encourage the CRTC to conduct such research.
12. In any case, ARC et al submit that fees to telemarketing companies for this service should not be considered an obstacle, as long as an effective enforcement regime exists. High fees may well deter companies from subscribing, but as long as similarly high penalties apply, non-compliance should not be a problem. If companies cannot afford to respect customer wishes regarding telemarketing, they should not be in the business of telemarketing.
13. ARC et al have concerns about the estimated costs of the CMA proposal. There appear to be a number of ways in which these costs can and should be significantly reduced. For instance, the CMA’s proposal involves live operators seven days a week. It is not clear why live operators are needed at all, let alone seven days a week. Surely, an automated registration system can be designed at far less cost.
14. The CMA’s proposal and budget estimates are also based on the use of an FTP server. The CMA describes exchange of the “DNS” list via FTP in these terms:
If a subscriber to the service has an FTP site, data is pushed to them at pre-determined intervals. An e-mail advises the subscriber that a data transfer has occurred, the number of records and the file layout. Those without an FTP site receive quarterly updates via CD-ROM.
15. The CMA’s proposed use of FTP technology is inefficient. There is no need for the agency managing the list to « push » the file to each of their subscribers’ FTP servers. Instead, the agency can simply post the updates to its own FTP server, and send a message to its subscribers informing them of the updated file. Using any browser commonly used to access web sites, marketers can then access the FTP site (using passwords) and download the available file.

Third party operation of a regulated « DNS » registry scheme should be based on competitive bids

16. Assuming that the Commission does not want to administer a national « DNS » list itself, it is essential that measures be taken to ensure that the system operates efficiently and at no higher cost than necessary to achieve its goals. This can and should be accomplished by putting the contract out to competitive tender. ARC et al believe that there are quite many possible operators of such a service across the country and that the opportunity to develop the system should be made widely available. Moreover the cost structure presented by the CMA should not be accepted. If the CMA wants to put up a proposal, it can present its proposals or new proposals that would be evaluated against other proposals.
17. The CMA proposes that any agreement between it and the CRTC for operation of a national « DNS » registry should be subject to a 5-year review. ARC et al submit that five years may be too long a period for the first contract to operate a national « DNS » registry. In any case, the contractual period should be no longer than five years.

Conclusion

18. For all these reasons, ARC et al submit that the record of this proceeding supports the imposition of new rules, mechanisms, and enforcement tools to control unwanted telemarketing in Canada. In particular, it supports the establishment of a national telemarketing opt-out mechanism for subscribers. It also supports much more active enforcement activity by the Commission or another governmental authority against non-compliant marketers. It is time for the Commission to act.
END OF DOCUMENT
Link to CRTC proceeding
 

Report: Consumer Privacy Under PIPEDA: How Are We Doing?

This report is available in PDF format [pdf file: 0.28mb]

Executive Summary

This report assesses the efficacy to date of the federal Personal Information Protection and Electronic Documents Act (PIPEDA), and identifies significant gaps and grey areas in the data protection regime, from the consumer perspective.
All relevant findings of the Privacy Commissioner to the end of October 2004 were considered to create an update, nearly four years after implementation of PIPEDA, on how it protects consumer privacy in the marketplace. As a practical exercise, this report revisits the targets of complaints filed by the Public Interest Advocacy Centre (PIAC) against major corporations for not properly obtaining consent to secondary marketing. This analysis shows continuing problems with these corporations’ use of “implied consent” obtained by “opt-out” mechanisms.
This report concludes that PIPEDA is a sheep in wolf’s clothing. As a general rule, PIPEDA has not been kind to consumers. Personal experience with the finding process has been painful, especially amongst those who found that they had to take findings of the Privacy Commissioner to Federal Court for “enforcement”. The procedural decisions made by the Office of the Privacy Commissioner of Canada have been highly questionable, and greatly reduce the effectiveness of, and exacerbate the difficulties for consumers with, PIPEDA. Some findings under PIPEDA that could have significantly impacted upon an established business model have been decided to permit the continuation of that business model, despite a privacy breach.
To some extent, results that are not favourable to consumer privacy rights are to be expected in a standards-based, non-prescriptive law such as PIPEDA that seeks to balance those privacy rights with business information use. However, the depth of the negative experience of consumers under PIPEDA suggests the need for major reforms to PIPEDA to make its process more practical and effective for consumers.

SOMMAIRE

Ce rapport évalue l’efficacité, à ce jour, de la Loi fédérale sur la protection des renseignements personnels et les documents électroniques, et identifie les importantes lacunes et zones grises du régime de protection de l’information du point de vue du consommateur.
Toutes les conclusions pertinentes du Commissaire à la protection de la vie privée communiquées à la fin du mois d’octobre 2004 ont été prises en compte afin d’effectuer une mise à jour sur la façon dont la Loi sur la protection des renseignements personnels et les documents électroniques protège la vie privée du consommateur dans le marché, presque quatre ans après sa mise en oeuvre. Sur le plan pratique, ce rapport examine de nouveau l’objet des réclamations enregistrées par le Centre pour la défense de l’intérêt public (PIAC) contre les principales sociétés par actions qui obtiennent à mauvais escient le consentement des personnes aux fins de commercialisation secondaire. Cette analyse montre des problèmes récurrents avec l’utilisation du « consentement tacite » obtenu grâce à des systèmes d’option de non-participation.
Ce rapport en conclut que la Loi sur la protection des renseignements personnels et les documents électroniques est un agneau déguisé en loup. En règle générale, la Loi sur la protection des renseignements personnels et les documents électroniques n’avantage pas les consommateurs. L’expérience personnelle avec le mécanisme des conclusions a été pénible, surtout pour les personnes qui ont découvert qu’elle devaient prendre les conclusions du Commissaire à la protection de la vie privée auprès du tribunal fédéral pour des « ordres ». Les décisions procédurales prises par le Bureau du Commissaire à la protection de la vie privée du Canada ont été extrêmement discutables, réduisent sérieusement l’efficacité de la Loi sur la protection des renseignements personnels et les documents électroniques et ne font qu’aggraver les difficultés pour les consommateurs. Certaines conclusions en vertu de la Loi sur la protection des renseignements personnels et les documents électroniques qui auraient pu avoir une influence significative sur un modèle de gestion établi ont été adoptées afin de permettre la continuité de ce modèle, malgré la violation du respect de la vie privée.
Dans une certaine mesure, les résultats qui vont à l’encontre des droits de la protection des renseignements personnels du consommateur devraient figurer dans une loi non-prescriptive axée sur les normes telle que la Loi sur la protection des renseignements personnels et les documents électroniques qui cherche à établir un équilibre entre les droits de la protection des renseignements personnels et l’utilisation des renseignements commerciaux. Cependant, l’étendue de l’expérience négative des consommateurs avec la Loi sur la protection des renseignements personnels et les documents électroniques suggère le besoin de l’amender en grande partie afin que son application soit plus pratique et efficace pour les consommateurs.

Personal Information Protection and Electronic Documents Act

PIAC’s position on the process of determining whether provincial privacy legislation is substantially similar to the Personal Personal Information Protection and Electronic Documents Act
Richard Simpson, Director General
Electronic Commerce Branch, Industry Canada

Re: Process for determination of “Substantially Similar” provincial provisions to the Personal Information Protection and Electronic Documents Act (Canada Gazette Notice, Part 1, September 22, 2001)

Dear Mr. Simpson:
The Public Interest Advocacy Centre (PIAC) is a national, non-profit organization which has provided legal services and research to Canadian consumers, and the organizations that represent them, for twenty-five years. PIAC’s members include individuals, groups and organizations representing 1.2 million Canadians. As you may be aware, PIAC has been extensively involved in the development of the Personal Information Protection and Electronic Documents Act (the PIPED Act).
Given our extensive experience with this legislation, PIAC would like to comment on the Canada Gazette Notice, Part 1, September 22, 2001 regarding the process for determination of “substantially similar” provincial provisions to the Personal Information Protection and Electronic Documents Act. We believe the substance of what will be considered substantially similar legislation, as reported in the Notice, is well thought out and expressed. We are pleased to see that all ten privacy principles must be maintained, independent oversight is necessary, and the collection, use and disclosure of personal information must be in all cases”appropriate and legitimate”.These are essential conditions for substantial similarity.
However, we are concerned about the process by which provincial legislation will be reviewed and potentially approved as substantially similar. Primarily, we are concerned about the potential for important decisions on “substantial similarity” to be made without input from the public. Because any determination of legislation as “substantially similar” to the PIPED Act will essentially provide an exemption from the Act for an organization, sector or a whole province/territory, it is imperative that the utmost be done to ensure that all concerned stakeholders are consulted. We recognize that Industry Canada will be consulting with the appropriate provincial or territorial government who drafted the legislation and that the Privacy Commissioner will be notified. As well, doubtless, there will be consultation with the requesting organization or sector. However, there appears to be no opportunity for public comment. We suggest that this oversight be remedied: Industry Canada should be required to seek public input when considering any requests for a determination of “substantially similar” under the PIPED Act.
At the very least, the fact that certain legislation or proposed legislation is being assessed to determine if it is substantially similar should be made public by way of notice in the Canada Gazette. If this is not done, the most directly affected party, Canadian consumers, will not have an opportunity to comment on fundamental changes to a law designed to protect them.
We hope that you are able to use our suggestions regarding the process of establishing “substantially similar” legislation to the Personal Information Protection and Electronic Documents Act. We continue to work in this area and would be happy to consult with you on this issue. Please contact me if there is any further information you require. My contact information is above, or you can reach me by email at kpriestman@piac.ca
Sincerely,
Kathleen Priestman, Research Analyst

The Life and Times of Airline Travel in Canada

PIAC report: High Hopes and Low Standards! – The Life and Times of Airline Travel in Canada
This Report is available as a PDF [pdf file: 0.5mb]

Inadequate approaches to opt-out consent

Also available as a PDF [pdf file: 0.07mb]
Philippa Lawson, Counsel
(613) 562-4002 x.24
plawson@piac.ca
Mr. George Radwanski Privacy Commissioner of Canada 112 Kent Street Ottawa, Ontario K1A 1H3
BY EMAIL and MAIL Dear Commissioner Radwanski: Complaint re: Inadequate Approaches to Opt-out Consent
Please accept this formal complaint under s.11 of the Personal Information Protection and Electronic Documents Act (“PIPEDA”), regarding business non-compliance with the requirement, under the PIPEDA, for individual knowledge and consent to the collection, use and disclosure of personal consumer information for the purpose of secondary marketing purposes. Based on recent market research conducted for us by EKOS Research Associates Inc.1, it is clear that many companies are not obtaining informed consent (either implicit or explicit) from individuals to the collection, use, and/or disclosure of personal data for secondary marketing purposes.
The non-compliance we are complaining about is widespread and appears to reflect prevailing business practice in the retail market. For the purpose of investigation, however, we recognize that you need company-specific complaints. We therefore submit the following specific complaints:

  • the failure of Bell Canada to bring to the attention of its residential local telephone customers (a) its policy of sharing customer data with affiliates for secondary marketing purposes, and (b) the corresponding opportunity for customers to opt-out of such sharing;
  • the failure of HBC (Hudson’s Bay Company), in respect of its credit card and rewards program, a) to adequately bring to the attention of customers:
    • to adequately bring to the attention of customers: its practices of using and sharing customer data for secondary marketing purposes, and ii) the opportunity for customers to opt-out of such practices;
    • to provide adequately clear information as to potential secondary uses and sharing of customer data, and
    • to provide applicants with a method of opting-out of such uses and sharing that can be executed immediately, easily, and at minimal effort and cost.
  • the failure of MBNA Canada Bank, with respect to its Mastercard service: a) to adequately bring to the attention of its customers: i) its practices of using and sharing customer data for secondary marketing purposes, and ii) the opportunity for customers to opt-out of such practices; b) to provide adequately clear information as to potential secondary uses and sharing of customer data, and c) to provide applicants with a method of opting-out of such uses and sharing that can be executed immediately, easily, and at minimal effort and cost.
  • the failure of the Bank of Nova Scotia: a) to adequately bring to the attention of its customers: i) its practices of using customer data, and sharing such data with affiliates, for secondary marketing purposes, and ii) the opportunity for customers to opt-out of such practices; b) to provide full and clear information as to potential secondary uses and sharing of customer data, and c) to provide customers with a method of opting-out of such uses and sharing that can be executed immediately (e.g., from the customer’s residence), easily, and at minimal effort and cost.
  • the failure of AIR MILES reward program:
    • to adequately bring to the attention of its customers: i) its practices of using customer data, and sharing such data with affiliates, for secondary marketing purposes, and ii) the opportunity for customers to opt-out of such practices;
    • to provide full and clear information as to potential secondary uses and sharing of customer data, and
    • to provide customers with a method of opting-out of such uses and sharing that can be executed immediately, easily, and at minimal effort and cost.

These examples2, in our view, involve violation of the basic PIPEDA requirement for “the knowledge and consent of the individual…for the collection, use, or disclosure of personal information, except where inappropriate.” (Principle 3, Schedule 1)
We submit first that, in respect of secondary marketing purposes, it is always appropriate to ensure the individual’s knowledge and consent, such that the exception does not apply. Secondary marketing involves no higher public interest such as law enforcement, health, or security that would override the general duty to obtain consent.
The issue then becomes: when can consent reasonably be inferred? (i.e., when can companies rely on “implied consent” to secondary marketing purposes) This is where there is clearly a difference of view between the marketers and the marketed.
Companies appear to take the view that customer consent to secondary marketing can be deemed to have been given, as long as the policy is stated in some document that is accessible to the customer. They do not consider that they have any obligation to bring to the attention of the individual customer the practices in question or the negative option regarding those practices. As a result, most consumers are not aware of the practices or of the negative option, contrary to the requirements of the PIPEDA. If they are not aware, they clearly are not consenting, implicitly or otherwise.
Failure to bring to the attention of the individual, so as to ensure awareness, was the single most common deficiency in company practices that we came across in our survey. It is manifested most commonly in two forms: (a) reliance on a document which is not provided to the individual customer, and which the customer must find on their own initiative, and (b) reliance on fine print buried in a long document, which most customers do not read in full and which companies do not realistically expect them to read in full.
Other common deficiencies which render the “implied consent” relied upon by companies meaningless, include:
*failure to provide the relevant information in clear, plain language such that the ordinary consumer can easily understand what they are being assumed to have consented to;
*failure to provide adequately detailed information such that the consumer can fully appreciate the extent and purpose of uses and sharing to which they are consenting, and

  • failure to provide a method of executing the negative option which is easy, does not require the use of computers (which many consumers do not have), involves minimal effort on the part of the consumer (e.g., does not require the consumer to write a letter and mail it to a postal address), and can be executed at minimal cost (e.g., does not require a long distance telephone call).

Our recent survey of Canadians’ expectations and desires regarding business collection, use and disclosure of their personal information for secondary marketing purposes confirms that the common practice of assuming customer consent to such purposes is unjustified. A copy of the survey report, which we sent to you earlier this year, is enclosed.
Attitudes vary widely among Canadians, such that businesses cannot assume anything about consent to secondary marketing. For example, 38% of respondents were not comfortable with companies using their personal information “in order to advise [them] of new products and services that may interest [them]”. A higher proportion of Canadians (48%) are uncomfortable with the sharing of such information among affiliates for the same secondary marketing purposes.
Yet, only a tiny percentage of consumers actually execute the negative options offered to them by companies, in respect of data use and sharing for secondary marketing purposes. For example, Bell Canada reports that only 500 of its customers have exercised an opt-out with respect to affiliate sharing.3 This is a tiny fraction of a percent of Bell’s residential customer base.4 Aliant Telecom reports only 30 instances of customer opt-out – again, a tiny fraction of a percent of their total residential customer base.5 Representatives from Air Miles have stated in the media that only a very small percentage of their customers exercise the negative option.
Clearly, there is an enormous mis-match between the proportion of Canadians who say they would like to exercise the opt-outs, and the proportion of Canadians who actually do. The cause is clear: most people are either inadequately informed, or simplyunaware, of the practices in question and of the opportunity to opt-out. Of the minority who are aware, many likely fail to act on their desires because of the effort required to exercise the opt-out.
Our survey shows that over half (54%) of those participating in loyalty programs are unaware of the fact that many of these programs collect, use and disclose information about their purchasing habits in order that companies can target them with new products and services. (53% of all respondents reported being unaware of this fact, suggesting widespread unawareness of common business practices in using and sharing customer data.) Clearly, consumers cannot be consenting to practices of which they are unaware. Yet, companies continue to assume customer consent to practices of which a majority of Canadians say they are unaware. Surely, this cannot be considered compliance with the PIPEDA.
The survey shows that a large majority of Canadians (82%) want to be asked for their permission before a company uses their personal information to build a profile on them for the purpose of marketing new products and services. Deeming consent, or assuming that it has been implicitly given when we know that a sizeable proportion of Canadians don’t consent to these practices, does not constitute “obtaining permission” or “obtaining consent” as required under the PIPEDA.
We should note that a clear majority of respondents to our survey want companies to use opt-in approaches to consent to secondary marketing (as opposed to opt-out): 69% do not consider opt-out approaches, in general, to be acceptable methods of obtaining consent. This preference for opt-in approaches was clearly evident in focus group testing as well, even after participants were made aware of the costs of opt-in approaches both to companies and to themselves as consumers.
Opt-out approaches were considered acceptable only under certain conditions: that the opt-out provision is brought to the customer’s attention, that it is clearly worded and sufficiently detailed, and that it is easy to execute. As noted above, these conditions are not met in practice. (In fact, we have yet to identify an opt-out approach which meets all of these conditions.)
In conclusion, it is clear that the current business practice of deeming consumer consent to the collection, use and disclosure of personal data for secondary marketing purposes does not reflect actual consumer expectations or desires. It surely does not meet the legislative requirement under PIPEDA for the individual’s knowledge and consent to such data use and sharing.
We respectfully request confirmation from you that opt-out approaches to individual consent to the collection, use and/or disclosure of personal data for secondary marketing purposes meet the requirements of the PIPEDA only if they:

  • are brought to the attention of the individual,
  • are clearly worded,
  • provide sufficient detail for the consumer to make an informed choice, and
  • are easy to execute with minimal effort.

All of which is respectfully submitted,
original signed
Philippa Lawson Counsel
cc: Bell Canada Hudson’s Bay Co. MBNA Canada Bank Bank of Nova Scotia AIR MILES
1 Copy attached. A copy of this report was sent to you earlier this year, as well.
2 We would be happy to discuss further with you the particular deficiencies of each company’s information practices.
3 See Bell Canada’s response to ARC et al’s question in the proceeding initiated by CRTC Public Notice2001-60, regarding customer consent to sharing of customer data with affiliates, in TheCompanies(ARCetal)27Aug01-6.4 Bell has app. 8.65 million residential network access lines.
5 App. 950,000 NAS.
 

Air Canada treats passengers shabbily, letter to Minister Collenette, 2001

Dear Minister Collenette:
Re: Air Canada and Passenger Transit Problems, Events of September 11, 2001
The Public Interest Advocacy Centre is a founding member of the Canadian Association of Air Passengers (CAAP). PIAC has been involved in the policy discussions that have taken place since the onset of the restructured Canadian airline industry in 1999.
It has come to our attention that passengers of many airlines, including Air Canada, were shabbily treated during the traumatic events of last week. Stranded in Canadian airports, they were forced to seek accommodation, and travel to that accommodation, at their own expense. Air Canada had surreptitiously changed their “irregular operations ” policy in August, claiming that the abandonment of passengers is the current practice in the airline industry. While the tragic events of last week were unexpected, disruptive, and costly, the narrow perspective of Air Canada and other (but, not all) airlines was appalling. How might a passenger, subjected to the cavalier airline attitude of last week, react to this week’s airline encouragement to travel?
With respect, this episode illustrates the folly of leaving it up to airlines to determine reasonable passenger expectations when a ticket is purchased. We would urge the government to move swiftly to implement a passenger “Bill of Rights” that would be incorporated into the conditions of carriage for every carrier licensed to operate in Canada. CAAP’s previous submissions to your office and your department have detailed the minimum content for such initiative.
We would note that it is Air Canada’s intention to apply for a four billion-dollar bailout of its operations. While we do not support such a measure, we would believe that, at a minimum, Air Canada would take steps to compensate passengers for their loss arising from the same unfortunate events that have occasioned the airline bailout request. As well, Canadians will demand far better treatment and mandatory enforceable customer standards if public monies are so invested.
Yours truly,
Michael Janigan
Executive Director/ General Counsel
cc: Mr. Bruce Hood, Air Transport Commissioner of Complaints
CAAP Members

Comments to CRTC on Reverse Directory Services – Reply comments

Canadian Radio-Television and Telecommunications Commission
Ottawa, Ontario
K1A 0N2
Attention: Ms. Ursula Menke Secretary General
Dear Ms. Menke:
Re: Public Notice CRTC 2001-56: Reverse Search Directory Assistance
1. We are in receipt of comments from Bell et al, Telus, and SaskTel in this proceeding. The following reply comments are made on behalf of Action Réseau Consommateur, the Consumers’ Association of Canada, and the National Anti-Poverty Organization (“ARC et al”), in response to the above-noted public notice.
Reverse Directory Services are privacy invasive
2. Bell et al argue that reverse directory services are privacy enhancing, rather than privacy invasive. ARC et al appreciate the advantages that such services provide to persons who wish to discover the identity and/or address of callers or others for whom they have only a telephone number. However, to characterize such information retrieval as privacy-enhancing is to stretch the definition of privacy beyond its normal meaning. Moreover, it focuses entirely on the needs of the information-seeking party, while ignoring the needs of the party whose information is being sought from a third party without their knowledge.
3. Some individuals have legitimate needs to remain anonymous, or to keep their location confidential. Those seeking refuge from abusive relationships or stalkers clearly need to be able to control the availability of such information. Consumers seeking information on sensitive topics such as personal health advice may not want their identity or address made known to the agency they are consulting. Social workers and others who deal professionally with troubled persons may not want their home addresses publicly available. It is essential that such persons are able to maintain their privacy without extra effort or expense. Reverse directory services threaten to further erode the legitimate privacy needs of consumers.
4. For these reasons, ARC et al submit that the damage to privacy caused by reverse directory services outweighs the informational benefits of the services, such that the public interest is better served by limiting the availability of such services.
5. Should the Commission nevertheless continue to permit the provision of reverse directory services by regulated telephone companies, ARC et al submit at a minimum that: Street address information should not be made available under any circumstances
6. Some telephone companies wish to make street addresses available via reverse directory services. ARC et al strongly oppose such a policy, on the grounds that it would unduly threaten the privacy and safety of subscribers, and is in any case unnecessary: those seeking detailed address information can and should obtain such information from the individual to which it pertains. No party to this proceeding has identified countervailing benefits of such information provision.
Reverse directory services should not be available for the purpose of compiling or updating telemarketing lists
7. ARC et al appreciate that reverse directory services as proposed by the telephone companies in this proceeding are targeted at individual subscribers, and would be neither economic nor practical for use by telemarketers to compile and update marketing lists. However, this may not always be the case. If the service is not intended to be used by telemarketers, ARC et al agree with Bell et al’s suggestion that any such service include a restriction that it is not available for the purpose of compiling or updating telemarketing lists.
Subscribers should be able to opt-out of reverse directory services
8. As stated in their earlier submission, ARC et al urge the Commission to ensure that subscribers are able to opt out conveniently of any reverse directory services, and are made aware of this right. There is no reason to treat reverse directory services any differently from other listing services in this respect.
9. ARC et al agree with Telus that consumer rights in this respect should be the same regardless of the company in question. Other directory publishers and operator service providers should be subject to the same rule requiring meaningful subscriber opt-out opportunities.
All of which is respectfully submitted,
Philippa Lawson
Counsel for ARC et al
cc: Interested parties, PN 01-56
 

Comments on Competition Bureau’s Draft Internet Advertising Guidelines

The following are brief comments on “Staying On-side when Advertising On-line: A Guide to Compliance with the Competition Act when advertising on the Internet.”
The Public Interest Advocacy Centre is a national non-profit organization devoted to the representation of consumer interests in matters involving public utilities, essential services, and public interest issues of broad application to Canadians. Our focus is on the protection of lower income and vulnerable consumers, and on issues not already being addressed by other public advocacy groups. PIAC has developed a strong record of consumer advocacy since its inception in 1976, and is widely recognized as an important and influential voice for ordinary consumers in a variety of marketplace issues. PIAC is governed by a distinguished volunteer Board of Directors from across the country, and is supported by member groups and donors representing hundreds of thousands of Canadians.
We have reviewed the Competition Bureau’s consultation draft and find that it sets out some appropriate guidelines for the online marketplace. We commend the Bureau on this initiative, especially the clarity with which it has expressed its intended approach to online advertising. The following are a few suggestions regarding areas which deserve further attention:

5. Representations about the Advertiser

  • “Identify the business on whose behalf the marketing or advertising is being conducted, if failure to do so would be deceptive.” This is an important guideline. However, it does not go far enough.

There are many examples of deceptive advertising via the Internet as a result of failure to identify hidden sponsors or transaction fees. For example, a website recruiting consumers for clinical trials in the USA, Dr.Koop.com, listed hospitals that were “the most innovative and advanced health care institutions across the country”, without disclosing that each listed institution paid US$40,000 to be listed, and that Dr. Koop received a 2-4% commission for products and services sold through the site. Amazon.com recommended books in online columns entitled “What’s worth reading” and Destined for Greatness”, and in email alerts to past buyers, without disclosing that publishers paid up to US$10,000 per book to obtain such listings.
Not only do sites in these cases need to identify the business on whose behalf they are advertising, they need to disclose relevant transaction fee arrangements, business relationships, and funding sources in order not to deceive consumers.

  • Add “hyperlinks” to the list of ways in which false impressions of affiliation, etc. can be created.

In addition to “representations about the advertiser”, representations about products for sale generally need to be addressed. One of the hallmarks of Internet advertising is its blending of information and advertising. In contrast to print or broadcast media, the unregulated Internet has allowed a situation to arise in which consumers are denied the kind of disclosures commonly provided in traditional media that provide them with the all-important context within which to judge what they read, hear and see. Online advertisements and paid announcements are commonly not labeled as such, and conflicts of interest are commonly not disclosed. It is critical, for consumers to be able to make informed choices, that they be able to distinguish between neutral information and advertising, sponsored content, or paid-for hyperlinks. Labeling of the latter is needed in order to prevent widespread consumer deception. We would therefore suggest the following additional guidelines:

  • Ensure that the purpose of the web site in question is clearly and honestly represented;
  • Label advertising, sponsored content, and paid-for hyperlinks as such.

Yours truly,
Philippa Lawson
Counsel