Madam Speaker, I appear to have wound up dividing my time quite inadvertently but nevertheless as I said earlier I am very happy to be a part of this debate because it is an opportunity to offer some constructive criticisms and comments on this legislation.
The bill is deficient because of a deficiency that already existed in the Competition Act. This act describes the person who is affected and constrained by this legislation as a person having a business interest. It also restricts the scope of the activity to the production or the promoting of a product.
The problem with this is it lets fall through the net entirely any organization that is a not for profit organization which could be on the one hand a not for profit organization registered as a non profit organization under corporate Canada legislation or as a charity registered under the Revenue Canada definitions.
In both these instances, both types of not for profit organizations by definition are not engaged in business interests. If a telemarketer that is deliberately engaged in scamming or wishes to promote in a way that circumvents the spirit of this act, that organization can simply reconstitute itself as a not for profit organization. It can either seek charitable status or, on the other hand, it can be a registered non-profit organization. That organization or telemarketer would then fall completely outside this legislation. It could engage in any kind of practice it pleased.
The other aspect of the problem is that telemarketing is very much a transborder phenomenon these days. What is happening is that when you receive that phone call, often from a charity I might say, often from organizations that are soliciting funds, that phone call may in fact be emanating from the United States.
Indeed, some of the very large telemarketers are based in either Pennsylvania or Maryland and are using transborder trunk lines to telemarket anywhere in Ontario or in Canada.
However, the other side of it is that while we have to be worried about organizations that will deliberately evade the law by becoming non-profit organizations, we also have to be very concerned about charitable organizations that may be engaged in what are very unethical activities, at least in the context of a for-profit industry when they are engaged in raising funds.
We may say that if it is a charitable organization surely it would not be engaged in any form of misrepresentation, be it misrepresentation by advertising or telemarketing or whatever you may have. The Internet provides us with all kinds of wonderful information. I was surfing the net, as they say, and I came across an article from the Professional Marketing Research Society which did a study of a practice engaged in by charities called frugging.
Apparently frugging involves charities that deliberately through telemarketing phone up and say they are doing a survey on perhaps social welfare, or tastes in tea, whatever it is. Or they might be doing a survey asking if there should be homes for battered women and this kind of thing.
The article from the Professional Marketing Research Society pointed out that often the surveys are really false surveys which are not a very transparent attempt to draw the client, the donor, the victim or the target into a survey which is really just a way of raising funds.
Two organizations are cited in the article as being engaged in the false survey activity. It is misleading. It is misrepresentation and there is no getting around it. One was the Coalition for Gun Control which did all kinds of surveys trying to get people to say they did not like firearms and that kind of thing. But really it was actually a way of promoting support.
Another organization cited by the report as being engaged in questionable survey practices, which was really another way of fund raising or getting the message out there, was the National Anti-Poverty Organization. It was asking all sorts of questions and said if the recipient responded to the survey a letter would be sent to the Prime Minister.
Behind many of these false surveys is simply misrepresentation for the purposes of fundraising. That is the kind of thing that goes on.
When it comes to telemarketing, charities are not very clean in some respects. Telemarketing is a very popular feature with charities now. A lot of organizations are turning to telemarketers. I think everyone in this House, and everyone in Canada, has received phone calls from people soliciting their donations by telephone. That would be all right so long as the representations are indeed honest. What is said by the telemarketer is not honest.
I refer you to a program that was done by CBC's Marketplace about a year and a half ago, I think it was, in which the theme was telemarketing. The thrust of the Marketplace show was to demonstrate that many of these charitable organizations that use telemarketers where so much of the donated money goes to paying the for-profit telemarketer that very little actually goes to the charitable activity. It may be as little as 10% and often in the outset of a telemarketing campaign it is 0%.
Nevertheless, the reporter interviewed the president of the Canadian Haemophilia Society. Her name is Durhane Wong-Reiger The reporter challenged her.
The telemarketer in setting up the Canadian Haemophilia Society said that he was proud to say that by putting your gift on a credit card—this is what the telemarketer says—over 87% of your donation would go directly to the Haemophilia Society.
The president of the Haemophilia Society did not even reply to the reporter's question. She could not reply. Very obviously, 87% of the donated dollar is not going to the charitable activity.
Therefore, we have a case where there is an absolute misrepresentation by a telemarketer speaking on behalf of a charity. The problem is, as Bill C-20 sits now, because it does not cover charities or non-profit organizations, the Canadian Haemophilia Society will have been seen to have done no wrong., There is nothing to be done about it. Imagine. It is a blank cheque to every non-profit organization, be they charity or not for profit organization, to engage in telemarketing practices, to misrepresent or mislead as much as they please.
Telemarketing does not work in isolation. This is another flaw with the bill. Telemarketing usually works in co-operation and in tandem with a direct mail campaign. In fact, what we are talking about here is not just telemarketing at all, but direct marketing. It is the whole business of sending flyers through the mail and that kind of thing.
People will find that wherever there is a telemarketing campaign or a media campaign, a fundraising letter will come through the mail as well.
Again, it is a deficiency of the bill because in fact, as the Competition Act stands now and with Bill C-20, it does nothing whatsoever about misrepresentation through direct mail advertising if it is a charity or a non-profit organization.
I have a great example. As members in this House will remember recently, there was a hubbub in the press about the seal hunt. It was the International Fund for Animal Welfare that had conducted a major campaign under another title to claim that seals were being wantonly slaughtered on the ice floes.
I think every one of us received form letters cut out of the newspapers from our constituents. They were to protest the seal hunt to their MP.
Quite apart from that, much of the literature produced on the seal hunt by the International Fund for Animal Welfare was false. What was going on simultaneously with this campaign was another campaign called Pet Rescue.
I have some documents here. I cannot show the actual pictures here but Pet Rescue was a direct mail campaign actually launched out of the United States. This is coming from the United States, as most telemarketing does.
Pet Rescue was about how all these animals were being tortured and being kept in facilities that were really awful and that kind of thing. There are pictures of poor cats that were in difficulty.
We see a title here “Your support saves lives”. This is really a fundraising promotion by the International Fund for Animal Welfare at the same time as the seal hunt protest.
Here is what we have. This promotion literature says “Here is how you can help stop the cruelty: `Seventy-nine cents of every dollar spent went toward animal welfare during our 1996 fiscal year, so you know your contributions are helping to stop suffering. The International Fund for Animal Welfare—”'.
I submit that this is absolute misrepresentation and that, if the International Fund for Animal Welfare was indeed a for profit company, if it was indeed engaging in a business interest, if indeed it was doing something other than fundraising, it would be subject to penalty under the law and rightly so.
My feeling with respect to Bill C-20 is that it is a step in the right direction, even though that step is incomplete. We have to recognize that with telemarketing spreading across the country and direct mail becoming increasingly an avenue of fundraising, telemarketing and direct mail advertising is a costly way of fundraising. Seventy per cent to eighty per cent of the actual dollar goes to the cost of telemarketing and direct mail solicitations, much of which come from the United States. This bill can do nothing even if it is a for profit direct mail advertiser or telemarketer operating out of the United States.
I hope the government and the committee will very carefully consider taking the opportunity Bill C-20 gives us to widen the catch of the Competition Act so it includes not for profit organizations as well as for profit organizations.
I have two suggestions. In clause 52(1) we could insert the words “or fundraising and any fundraising activity” after the words “any business interest”. Second, we should make charitable and not for profit organizations responsible for the activities of the telemarketers they hire. At present, if a charity hires a for profit telemarketer and the telemarketer misrepresents the charity, under Bill C-20 only the telemarketer can be caught. I believe that if it is the intent knowingly and recklessly of a charity or a not for profit organization to use a telemarketer or a direct mail advertiser to misrepresent that charity to the public then the charity itself or the not for profit organization should be subject to the same penalties under the law. I hope the committee will consider these thoughts.