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House of Commons Hansard #195 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was c-55.

Topics

Foreign Publishers Advertising Services ActGovernment Orders

1:15 p.m.

The Acting Speaker (Ms. Thibeault)

Is that agreed?

Foreign Publishers Advertising Services ActGovernment Orders

1:15 p.m.

Some hon. members

Agreed.

The House resumed from March 10 consideration of the motion that Bill C-393, an act to amend the Competition Act, 1998 (negative option marketing), be read the second time and referred to a committee.

Competition ActPrivate Members' Business

1:15 p.m.

St. Catharines Ontario

Liberal

Walt Lastewka LiberalParliamentary Secretary to Minister of Industry

Madam Speaker, I am pleased to speak to Bill C-393, an act to amend the Competition Act.

The hon. member for Sarnia—Lambton who introduced the bill has done Canadian consumers a great service in putting it forward. This legislation would amend the Competition Act to restrict the practice of negative option marketing in Canada.

We are all familiar with the irritation of opening telephone and cable bills or other statements and seeing that we have been charged for a service we did not ask for, we do not need and we do not want.

When we ask about what is going on we are given the impression that we are at fault. We are told we should have read the notice and should have sent in a form saying no.

That is how negative option marketing works. Negative option marketing is a sales strategy by which consumers are required to expressly refuse a product or service to avoid receiving and paying for it.

To put it another way, if there is no action to refuse the service the recipient has bought it. I am sure there are examples where negative option marketing works well and for the benefit and convenience of both the customer and the supplier.

There are book and record clubs where the customer understands and is happy to receive the monthly selection unless the reply card is sent. The key to successful negative option arrangements is making sure the consumer is well informed, has accurate information and is not taken by surprise.

This points to why so many Canadians find negative option marketing offensive. When they enter into an agreement with a service provider for a particular package of services they do not expect that the company would assume it can charge without their consent. They are surprised to learn that companies think it is okay to keep switching and adding services and raising the charges until the customer says stop.

Negative option marketing reverses the customer-seller relationship. It imposes on the customer the requirement to react to avoid the sale. It can take advantage of those of us who with busy lives may find ourselves less vigilant with our financial affairs.

An example can be made with day to day banking. Many of us like to convenience of paying our bill by automatic debit. We do not always take the time to go through the statements at the end of the month. Weeks later when we do notice the charges have crept up there is a good chance that we will let it go. After all, it is only a few dollars. It is not worth the hassle. That is how negative option marketing can take advantage of the average Canadian. Intentionally or not, it can also take advantage of vulnerable consumers.

The member's initiative allows the House to debate this issue. He should be applauded for this. As part of this debate I would like to suggest a few improvements to Bill C-393 that the member may wish to consider.

I first propose that the bill focus on sectors of clear and exclusive federal jurisdiction. This would mean making negative option marketing a reviewable matter with applications with specified regulated industries. The bill would then be broad enough to encompass the major players while minimizing the potential for a perception of overlap with provincial jurisdiction.

Next, in its current form Bill C-393 contemplates making negative action marketing a criminal offence. Members may recall that in September of last year the House approved Bill C-20, an act which also amended the Competition Act. One of the innovations of that was the creation of a civil court process to allow the Competition Bureau to deal more expeditiously with cases involving misleading advertising and deceptive marketing practices.

The government's position is that negative option marketing rather than being subject to criminal law and processes should be a matter reviewable by the civil courts.

Members may recall that in the 35th parliament the same hon. member sponsored Bill C-216, an act to amend the Broadcast Act. That bill was amended on third reading in the Senate to respond to concerns of its possible effects on the viability of French language broadcasting services. We will want to ensure that Bill C-393 is crafted so as to anticipate and resolve these types of concerns.

Another issue is notification. The bill contains provisions requiring companies to send their customers a notice at least once a month for three consecutive months before they can charge for a new service. In the current form it appears that these provisions would require a company to complete the triple notification process and prevent it from charging for the service for three months, even if the customer had agreed to it and signed up for the service right away. I think this is an issue we may wish to review.

The bill addresses several of the consumer issues raised in the context of a much broader review of the financial sector. As drafted, the bill has the potential for conflict with the existing provisions of the Bank Act that deal with services charges and notice requirements. We will undoubtedly address these issues further as debate continues on this bill.

Bill C-393 is a worthwhile initiative that merits debate in the House. It applies to certain federally regulated enterprises, notably those subject to the Broadcast Act, the Telecommunications Act and the Bank Act. It has the potential to touch each Canadian consumer who subscribes to cable TV, uses a telephone or has a bank account.

We look forward to collaborating with the hon. member on his private member's bill. We want to demonstrate our support to consumers and give a positive response to the many Canadians who find negative option marketing offensive and unreasonable.

With respect to the financial sector, the task force on the future of the Canadian financial services sector produced a report that made consumer issues a major preoccupation of its 124 recommendations released to the Minister of Finance in September of last year.

The House of Commons finance committee and the Senate banking committee have studied the report and also conducted public hearings. The two committees supported many of the consumer measures contained in the report and provided some additional recommendations. The government is currently reviewing the advice of these three bodies and will be setting out its response as soon as possible.

The bill addresses several of the consumer issues raised in the context of a much broader review of the financial sector. As drafted, the bill has the potential of conflict with existing provisions of the Bank Act dealing with service charges and notice requirements.

As the bill proceeds through the House and through committee at various stages we should consider how best to resolve the conflicts between the bill's provisions and the existing consumer protection provisions contained in the Bank Act as we debate this bill in the House to make sure we have responded to the hon. member for bringing this bill forward.

Competition ActPrivate Members' Business

1:25 p.m.

Reform

Keith Martin Reform Esquimalt—Juan de Fuca, BC

Madam Speaker, I compliment the hon. member for Sarnia—Lambton for taking the courageous step in dealing with this bill.

This is an issue that many of us in the House have had to deal with among our constituents. Our constituents have been very mad and angry that they have had to be subjected to this bullying by certain companies.

I draw to the attention of the House the issue of the cable companies and the banks that tried through the back door to force individuals, members of the public, to purchase goods and services they were not interested in purchasing.

As the hon. member for Sarnia—Lambton so eloquently mentions, the adoption of Bill C-393 will mean that if a person does not respond it means no purchase. I repeat, if a person does not respond to what a company is trying to sell it means no purchase, contrary to the situation we have now where consumers are simply not protected.

The fact that this has never been dealt with before is absolutely tragic. Given the actions by some large companies, cable companies, telephone companies and banks in recent memory, it is all the more important that this issue be dealt with as soon as possible and that Bill C-393 gets expeditious passage through the House of Commons for all the consumers who are not protected by this consumer bullying that has potentially been taking place.

Negative option billing means that if something is offered to a person and they do not respond, they have bought it. Many people do not know this. Sometimes they see their bill and all of a sudden they are paying for things they never asked for. That is the reason negative option billing has to be outlawed. That is why our colleague from Sarnia—Lambton has put forth this extremely important bill that should get expeditious passage through the House of Commons and into law as soon as possible.

I am sure the Minister of Industry will look at this bill very carefully and give it his full support not only in the House but in public.

Negative option billing is also known by other names such as tied selling, automatic renewal contract, all euphemisms for the same thing. One can argue that tied selling actually violates the Competition Act.

Section 52 of the Competition Act says that anyone who promotes a product or business interest through representation to the public that is false or misleading in any material respect is guilty of an offence punishable by fine or imprisonment.

Section 52(4) specifically states that the general impression conveyed by a representation, not just the literal meaning, shall be taken into account in determining whether the representation is false or misleading.

That is why Bill C-393 falls within the realm of the laws we have today. That is why it is a reasonable law to be supported and passed by the House expeditiously.

Bill C-393 also would not apply to companies across the country. It would apply specifically to federally regulated businesses, such as banks, cable companies and telephone companies, companies that have been engaging in or trying to engage in negative option billing for quite some time. I will give some examples.

In 1997 the Toronto Dominion Bank employed a negative option technique to deprive bank customers of their privacy. The National Bank has reportedly used a similar scheme to sell travellers' health insurance to existing customers by debiting their accounts $9.95 a month.

We all know the action that was taken by the cable companies. They told their customers that if they did not hear from them over a certain period of time they were going to be forced to pay for certain services. That was completely outrageous and should never have been tolerated.

Bill C-393 addresses this important issue of the protection of consumers across the country. Industry should not be afraid of this. It should actually be applauding it because it would improve competition. Without Bill C-393, negative option billing allows companies, particularly large companies, to bully their customers. Power is centralized in the hands of those companies. In other words, negative option billing enables the large companies to have greater power over their smaller counterparts. That is not competition. That is called monopolization. And in this country monopolization is outlawed.

Bill C-393 has a number of benefits. It would liberalize trade in this country. It would provide protection for small businesses, not unfairly. It would level the playing field between small and large businesses. Above all else, it would protect the public from being bullied by large companies that seek to add profits to their coffers by virtue of trying to force their customers, through surreptitious means, to purchase goods which they are not interested in purchasing.

Again I would like to compliment the member for Sarnia—Lambton for his leadership on this issue. He is going to get a lot of support from this House. I am sure the Minister of Industry is going to applaud this member for his leadership and work with him to make sure this bill becomes a reality in the very near future for Canadians everywhere.

Competition ActPrivate Members' Business

1:30 p.m.

Bloc

Caroline St-Hilaire Bloc Longueuil, QC

Madam Speaker, I am pleased to rise today to speak to Bill C-393, an act to amend the Competition Act, 1998 (negative option marketing).

This bill is aimed at prohibiting negative option marketing, which means billing consumers for products or services without their express consent.

In fact, this bill proposes to amend the Competition Act to prohibit such marketing practices by banks, trust companies, credit unions as well as telecommunications and broadcasting companies.

Should this bill be adopted, anyone who commits an offence under the act would be subject to a fine of up to a maximum of $100,000. The director of the Competition Bureau would be required to submit an annual report on this issue. Moreover, the governor in council may, by regulation, exempt any service that needs to be exempted to remain competitive, for example, French language broadcasting services.

I want to emphasize the fact that Bill C-393 is the member for Sarnia—Lambton's third attempt to prohibit negative option billing by cable companies. However, Bill C-393 differs from the two previous attempts in that it goes beyond cable companies.

I would also like to give a brief overview of the history surrounding the introduction of Bill C-393.

In 1994, the CRTC authorized six new English language and two new French language broadcasting services. In 1995, cable companies in English Canada withdrew certain broadcasting services from the basic service and created an enlarged package consisting of the services previously included with the basic service and the new services they were offering, which had been authorized by the CRTC.

Consumers reacted strongly to this disruption of their package. Their reaction was described as a revolt at the time. They did not appreciate the changes, nor did they appreciate the fact that they had to pay more for services they already had and that they had to pay for new services they did not want.

They also did not appreciate having to make known their wish not to subscribe to this new service, or find themselves subscribing by default.

In 1996, the member for Sarnia—Lambton introduced Bill C-216, the purpose of which was to amend the Broadcasting Act so as to prohibit negative option billing in the broadcasting sector.

I would remind members that the Bloc Quebecois was in agreement with the bill in principle, but that we were still opposed for the following three reasons.

First, Bill C-216 represented interference in commercial relations between businesses and consumers, a field of provincial jurisdiction.

Second, the bill was impossible to enforce, there being no technology for providing television on demand. In addition, Bill C-216 would have required the explicit consent of all subscribers for a new channel to be broadcast, which, to all intents and purposes, would have prevented new channels from starting up.

Third, the bill had a particularly unfortunate effect in Quebec, where negative option billing is needed to ensure the widest possible distribution of a broadcasting service, failing which the service would be too expensive or would never get off the ground.

For the record, Bill C-216 died on the Order Paper when the 1997 general election was called.

When a new parliament reconvened, the hon. member for Sarnia—Lambton tried again and introduced Bill C-288 on November 25, 1997. Its goal was similar to that of Bill C-216, and its content was almost identical. Unfortunately for him, the bill was not a votable item.

And now we have Bill C-393, which was introduced on April 23, 1998, and is before the House. It also deals with negative option marketing. But, as I said before, it is different from the two previous bills in that it deals with much more than cable television.

The Bloc Quebecois supports of the hon. member's proposal in theory. Let me remind the House that the Quebec government has passed a law banning negative option billing in Quebec.

But the Bloc Quebecois will oppose Bill C-393 for the three following reasons.

First of all, the bill encroaches on Quebec jurisdiction in matters of trade and contracts. As a matter of fact, the Constitution provides that matters of contract, local trade and consumer protection are under provincial jurisdiction.

The second reason we will vote against this bill is that the CRTC already has the authority to ban negative option billing, if it thinks it is in the public interest to use its authority to do so.

Finally, the Bloc Quebecois is opposed to this bill because it will help to reduce the authority of the CRTC and give the Competition Bureau powers that could undermine Canadian broadcasting policy, reduce consumer choice, increase rates and put an end to the development of French broadcasting services throughout Quebec and Canada.

I remind the House that consumers in Quebec made their position about Bill C-216 known to the Senate committee.

In fact, I firmly believe that more than ever French speaking viewers need the protection the CRTC can give them. Members have to understand that Bill C-393 could prohibit every other marketing method except pay per view television and could particularly involve such limited distribution that no new French language service would ever get off the ground.

It could deprive us of any new French channel. But even worse, as my hon. colleague from Mercier put it, the French language media must be allowed to live, not just to merely survive.

For all these good reasons, we will vote against this bill. Still, I want to commend the hon. member for Sarnia—Lambton for his perseverance, and he can be assured that the Bloc Quebecois will also persevere in its opposition to his bill.

Competition ActPrivate Members' Business

1:35 p.m.

NDP

Wendy Lill NDP Dartmouth, NS

Madam Speaker, I am pleased to offer my support for Bill C-393 proposed by the member for Sarnia—Lambton. Negative option billing represents some of the worst corporate behaviour imaginable. By saying that implied consent should allow a company to change the general contractual agreement between a company and an individual we are chucking out a thousand years of common law, the part that says a deal is a deal.

Negative option billing negates one of the fundamental concepts which I have always fought for as a writer and as a legislator, which is that we should always safeguard the public's ability to exercise informed consent when dealing with the world.

I am proud to add that this practice has already been dealt with by the NDP government in British Columbia which amended its consumer legislation to ban negative option billing in that province.

The current bill proposes to amend not the Broadcasting Act, but rather the Competition Act to ensure that negative option billing is prohibited in all sectors under federal jurisdiction, not just those regulated by the CRTC. Banning negative option billing is a way of telling the providers of those federally regulated services that they should never see the public as a pool of cash to be dipped into whenever they need to boost profit margins.

Business should provide a service and if the public wants that service and they can afford it, they can agree to buy it. If a business wants to charge customers for a service it has to ask them first, ask them nicely and make the sale by convincing them that they need it or want it. It cannot change the rules in the middle of the game without permission. It is just not fair.

Sadly we are dealing with this as a result of the other place which sent back a bill just before the last election. As we know, elections are of no concern to the other place. The fact that this took place is a good example of why we need to abolish the other place. The House of Commons said that negative option billing should be banned. The Senate blocked our will. Canadians suffer. The cycle has to go and I believe the other place does too.

I well remember the public outrage in the winter of 1995 when the cable companies introduced new specialty channels and restructured their cable package lineups. I was offended that it was suggested by the companies that they needed this anti-consumer practice to support culture.

Canadian creators produce good work and people want it, so they agree to buy it. Shame on the cable companies for trying to hide behind artists while fleecing the public.

The CRTC allowed the practice in 1995 and this shows how out of touch the CRTC has been.

I support regulation and protection for Canadian culture in the broadcast and telecommunications industries by the CRTC. I support regulation and protection for Canadian culture in broadcasting and telecommunications, but it is evident that the CRTC abandoned its role as a protector of citizens, the consumers, when it allowed the cable companies to gouge Canadians through negative option billing.

This failure also hurt the cable industry. When the new channels were introduced in 1995 it was into a much more hostile environment than the channel originators probably deserved simply because people were so appalled at the negative option billing.

I am pleased to see the measure before us in this parliament and pleased that the member has seen fit to include other federally regulated industries in its scope. I agree with the hon. member that we are also seeing the phone companies and some of the banks testing the waters with these kinds of marketing schemes and it needs to stop now.

We must remember that most federally regulated industries are granted certain privileges to conduct business in a protected way in this country and they provide essential services to the economy and the people of Canada. In return for this privilege, which often means they are guaranteed certain levels of profit as well, they have a higher duty to conduct their business in an ethical way. In some cases, the cable industry for example, the profits are high.

I hope that with the change in focus to the Competition Act we will see the Department of Industry start taking a role in protecting consumers in Canada, not protecting corporate Canada. When I say this I am referring to recent failures of the department and the minister to protect cultural interests.

We have the loss of domestic control of large sections of the publishing industry, a trend apparently encouraged by cabinet. We have also seen unprecedented amounts of corporate concentration in television and other media, all with the applause of Industry Canada. I hope the passage of this bill will encourage a change in the overall implementation of the Competition Act so as to protect Canadian citizens and not just Conrad Black, Izzy Asper and members of the Business Council on National Issues.

I would like to go on record as supporting the previous concerns expressed by the member for Regina—Lumsden—Lake Centre concerning the Competition Act. He expressed his longstanding criticism of the act's ability to deal with pricing in the retail gas market.

With the changing nature of the international economy and the simultaneous trends of increased mergers and acquisitions, but also the growing number of small businesses, we need a much more active competition policy in this country to ensure that the marketplace works well for consumers and for small business owners.

On Monday my leader and I attended a press conference with members of the small business community in Nova Scotia. They raised very grave concerns about the impact of Sobey's assuming control of 75% of the food wholesale market on the east coast. The takeover of Oshawa Group by Sobey's controlled Empire Ltd. would mean that small family restaurants and corner stores will become price takers from one food wholesaler. That will hurt them and it will hurt consumers.

It is a competition issue and it is a consumer issue. I think it is time we made a comprehensive examination of the whole area. As the member from Regina has said, we do not have one-tenth the amount of competition legislation they have in the United States. I am not saying necessarily that more is better but what we have now obviously is not enough. And it is not working for anybody.

To return to where I started this afternoon, I just wanted to indicate my support for the principle in the member's bill. I hope it receives wide support from the House once again, and is not again stalled by the unelected Senate.

Competition ActPrivate Members' Business

1:45 p.m.

Liberal

Denis Coderre Liberal Bourassa, QC

Madam Speaker, I am pleased to participate in today's debate on Bill C-393, an act to amend the Competition Act, 1998, with respect to negative option billing.

Negative option marketing is a deplorable practice, and we should all support the hon. member for Sarnia—Lambton in his efforts to end this practice. In the case of broadcast services distribution, this practice gave rise to two attempts to amend the Broadcasting Act.

As a result of amendments in the other House, it was established that negative option marketing should not be allowed, except to facilitate the achievement of the broadcasting policy objectives set out in the Broadcasting Act. We do not find the same provisions and safeguards in this bill.

I appreciate that the member for Sarnia—Lambton introduced this bill amending the Competition Act in order to extend its application to banking and telecommunication services. However, there is a risk. Introducing in the Competition Act new regulatory rules that would also apply to broadcasting services may result in conflicts with the Broadcasting Act, as passed by Parliament in 1991.

The Broadcasting Act provides, and I quote “that the Canadian broadcasting system constitutes a single system and that the objectives of the broadcasting policy can best be achieved by providing for the regulation and supervision of the Canadian broadcasting system by a single independent public authority”, namely the CRTC.

Any attempt to deal with a same matter in two different acts with very different objectives can only lead to confusion and court actions. The bottom line is that consumers are those who might have to pay the price.

The Broadcasting Act provides, and I quote “The Canadian broadcasting system should serve to safeguard, enrich and strengthen cultural, political, social and economic fabric of Canada”. Bill C-393 deals only with commercial and economic aspects without any consideration for other cultural, political and social aspects.

The practice of negative option marketing is no longer used by the cable companies. People will recall the fuss raised in the English language market. Consumers simply will not accept this practice, and the cable television industry, which is faced with increasing competition from satellites and wireless systems, simply cannot use this any longer without major loss of business.

However, the bill as it stands would prohibit marketing practices that have been used successfully to introduce a broad range of new French language services to the French language market. Without this flexibility, no new French language service could see the light of day, given the small size of the market.

This experience with the French language market demonstrates two things. First that, when properly used, the marketing practices required for the introduction of new services are supported by consumers. Second, the Broadcast Act states:

English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements.

Bill C-393 introduces a new regulatory power of the governor in council in order to remove certain services from its application for competitive reasons. There are concerns that this new power will not be easily reconciled with the CRTC's licensing powers.

Moreover, since the CRTC's licensing decisions can already be appealed to the governor in council, the latter could find himself in the position of having to deal with a single issue under two different acts with very different objectives.

We must make sure we do not create a legislative dead end that would delay or even prevent the introduction of new broadcasting services that Canadians have a right to expect.

A case in point is the recent CRTC decision to grant a licence to a new aboriginal service called The Aboriginal Peoples Television Network. Should Bill C-393 come into effect, I am afraid it might jeopardize the introduction of this service by all cable companies in the country.

The marketing of broadcasting services is an issue that must be dealt with under the Broadcasting Act. This legislation provides all the power and flexibility required to maintain a balance between its objectives and consumer needs.

The bill's previous versions only dealt with discretionary broadcasting services. The current version no longer makes that distinction and could in fact prevent the CRTC from requiring the distribution of broadcasting services under the terms and conditions that it deems appropriate. Incidentally, this provision was the one used by the CRTC to require the distribution of a new aboriginal service, The Aboriginal Peoples Television Network.

I listened to the various arguments put forth so far regarding this bill. I agree that we must find a deterrent to the all the practices that were described. However, having read the bill, I come to the conclusion that, in some cases, it does not address these concerns. For example, I do not see how it could prevent the banks from using the negative option or a tacit reply from its clients to provide personal information to a third party.

However, in other cases, I feel that the bill targets practices that it was not meant to target. I am not sure that the intention was to prevent the compulsory distribution of an aboriginal service. Yet, this could well be the end result.

Competition ActPrivate Members' Business

1:50 p.m.

Reform

Inky Mark Reform Dauphin—Swan River, MB

Madam Speaker, I am pleased to speak to Bill C-393, an act to amend the Competition Act with respect to the prohibition of negative option billing.

I would like to recognize the work of the member for Sarnia—Lambton on this issue. I know he has worked tirelessly in the interests of consumers. I respect any member of this House who is prepared to champion an issue despite pressures from within his or her own caucus to be a quiet and dutiful backbencher.

This bill is designed to prohibit the practice by federally regulated businesses such as banks, cable companies and telephone companies of implied consent billing. It would restore the traditional buyer-seller relationship that relies on the consumers' explicit consent before they can be billed for a product or service and would prohibit default billing of consumers who do not absolutely decline a product or service. In other words, it would put an end to what has been called negative option billing.

It is clear that this bill has broad support among consumers frustrated by negative option billing. In particular, there is frustration with cable providers that bill automatically for a new program unless the consumer expressly rejects the service.

Consumer groups have cited senior citizens as examples of people who are often unaware that they have the choice of opting out of the new service and are consequently billed for a program they do not want and cannot afford. This is a source of frustration not simply because of the financial costs but because it is deemed to be a violation of an age-old relationship between buyers and sellers.

It is clear that consumers are looking for protection from negative option billing. The questions are simply: How do we provide this protection? Should it come in the form of Bill C-393, or can this be achieved through market based reforms? I think a balance must be struck.

Bill C-393 had its origins as Bill C-288 which would have amended the Broadcasting Act to restrict negative option billing by cable companies. These companies can currently act with relative impunity as they are federally regulated regional monopolies that are free from the normal constraints of a competitive market. This new version of the bill is broader and instead amends competition laws that apply to all federally regulated industries.

The decision by the hon. member for Sarnia—Lambton to use the Competition Act as a means by which to prohibit negative option billing instead of making changes to the legislation that deals directly with the perpetrators of this practice is troubling for me.

Competition laws can profoundly restrict economic freedom and market efficiency. The general move toward strengthening these laws should be approached with caution.

This bill should not be seen as a mechanism by which to restrict attempts made by companies wishing to expand their market share. We must not allow our competition laws to grow steadily more intrusive. We must act vigilantly to create competition through deregulation of our industries in the interest of every Canadian consumer.

The original purpose of this draft legislation in the form of Bill C-288 was to amend the Broadcasting Act. This dealt much more directly with the source of the problem and would be the preferable course by which to protect consumers against negative option billing.

Negative option billing is a practice common to federally regulated industries because they enjoy market protection such that they restrict or limit the consumers' ability to seek alternative providers of a product or service. Therefore the deregulation of federally legislated industries should be the first step to eliminating negative option billing and other practices that do not properly serve consumers.

The Reform Party recognizes the important role of government in creating an economic environment with fair and transparent rules that protect both consumers and businesses. Bill C-393 is a band-aid solution made necessary by policies that assume Canadians will watch anything if it is Canadian, but viewership dictates something else.

Despite the CRTC's pursuing policies which in effect force Canadians to view Canadian productions on cable, viewership for Canadian programs remains about the same. I challenge Canadian producers to offer programming that Canadians and people around the world will want to view.

Competition ActPrivate Members' Business

1:55 p.m.

Bloc

Maurice Dumas Bloc Argenteuil—Papineau, QC

Madam Speaker, this is the first time I have risen in this House with the name of my new riding, because the name of Mirabel, the former international airport, was added yesterday.

Bill C-393, an act to amend the Competition Act, 1998, negative option marketing, is intended to prohibit this practice, that is invoicing for a good or a service the customer has not expressly approved.

This bill proposes an amendment to the Competition Act and is intended to prohibit this practice in the banking, trust company, co-operative credit association, telecommunications and broadcasting sectors. Contravention of this legislation could result in the charge of no fine to a fine of $100,000.

The director of the competition bureau would be required to report annually on this matter. The governor in council is authorized to make regulations to exempt services that require an exemption to remain competitive, for example, francophone broadcasting services.

This is the background of this bill. C-393 is the third attempt by the member for Sarnia—Lambton to prohibit negative option billing in the cable sector. However, Bill C-393 differs from its two predecessors because it gathers in much more than just cable companies.

In 1994, the CRTC authorized six new English language broadcasting services and only two French language ones.

In 1995, Canada's anglophone cable companies withdrew certain basic broadcast services and expanded the volume to include the services previously distributed on the basic service and the new services offered by the CRTC.

Consumers reacted vigorously to the upheaval in their schedules. Their reaction was described as a revolt, but consumers did not like anyone playing with the schedule, having to pay more for services they had had previously and having to pay for services they did not want.

They did not take kindly to having to refuse the new service, or receive it by default otherwise.

In 1996, the member for Sarnia—Lambton introduced Bill C-216, which was to amend the Broadcasting Act to prohibit negative option billing by cable companies.

Although the Bloc Quebecois agreed with the bill in principle, it was opposed to it for the following reasons: Bill C-216 represented interference in commercial relations between businesses and consumers, a field of provincial jurisdiction; the bill was impossible to enforce, there being no technology for providing television on demand; the member's bill would have required the explicit consent of all subscribers for a new channel to be broadcast, which, to all intents and purposes, prevented new channels from starting up.

The bill had a particularly unfortunate effect in Quebec, where negative option billing is needed to ensure the widest possible distribution of a broadcasting service, failing which the service would be too expensive or would never get off the ground.

The Senate amended the bill in order to protect the francophone market. The bill died on the order paper when the 1997 general election was called.

On November 25, 1997, the member for Sarnia—Lambton very laudably went at it again, this time with Bill C-288. The purpose of this bill was essentially the same as that of Bill C-216 and its objectives were almost identical. At the time, the bill was not made votable.

On April 23, 1998, the member for Sarnia—Lambton stubbornly, and I mean this as a compliment, introduced Bill C-393, another bill on negative option billing.

In the clause defining client, enterprise and service, the member proposes that the bill also apply to banks, trust companies, co-operative associations, broadcasting undertakings, telecommunications undertakings, and insurance companies. The bill says that certain services may be excluded by the governor in council by regulation.

Section 53.1(2) sets out the procedures that will have to be followed by businesses covered under this bill to make sure that the client is fully informed of the nature of the new service, of the date the new service is to begin, of its cost calculated monthly and annually, of the fact that the new service is not mandatory, of the fact that the client may obtain the new service by signing a business reply card, and of any other matter that may be prescribed.

Paragraph ( b ) of this section reads as follows: b ) the enterprise has received the express consent of the client for the purchase or reception of the new service by the client.

Section 53.1(3) says that the prohibition does not apply where the new service replaces another service for which the client has already paid a similar or higher fee, or where the new service is free of charge.

Subsection 53.1(4) deals with offences and punishment. Fines range from $0 to $100,000. This section also provides that officers and directors of a corporation are considered party to and guilty of the offence and liable to the punishment provided for the offence.

Clause 2 gives the Attorney General of Canada the authority to institute prosecutions. It requires the director of the Competition Bureau to report annually concerning the number of complaints received from the public, a description of the complaints and proceedings undertaken under the Act. The report must be tabled in both Houses.

Clause 4 gives the governor in council the authority to make regulations for carrying out section 53, therefore allowing the governor in council to exempt enterprises that would otherwise come under the act, to allow them to remain competitive.

The rest of the bill provides for consequential amendments to harmonize the Competition Act.

I remind the House that, under the Constitution, contracts, local trade and consumer protection are areas of provincial jurisdiction. I must stress this fact.

Under section 93 of the Canadian Constitution, which gives the provinces authority over matters related to property and civil law, contracts, local trade and consumer protection issues come under provincial jurisdiction. These powers enabled the introduction in the Civil Code of Quebec of a provision on contract formulation, attached in part.

The powers given to provinces by the Constitution Act enabled the Government of Quebec to pass the Consumers Protection Act, which prohibits negative option marketing.

I will conclude by recalling the position of the Bloc Quebecois. As I said earlier, our party agrees with the hon. member in theory and points out that the Government of Quebec introduced provisions prohibiting negative option marketing within the boundaries of Quebec.

But the Bloc Quebecois still opposes Bill C-393 as it opposed Bill C-216 and C-288, for the following reasons: this bill intrudes into provincial jurisdiction over trade—

Competition ActPrivate Members' Business

2:05 p.m.

The Acting Speaker (Ms. Thibeault)

Unfortunately, I must interrupt the hon. member, as his time is up.

Competition ActPrivate Members' Business

2:05 p.m.

Liberal

Carolyn Parrish Liberal Mississauga Centre, ON

Madam Speaker, it is a pleasure to speak to Bill C-393. I congratulate the member for Sarnia—Lambton for his dedication to the issue of consumer rights and for his perseverance in bringing the legislation before the House.

Parliament has made substantial changes to the way we conduct Private Members' Business. It is fair to say that it was the passion and commitment of backbench MPs, such as the member for Sarnia—Lambton displayed, that inspired parliament to make those changes.

Like many MPs, my constituents have often expressed frustration at unfair marketing practices that require them to expressly decline new services in order to avoid being charged for them. It is also important to remember that people who pay for services they do not want are often the ones who can least afford it, such as the elderly, young people, recent immigrants and those still learning English or French.

The bill regulates federal institutions, but I will show how insidious negative billing can be. For example, I have two daughters in university who are both charged full fees that include extra health care of $250 a year. Unless they line up at a specific time on a specific day in a specific location and prove they have extended health care through our family, they are automatically charged that money. If they line up they get the money back. Since many of the students are on student loans, federal government money is being sucked up by the universities on negative billing. That gets me very excited and that is why I am in favour of the legislation.

Some minority groups and business people have also come forward to argue in favour of negative option marketing. They offer good reason to allow some form of limited negative option selling to continue.

These considerations deserve to be looked at closely, but this debate also offers the opportunity to consider whether negative option selling is the best method for achieving very laudable cultural objectives. If consumers feel manipulated by negative option practices, this can create resentment toward the cultural product the practice is intended to benefit.

However, it is also clear that current negative option practices are generally unfair to consumers. As legislators we have to do a better job of protecting those interests. Bill C-393 is a very good step in that direction.

Negative option billing relies on the legal concept of implied consent. By not responding the consumer is deemed to have given his or her consent. Some might argue that consumer pressure is enough to end negative option practices. However, as Bill C-393 recognizes, most negative option selling occurs in industries where there is little or no competition. Indeed unfair negative option selling is much less likely to occur in competitive markets because of the threat of losing customers.

I would like to see us all have a pair of shoes arrive from Eaton's, for example, and then be billed a month later because we did not send the shoes back and see how long that practice would last.

Bill C-393 deals specifically with federally regulated businesses such as banks, cable and telephone companies. Those that argue “let the market do its work” are ignoring a central fact of Canadian life. In banking, local telephone service and cable television distribution, consumers are faced with limited choices. Companies in these sectors do not always have to consider consumer pressure because their customers have very few options.

Let us look at the furor in 1995, which has been recognized by other speakers, over the negative option billing by Canadian cable companies. This elicited more phone calls into my constituency office than any other issue has ever affected my riding. Thousands of consumers were outraged. Cable companies backed off at the time. Yet only a few short years later there were reports that they were doing it again, using negative option billing in regional markets.

No one on this side of the House wants the federal government to exercise undue influence over the marketplace, but we have to ask ourselves whether negative option billing further concentrates market share with the dominant players.

It may be time for the legislation. Computer technology has made it much easier for businesses such as the banks to quickly and easily offer new services and change existing ones. Industry Canada's office of consumer affairs pointed out in the 1996 discussion paper that negative option marketing had the potential to be an important tool in the financial services sector. To quote the report:

From a negative perspective these new technologies could allow industry to profit by slipping new charges and services past unsuspecting customers.

However, the report also pointed out:

—responsible service providers operating in competitive markets can enable financial institutions to offer better service more easily and with greater efficiency.

The report also gives examples where negative option marketing has worked reasonably well.

Bill C-393 takes these issues into consideration. It recognizes that there may be situations where a consumer would benefit from a negative option billing arrangement. However, for this to be the case, consumers must be able to make informed decisions and express consent.

Bill C-393 proposes certain steps for a negative option marketing practice to be legal. The bill has received the support of the Consumers' Association of Canada, the Public Interest Advocacy Centre and the Insurance Brokers Association of Canada.

There is no doubt that these measures enjoy widespread public support. Consumers feel vulnerable to negative option tactics. When this method of selling is used inappropriately it catches them off guard. They are accustomed to business relationships where no response means no purchase.

They believe they are safe in the understanding that unless they give their consent no one can take money from their account or add a charge to their monthly bill. As I have said, negative option selling is sometimes used responsibly, but in cases where it is used inappropriately consumers are being taken advantage of.

By not responding to a solicitation the consumer is deemed to have given his or her consent. How can the sender be sure that their customer received the solicitation? What if the person is away from home? What if the solicitation simply does not make it into the customer's hands? If it does make it into their hands, how is the consumer approached? Is the negative option included with other information? Is the offer made at the beginning of the document or at the end? Is it clear for everyone who reads it?

These are all good questions. The debate over Bill C-393 offers parliament and the federal government a useful opportunity to explore them.

Since the controversy over negative option billing in the cable industry little has been done to protect consumers from the misuse of this marketing practice. On that occasion and on other occasions consumers have spoken.

They have said they do not want the responsibility of having to thoroughly examine every document they receive in the mail, every business trying to sell them a new product or service.

They do not want to be forced to phone in a response or mail a reply card just to keep their own money. My daughters do not want to have to line up in the cold to get their money back.

There are times when the practice is used appropriately for worthwhile reasons. Let us deal with the misuse of negative option marketing so that consumers can make informed choices.

If consumer resistance is not effective in stopping the misuse of this practice, it is up to the members of this House to act in their interests.

Bill C-393 offers us an opportunity. The member for Sarnia—Lambton should be commended for bringing this issue before the House.

Competition ActPrivate Members' Business

2:15 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Madam Speaker, I am pleased to speak on this important initiative on the part of the hon. member for Sarnia—Lambton.

He is to be congratulated for bringing to the attention of the House a marketing practice many Canadians find offensive and for giving the House the opportunity to express our concern and support for the rights of Canadian consumers.

Many if not most Canadians dislike aggressive marketing tactics. We dislike pushy sales techniques. It makes us uncomfortable to have to hang up the phone on a telemarketer or to slam the door in a salesman's face.

Aggressive sales tactics often succeed precisely because they exploit our better nature.

The marketing practice dealt with in Bill C-393, negative option marketing, may be a little bit more subtle than the tanned salesman who shows up at your door, but it is just as aggressive and intrusive. Negative option marketing means that a company will send the consumer an offer saying that he must refuse it, otherwise it will consider that he has accepted the offer. It will then send him a bill or, if he are already a customer, add the extra costs to his monthly bill.

Naturally many Canadians find this sales strategy more than a little annoying. There they are sitting at home quietly minding their own business and they are not safely out of reach of businesses pushing products and services they do not need, do not want and maybe cannot afford.

Why should Canadians be required to be eternally vigilant against unsolicited sales?

There are negative option billing arrangements that satisfy both the consumer and the business, for example in certain book or record clubs, but generally these are contractual agreements in which the rights and obligations of both parties are clearly set out and where the consumer has all the information and knows what to expect.

I hope this discussion finds support and solutions from the House.

Competition ActPrivate Members' Business

2:15 p.m.

The Acting Speaker (Ms. Thibeault)

The time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

It being 2.20 p.m., the House stands adjourned until Monday next at 11 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 2.17 p.m.)