$1,25M fine for Enterprise, National, and Alamo

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A negotiated fine

Enterprise Rent-A-Car Canada Company, which manages the Enterprise, National, and Alamo car rental companies, has recently agreed to pay, to the Competition Bureau, a $1,25 million fine for sending emails containing misleading promotions, a practice covered by the Canadian Anti-Spam Law (CASL).

The entire industry is targeted

In its press release, the Bureau states as a reminder to companies, that already $5.25 million has been fined to and paid by three other major companies in this industry: $3M paid by Avis Budget following an investigation concluded in March 2015; and Hertz Canada, which also manages Thrifty, was fined $1,25 million in the spring of 2017.

This reminder clearly shows that the Competition Bureau will continue investigating car rental companies, as misleading promotions seems to be a systemic practice. This targeting, of a specific industry, is reminiscent of the CRTC’s investigation with vocational training companies.

Again, consent is not enough

While most companies continue to believe that having consent with regards to their promotional messages is enough be compliant with the Canadian Anti-Spam Law, this fine, once again demonstrates that CASL is much more complex and demanding. In fact, there are around one hundred risks that must be analyzed to ensure that a company is in compliance with CASL. Not only because this law has many articles, but also because CASL touches upon certain articles of the Personal Information Protection and Electronic Documents Act (PIPEDA) and the Competition Act.

Moreover, while the fines imposed by the CRTC for issues of “consent” or “unsubscribe” are of the order of a few tens or hundreds of thousands of dollars per company, the fines given by the Competition Bureau due to “message content” is consistently greater than $ 1 million.

The importance of a compliance program

In the Tribunal agreement, Enterprise was required to implement a compliance program under the supervision of the Competition Bureau. While waiting to be investigated to implement its compliance program, Enterprise not only had to pay a hefty fine, but it also had to incur significant legal fees in collaboration with the investigation and to negotiate a settlement, satisfactory to the CRTC.

If your company is not the subject of such an investigation, there is still time to set up your compliance program and protect your business before it’s too late.

Hertz & Thrifty to Pay Over One Million in Fines

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$1,25 Million Fine

The Competition Bureau of Canada recently announced that car rental companies, Hertz Canada Limited (Hertz) and Dollar Thrifty Automotive Group Canada Inc. (Thrifty), have agreed to pay a $250,000 fine plus additional fees for sending emails with deceptive promotions—advertised prices in said emails did not include certain mandatory service fees.

Mea Culpa

Upon hearing that the Competition Bureau of Canada was investigating similar practices from their competitors Avis and Budget, Hertz and Thrifty executives voluntarily approached the Bureau to address their own situation. This is probably why the fine of $1.25M is well below the $3M fine plus $250,000 of fees paid by Avis and Budget.

Once Again, Consent & An Unsubscribe Link Are Not Enough

This fine, once again, confirms that simply having the consent of recipients and including an unsubscribe link in one’s newsletters are not enough to be in good standing and to protect one’s self.

In fact, there are nearly a hundred risks that must be analyzed to ensure that a company complies with the Canadian Anti-Spam Law (CASL). CASL amends certain articles of the Personal Information Protection and Electronic Documents Act (PIPEDA) and the Competition Act. Thus one has to take these laws into consideration when sending commercial electronic messages.

The Importance of a Compliance Program

Hertz and Thrifty, in their agreement with the Competition Tribunal and in addition to their fines, had to commit to implementing a compliance program under the supervision of the Competition Bureau.

There’s no doubt that, had they been proactive in the implementation of a compliance program before being found at fault, they would have avoided paying such hefty fines (plus all the legal costs associated with their case).

If your business is not yet under investigation, there’s still time to set up your compliance program and protect yourself before it’s too late.

 

 

Amazon complies but is still fined $1,1M!

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Amazon’s emails complied with three essential principles of the Anti-Spam Act:

  1. Amazon sent messages only to those with whom it had consent,
  2. Each email contained a straightforward and efficient unsubscribe mechanism,
  3. Information to identify and contact the business (company name, mailing address and phone) was indicated.

So, why did Amazon agreed to pay a penalty of $1 million and the sum of $100,000 for certain investigative expenses incurred by a government regulator?

The devil is in the details

Although Amazon complied with the three top items of Canada’s Anti-Spam Law, there are still 53 pages of details and guidelines in the Act. In fact, after analysing the Act with marketing communications specialists and researchers at Université de Montréal’s Faculty of Law over the course of several months, we’ve identified more than 150 compliance risks for businesses.

For example, 99% of emails sent by a business are commercial, so they must comply with the Anti-Spam Act. This includes individual business emails. Do your emails have an unsubscribe mechanism? Your newsletters I’m sure do, but probably not your individual ones. Yet, it’s mandatory.

Canada’s Anti-Spam Law applies to four pieces of Legislation

The act is defined as follows: “An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the 1) Canadian Radio-television and Telecommunications Commission Act, 2) the Competition Act, 3) the Personal Information Protection and Electronic Documents Act and 4) the Telecommunications Act” (S.C. 2010, c. 23).

Many SMBs are simply not aware of the reach of this legislation. It’s not just an anti-spam act; it’s a true code of “electronic” conduct for businesses. Additionally, journalists and commentators, regularly talk about the CRTC’s role in enforcing this act, but often omit the Competition Bureau’s (and other regulatory bodies’) involvement.

For example, if you violate one of the Competition Bureau’s articles through an email communication, you will be fined, and heavily. Note carefully; fines can reach up to $10 million when a violation is done via email.

The case of Amazon

Canada’s Competition Bureau stated, “With the adoption of Canada’s Anti‑Spam Legislation, provisions were added to the Competition Act to provide additional tools for addressing false or misleading representations in all forms of electronic messages. The Bureau’s investigation into Amazon’s price advertising was made per these provisions.”

So, because Amazon was promoting prices, by referring to savings in relationship to list prices, they were fined.

Amazon complies but is still fined $1,1 MIL!

Amazon complies but is still fined $1,1M for misleading pricing.

As indicated by the Competition Bureau, “Amazon often compared its prices to a regular price—or “List Price”— signaling attractive savings to consumers. The Bureau’s investigation concluded that these claims created the impression that prices for items offered on www.amazon.ca were lower than prevailing market prices. The Bureau determined that Amazon relied on its suppliers to provide list prices without verifying that those prices were accurate.”

Although it’s primarily on Amazon.ca that these type of promotions are found, the Competition Bureau was able to convict Amazon because the company had communicated these promotions by email.

Not a first for the Competition Bureau

The case of Amazon is not the Competition Bureau’s first fine under CASL. They’ve already gone after car rental companies Avis and Budget for hiding certain mandatory fees in posted promotional pricing.

Additionally, the Competition Bureau said that it’s been documenting these situations since 2009 and fighting for years to prevent these types of practices. But it was only with the arrival of CASL that it finally had the means to do so.

The case of Avis and Budget pending before the Competition Tribunal was settled by the companies’ consent to pay $3M in fines and $250,000 in compensation to the Bureau. 

The mandatory compliance program is your only real protection

As these examples here illustrate, it’s almost impossible to be confident that you’ll never violate CASL, especially since many details of the Act are very vague and will only be clarified by actual cases in years to come.

It’s for this particularity that Parliament has provided in the Act a means to protect ones-self: if a business (or individual) can demonstrate that it has acted diligently to comply with the Act, it will be immune from sanctions. To “act diligently” means to have a compliance program that meets the CRTC’s eight requirements.

 

 

 

Even With Consent Avis & Budget To Pay $3M

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(Update March 23, 2017) In a joint agreement before the Competition Tribunal, the Avis Budget Group (ABG) agreed to pay a $3 million penalty along with a $250,000 fee. Let’s also add the lawyers’ expenses on top of this, which has probably been very costly for ABG considering how long these parties have been fighting it out in court.

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The Competition Bureau, issued a news release, stating that under the Canadian Anti-Spam Act (CASL), it is asking the Competition Tribunal to impose $10 million fines (each) to the Avis Budget Group, and its two subsidiaries Aviscar and Budgetcar, in addition to forcing them to reimburse consumers fines of up to $35 million. These fines are the first to be imposed by the Competition Bureau under CASL. 

Consent was not an issue

While most journalists and observers have emphasised the importance of consent when referring to CASL, this exemplary penalty demonstrates the complexity and reach of Canada’s Anti-Spam Law. The Competition Bureau asked the Competition Tribunal to impose the maximum amount allowed by law to each of the three companies, not because of a problem of consent, but because of misleading promotional content in their emails.

It should be noted that the Canadian Anti-Spam Legislation goes much further than prohibiting spam. The Act contains 70 different rules for each commercial electronic message sent. Furthermore, it also amends the Competition Act by allowing the Competition Bureau to issue fines under CASL when a company violates Section 74.011 of the Competition Act.

And so this is the basis for the case of the Avis Budget Group violation. The Competition Bureau believes that the promotions advertised by the group were misleading because the listed prices were 35% lower than the actual price the consumer paid.

In its Notice of Application, the Competition Bureau examined the promotions in their various formats, from websites to mobile applications to radio and print advertisements. But it was because these promotions were also sent by email, that fines of $10M could be imposed plus $35M to consumers that had been wronged.

The importance of carrying out a complete compliance audit

Many companies and industry observers erroneously believe that Canada’s Anti-Spam Law only imposes obligations regarding consent. The CRTC itself contributes to this false perception through its Business FAQs (How can businesses ensure they are in full compliance with CASL?)

This false perception is what led to the flurry of emails around July 1st, 2014 requesting consumers for their consent (an action that was completely unnecessary for businesses and in certain cases illegal).

CASL is complicated, there are many rules a commercial electronic message must adhere to, and some of the regulations can be unclear at times due to weak jurisprudence. The best way to protect your business is to conduct a comprehensive compliance audit (you are required to do so to be compliant according to the CRTC) and to implement a compliance policy that corrects any weaknesses identified during the audit.

This is what the CRTC recommends for all businesses that want to avoid penalties.