Industry Committee on Oct. 19th, 2017

[Mary Ng, Liberal, Markham—Thornhill, ON]

Mr. Schiestel, you said to me that through your chamber, or whomever, you're actually putting out potentially some suggested technologies or practices that will help other member organizations to comply. Can you talk a little more about that? Did I get that right?

[Andrew Schiestel]

The example I used was what a company would have to do to properly comply with the two-year and six-month rules if they wanted to automate that.

That's a very difficult thing in practice to have happen. One reason is the cost. In the example I gave about the CRM/ERP that tracks the moving purge dates, it's going to cost five to six figures at a minimum for a company to implement that, including ongoing maintenance. The other practical problem with that is the scale. You have 1.17 million companies across Canada that would then have to implement that. There's no universal CRM or ERP that exists—there are hundreds—so there's no silver bullet out there that if implemented would be fine across those 1.17 million companies, because there are hundreds of different CRMs and ERPs that are integrated into these businesses right now.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Okay. Is the removal of the six months or two years something that is a practical solution that everyone supports?

[Andrew Schiestel]

Yes.

[Wally Hill]

I think that would be a huge improvement to this law. It would simplify the consent provisions of the law, especially for small and medium-sized businesses.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We are going to move to Mr. Masse.

You have two minutes.

[Brian Masse, NDP, Windsor West, ON]

The private right of action was created basically to allow people to deal with the economic loss they have from malware and other types of things that they have received on their own personal devices and so forth. If that's suspended now, do you have any suggestions as to how we can allow people to protect their own devices during the payment for services that they make on a regular basis, as an investment? Again, I view receiving information on my device and through my service as a privilege, not a right.

What could we do to protect people from those things, to protect consumers so that they get the proper stuff they want, and then if they're affected and have economic loss....

If it seems like a sledgehammer approach, what else could we do?

Mr. McLinton, you might be able to start with this, and then Mr. Schiestel could answer.

[Jason McLinton]

Thank you, Mr. Masse, for the question.

Our members' primary focus of concern is not as much around the botware and the malware and that sort of thing and those provisions; it's primarily around commercial electronic messaging. They're seeing a big flashing red light of the possibility of litigators coming up when a mistake has been made, where they've invested millions of dollars in trying to comply with the legislation but have accidentally sent some messages out and then there is this sort of situation. I'm not hearing a lot from them about malware and botware and that sort of thing. I'm hearing a lot from them about them trying to comply. What ends up happening is that they err so far on the side of caution that consumers are not getting the messaging that they actually would like to get, and it's hampering the digital economy in Canada.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you. You will have five more minutes.

We have some time. We're going to keep going.

Mr. Baylis, you have five minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'm going to share all my time with Mr. Lametti.

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

Thank you, Frank.

Thank you to members of the committee.

As fate would have it, this morning, the CRTC ruled in Compu.Finder and found it constitutional. I want to ask the lawyers on the committee for their comments. I'll read a couple of paragraphs from the judgment:

These [deleterious effects or detrimental effects on protected freedom], viewed through a Charter lens, involve certain individuals and businesses having to make adjustments to their online marketing strategies to exercise their freedom of commercial expression. The Commission considers that, on balance, these deleterious effects are not so severe as to outweigh the benefits to the greater public good in this case. In particular, the evidence on the record shows lower spam rates in the wake of CASL, without an attendant material lessening of the effectiveness of electronic marketing. These effects are consistent with the government’s objective in enacting CASL–namely, to benefit the economy as a whole by increasing confidence in using the Internet for commercial purposes. In light of the above, the Attorney General has [satisfied] that the salutary effects of the impugned provisions outweigh their deleterious effects.

Then they hold it to be proportional under section 1. Those are paragraphs 182 to 185 of the decision.

I would ask for your comments. This was a case brought by another McCarthy lawyer, Charles Morgan, in the Compu.Finder case. I'm just curious to hear, particularly from counsel.

[Stephanie Provato]

That, of course, would happen today. I find that interesting. I'm definitely going to take a look at that and read it for myself, just based on what you brought to us today.

I still stand by my position. I do disagree with that. I do think that the points we brought up today, especially when we're talking about small and medium-sized businesses.... It's having a pretty significant impact. I think that it's disproportional for the reasons that we talked about today, which I don't want to get into again and beat a dead horse.

I think that it's ignoring the impact that it's having in restricting businesses, especially small businesses, from being able to comply, from being able to understand the legislation, and for imposing such onerous standards on these businesses that can't stand up on the their own legs, let alone with this kind of heavy burden on them. I think that's naive to ignore. I'm curious to read more about how they came to their decision.

[David Elder]

Obviously, I haven't seen this yet. This would have come out at 11 o'clock while we're sitting here, right? I was paying attention to you.

My question is, what was the evidentiary basis for making that finding? Certainly, in a proportionality analysis, you would look at what the public benefit is. You would assess what the efficacy of the law has been versus the costs to business. I think those are very difficult questions to answer. I don't know what evidence was produced before the commissioner, for example, to assess the impact on businesses or even to draw a causal link between CASL and a perceived reduction in spam.

As we've heard from a number of people, a number of things are going on, including much more sophisticated filters and an overall drop in commercial email traffic that have affected the amount of spam. It's very difficult to draw those causal links.

I expect that we haven't heard the last of it.

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

There are statistics that they cite. I would imagine that Maître Morgan would have provided much of the same information as you have. He's with the Sookman group at McCarthy's.

But there are statistics provided from another survey. Here's paragraph 180 indicating,

...spam originating from Canada had dropped 37% since CASL came into force. This drop had little impact on businesses. There's also evidence that retail e-commerce sales rose in the year of CASL coming into force. It will continue to do so for the immediate future.

There is some interpretation of the statistics.

[Andrew Schiestel]

Mr. Lametti, could you clarify if that's a CRTC decision or if that's a court decision?

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

That's a CRTC ruling.

[Wally Hill]

I think that statistic, to the 37%, is the Cloudmark study that gets loosely referred to. That also measured something like a 27% or 28% reduction in overall email traffic. One really needs to be careful with statistics. What's causing the reduction in spam? Is it just that everyone's emailing less?

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

There's no question one needs to be careful with statistics.

[The Chair, Liberal, Dan Ruimy]

I would love to see that one keep going, but we're out of time.

We're going to move to Mr. Eglinski.

[Jim Eglinski, Conservative, Yellowhead, AB]

Thank you, Chair. I'm going to share my time with Mr. Jeneroux.

I'm going to ask a really quick question.

There was a comment made earlier about a penalty assessed by bureaucrats then reduced twelvefold by the commission. Are we maybe missing something in this act where we might have a penalty set schedule to put the level of importance on a certain action that might take place?

You seem to be nodding.

[Jason McLinton]

Thank you, Mr. Eglinski.

Yes, it goes exactly to the point about intent and to how the penalties should be proportionate to intent. Going back to that example of the rural hardware stores, somebody who is really trying to comply and accidentally sent an email, or can't demonstrate that the one person whose record they lost, that's different from the person who's intentionally and maliciously breaking the law. A provision in the legislation about intent, and then scaling compliance and enforcement accordingly, I think would really help give certainty to the business community.

[Jim Eglinski, Conservative, Yellowhead, AB]

Thank you.

I'm going to turn it over to my friend, Matt.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

That's very generous, but I have no other questions for you.

[Jim Eglinski, Conservative, Yellowhead, AB]

Don't you have any more questions? You could have told me. I still have a few minutes, and I don't know what to ask.

Let's continue the debate on the challenge.

Does anybody have any further comments?