AMP up regulatory enforcement

Under the right circumstances, administrative monetary penalties (AMPs) could be a valuable enforcement tool in regulating telemarketing, e-commerce, online communications and spam according to a recent report from the Public Interest Advocacy Centre. "Regulators have found the use of AMPs to be an effective means of curbing socially and economically disruptive behaviour, especially in the marketplace," reads The Use of Administrative Monetary Penalties in Consumer Protection, which was written by Amanda Tait and prepared by PIAC with funding from Industry Canada. "For instance, AMPs allow regulators to control such behaviour by handing out swift, efficient penalties that create an effective deterrent in the industry, while avoiding the stigmatism associated with criminal indictment." According to PIAC, AMPs are effective for four main reasons: criminal law is not always appropriate; they're efficient; they come with less social stigma; and they're effective deterrents. The final principle is closely tied to the first three since the efficiency and lowered social stigma of AMPs could count against the practice as a deterrent if the monetary penalty isn't sufficient. As a rule, writes PIAC, "in setting the penalty of the AMP, the regulator must calculate the economic benefit of non-compliance and ensure that the penalty burden is at least as great as the benefit of the violation." PIAC feels the telecommunications sector is particularly well suited for the use of AMPs for consumer protection. Thanks to amendments to the Telecommunications Act resulting from the enactment of Bill C-37, the CRTC has been able to impose AMPs for telemarketing calls to customers on Do Not Call (DNC) lists of $1,500 per offence for individuals and $15,000 for corporations since November 2005. Before that time the commission was limited to pursuing violators through the courts or relying on service providers to discontinue service to unlawful telemarketers, neither of which was efficient or overly successful. AMPs should also prove useful in enforcing compliance with our national DNC registry, when it is finally implemented. Established in 2003, the United States' DNC registry now counts more than 65 million registrants. However, because the US chose not to use AMPs as an enforcement mechanism - opting for violators to be punished through civil lawsuits - there are now more than 600,000 complaints pending against DNC registry violators, which certainly reduces telemarketers' fear of breaking the rules. With a per violation AMP of $15,000 at the CRTC's disposal, telemarketers here will have cause to be less blasé about calling Canadians on the national DNC list. E-commerce and online communications face similar problems when it comes to deceptive marketing practices, only the increased anonymity of the Internet is even more tempting for unethical individuals and companies. AMPs have been used to regulate certain e-commerce and online communications, but unlike telemarketing, they are applied through the Competition Act. In one particular case Edmonton's Strategic Ecomm Inc. agreed to pay a $100,000 AMP for running an online resumé distribution scam. However, the Competition Bureau has not pursued AMPs under its Project FairWeb, which it launched in April 2004, in spite of identifying almost 600 questionable websites through the initiative. "Hopefully, the Bureau will begin imposing strong AMPs on companies who fail to play by the rules," writes PIAC of punishments issued through Project FairWeb. "Otherwise, there will be little incentive for these unscrupulous marketers to change their anti-competitive practices and more vulnerable consumers will fall victim to their deceptive and fraudulent claims." As for spam, although no anti-spam legislation exists in Canada, the CRTC, Competition Bureau and the Office of the Privacy Commissioner all have means by which they can punish spammers, but the Competition Bureau is the only body that can use AMPs in that fight. However, the nature of spamming has allowed it to continue almost unabated in Canada. Until new, targeted legislation on spam is introduced, AMPs will not be fully leveraged as an enforcement tool in that fight. PIAC also notes that AMPs are not the best enforcement option for all Internet offences. "AMPs are not meant to be a punishment and should not serve as such. Therefore, AMPs may not be an appropriate penalty for online fraudsters or those who engage in malicious online assaults through the use of phishing, malware, and spyware....When there is clearly a fraudulent or malicious purpose behind the unlawful act, the criminal law is likely better suited to the distribution of justice."

AMP up regulatory enforcement

News | 08/15/2007 7:16 pm EDT

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