Industry Committee on Oct. 7th, 2009

[André Leduc]

No.

[The Chair, Conservative, Michael Chong]

Thank you very much, Madam Coady.

Thank you, Monsieur Leduc.

Monsieur Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chairman.

Thanks as well for being here this afternoon.

Pardon me for being late. I was used to always going to Room 308, where I went and saw that you were in another place.

First, I have examined your document in broad terms and seen that the observations and requests made by the businesses that have testified before us do not seem to have been considered.

I want to raise one point. I'd like to have an explanation from you of this option that businesses would have of sending e-mails without obtaining prior consent.

Could you tell me why this is the case? Because in the testimony and hearings we've had, a number of business representatives said that, since the purpose of this bill is to promote electronic business, among businesses, obtaining consent should be necessary.

Why have you not accepted those demands?

[Philip Palmer, Senior General Counsel, Legal Services, Department of Industry]

In my opinion, we've brought in major amendments in response to industry concerns, especially in two areas. First, there is the sending of messages between businesses in the course of business operations. On that point, we've advanced the idea of open publication of e-mail. This enables the business to send an e-mail concerning the function of the person who receives the message.

Second, we agreed that an exchange of business cards is enough to allow a message to be sent from one business to another, perhaps even to a consumer. We've also responded to concerns, mainly from Desjardins and the investment industry, concerning third-party referrals. We've made sure that a business can, in accordance with certain rules, send an initial e-mail to obtain consent enabling it to maintain a link with an individual or another business.

I think we've responded quite well to the concerns of businesses.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

You mentioned Desjardins. Those people suggested the possibility that an e-mail could be sent without first obtaining consent. They were talking about one time here, about the possibility of sending one e-mail. I don't believe you considered that request.

[Philip Palmer]

Yes, it was carefully considered. It was in the context of the very basis of the act. In that case, the problem was what's called a freebie. Technically, a spammer can very well send only one e-mail, but address it to a number of businesses, companies or sectors. It's technically easy to avoid this opening. Consequently, we decided instead to permit the initial e-mail in limited circumstances. We also opted for a relaxation of the rules concerning implied consent.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Let's suppose I get an e-mail from a business offering me services. The bill provides for a 10-day time frame. Submissions were made on that point. People said that was too short. However, I haven't seen any observation or remark proposing that the time period during which someone can consent to the sending of other information by a business be extended.

[André Leduc]

I want to be sure I clearly understand your question. Are you talking about a case in which you would like to tell a business that you no longer want to receive e-mails from it? Then we're talking about the number of days the business has to take the necessary steps to meet your request.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Indeed.

[André Leduc]

We carefully considered that question. In the context of the committee, there was talk, concerning the Do not call list, of a 31-day time frame to respond to that request. We made a minor change. As you can see, the bill now refers to 10 working days. The idea was to grant 10 days. However, that time frame was very limited, especially for small and medium-size businesses, in view of staff leave, holidays and absences on weekends, and so on. So we opted for 10 working days, which in fact amounts to a time frame of 14 to 16 days, including holidays.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Leduc.

Thank you, Mr. Bouchard.

Now we'll go to Mr. Lake, but before we do, I want to thank the parliamentary secretary for working with the minister's office and the department in getting these proposed amendments to the committee members.

You should all have a copy of this spiral-ringed binder, which contains the government's proposed amendments in red-lined text so it's clear which amendments the government is proposing.

I want to thank you for doing members the courtesy of distributing this to all members. Thank you for that effort and for that work.

Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

You're welcome, Mr. Chair.

To the witnesses, thank you for being here today.

I just want to focus, if I could, for a moment on this opt-in versus opt-out, because there seems to be a philosophical divide among proponents and opponents--maybe not of the whole bill, because most people are in favour of the bill, but of certain sections of the bill, based on opt-in versus opt-out. I want you to correct me if I'm wrong. I have a scenario for you.

Whether you opt in or opt out, the scenario starts with a transaction that occurs at some point between a consumer and a company. Right at that point, there's a divide. There's the marketing strategy, I guess, that would be undertaken under this legislation, and then there's the marketing strategy that would be undertaken under an opt-out regime.

Under the opt-in regime, it seems as though the marketing strategy would be for the company to clearly indicate a choice in some form, on a form, for whether customers want to receive more information from the company itself or its partners. It seems like the marketing strategy would be to try to persuade the customer, the consumer, to say yes to that.

I would think that if you're doing an electronic transaction, you'd probably actually require the customer to answer yes or no. I mean, that would be a logical marketing strategy and a good strategy if you're a marketer. I come from a marketing and sales background, so I'm trying to think about the way I would approach this. It seems to me under that this option we have a fairly transparent marketing strategy there.

Under the opt-out regime, it seems to me that you would, from a marketing strategy--I would be doing this--probably try to have a form that's long enough so that nobody reads through the whole form, and then you would hide the option to opt out somewhere within that form--

[Voices]

Oh, oh!

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

--so that no one opts out. From a strategic sampling, it seems as though that would make sense so that you can keep your list of available people you can e-mail as long as possible.

Both of those would be legitimate marketing strategies, given the appropriate circumstance. Do I have anything wrong in terms of what this legislation entails versus what an opt-out legislation might entail?

[André Leduc]

I think you're dealing specifically with a set of circumstances, whether the check box is ticked or whether it's not ticked. You get right down to the basics. The American model is an opt-out model, whereby nobody has to have prior consent or permission to send out any commercial electronic message at any time. The opting out is that unsubscribe mechanism. So every time I get an e-mail, I have to unsubscribe for it. And if there are 300 million businesses, they each get a shot at me, and I have to unsubscribe every single time. A “you can spam” act is basically what it turned out to be. In fact, many groups within the United States that are trying to protect the citizens are saying don't unsubscribe, because all you're doing is giving effect to your e-mail address. If you're confirming your e-mail address, then you're just going to be bombarded even more. That's the opt-out strategy.

The opt-in strategy is already under way. The Canadian Marketing Association appeared here. Most industry best practice is when we're getting your e-mail address. One, how are they getting the e-mail address? I'm writing it on a sheet of paper at the point of purchase, here it is. And in that form, when I'm writing my personal information in there and I'm writing in my e-mail address, it should state why you're collecting the e-mail address and what you intend to do with it. So if you intend to send me e-mails about products or services at that enterprise, and I'm filling in my e-mail address, that's express consent.

The question we should always ask ourselves before we go all over the place is, how are they collecting my electronic address? If I'm giving it to them, well, it's at that point where they should say, “Is it okay if we contact you or have partner organizations contact you to offer you a better deal the next time you rent a car?” And that's the idea here. For a legitimate, responsible enterprise, when they're collecting that address, it's to get my consent to send me further e-mails, to use this electronic communications vehicle as a preferred method to contact me. Because yes, it is the cheapest method to contact clients, whether they're prospective or existing.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Actually, setting aside the issue of all of the malicious actions that this act would prevent, I want to talk about the “legitimate” business e-mails that people would send. A lot of people have talked about that.

Is there any idea now of the volume of e-mail out there that business is using and the direction that volume of e-mail is going in, and maybe the cost, in terms of bandwidth, that this e-mail has?

[André Leduc]

Well, we have measured within our borders and around the world what percentage of all e-mail traffic is spam, and estimates vary, with between 75% and up to about 92% or 93% being garbage. So 90% of traffic is garbage that we're either having to filter through or it's getting into your inbox.

But in terms of whether businesses are using this as a tool to increase productivity, yes, at Industry Canada we've done studies on using e-business applications, having a website, automating a bunch of processes, and what type of impact this has on the company's bottom line; and it's impressive, to say the least. Automating business processes.... You know, the folks around the table here were saying it's so much cheaper to send an e-mail than it is to print something and ship it over mail, which is not environmentally friendly. Well, yes, all of that holds true for all electronic commerce, all e-business applications. The productivity gains are unbelievable.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

There has been some talk about the broadness of the bill, and I understand where people are going, that maybe there are risks of having a bill that's too broad. I'm not convinced, in terms of the opt-in and opt-out arguments, but there are measures within the bill to make changes using the regulations, am I correct? If there's an area that someone looks at and says, “You know what, that's not quite the effect we meant to have”, can there be changes made through regulation so as to not have to come back to the House of Commons and through this process again?

[André Leduc]

Yes, in many of the clauses within the bill, and then more clearly under clause 63, you will see that the Governor in Council has the capacity to make regulations regarding certain aspects of the bill, and then generally, for the proper functioning and application of the legislation. So it does appear under a number of clauses, but then more clearly, those clauses are all linked back through clause 63.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you very much.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Lake.

[Philip Palmer]

Could I make a supplemental observation on that?

The regulatory powers we have asked for have all been within the context of the ability to expand and ease what otherwise might create difficulties for legitimate activities. The opposing theory is that every time a new evil arises, you make new regulations and cover it that way. But speaking as counsel to a government department who has been functioning for 30 years in the public service, I can assure you that an enforcement regime where you're chasing the evil rather than covering things and letting the good guys out is by far the easier and cheaper enforcement approach. I think it is easiest for industry as well, once they get used to the rules of the game.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Palmer and Mr. Lake.

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you for being here.

With regard to your amendments, the first one in particular, I want to make sure the following is correct. If a company I'm doing business with right now has an insurance policy, can they then continue to send me information on things other than, say, my insurance policy or warranty? Or does it have to be specific to the product I've purchased and the relationship I have?

[Philip Palmer]

It is specific to the relationship you have. We've used the word “solely” here, so that it is solely information about the relationship you have.