Mr. Speaker, it is my pleasure to speak today to Bill C-393, an act to amend the Competition Act which relates specifically to negative option marketing. I commend the hon. member for Sarnia—Lambton for introducing the legislation once again. It seeks to protect consumers and offer consumers greater choice in the marketplace.
Bill C-393 deals with the business practice known as negative option sales and marketing. The practice is also known as unsolicited marketing and marketing by inertia. Related concepts include the following: bundling, tied selling, automatic renewal contracts and misleading advertising and/or deceptive marketing.
Regardless of the term or concept, this practice is a perversion of the normally accepted rules of contract or sales. The law of contracts insists that a form of offer and acceptance is required to make an agreement binding. It could be argued that negative option marketing, in the absence of independent consent, undermines the fundamental principles necessary for a valid commercial contract.
Negative option marketing involves a consumer receiving a product and a payment request because the consumer failed to say no to the offer. Normally in the context of the rules of contract or sales, an offer is made, acceptance is given, the service is delivered and payment is required.
The framework employed under negative option sales is inverted. An offer is sometimes made, sometimes hidden and sometimes there is no choice at all. The consumer accepts the offer not because the individual necessarily wants the product but because they do not specifically say “No, I do not want this service”.
Why is this practice employed? It is obvious. The assumption that the consumer desires the product is made in the absence of refusal in order to increase revenue. Practitioners of this type of marketing or sales do not seek to meet the demands of the marketplace but create what can be termed as a false demand. This sleight of hand technique violates consumers' right to choice. Moreover approving sales where there is no market is synonymous with forcing sales where there is no demand. It is unreasonable to allow the creation of both market and demand where neither exist.
Bill C-393 would amend the Competition Act to force federally regulated companies to obtain the permission of customers for any new service. Why is it unreasonable to suggest that a consumer has the right to say “I know what is offered. I know the cost. I want what is offered”. It is not unreasonable to expect federally regulated companies to obtain a definite and positive response before supplying and charging for services.
This bill protects a basic consumer right, the right to express consent before purchasing a new product. Negative option marketing or billing relies on implied consent. In other words, by not responding to solicitation the consumer is deemed to have given his or her consent. Rather than foster competition, negative option marketing concentrates market share with the dominant players in a particular sector. Any anti-competitive practice limits choice for consumers and acts contrary to the foundation of the Canadian marketplace.
In today's marketplace consumers are inundated with communication through various mediums. It is unreasonable to sanction the onerous task of requiring consumers to examine the endless amount of communications from customer dealings in search of negative option marketing. Consumer arrangements resulting in new products or services being offered that obligate additional consumer expenditure should require expressed consent.
Several points should be made clear. Bill C-393 applies to federally regulated businesses such as banks, cable and telephone companies. The provinces are free to prohibit negative option marketing within their jurisdictions. Several have already taken steps in this direction. The time has arrived to enact measures at the federal level in order to protect consumers. Bill C-393 provides the appropriate measures.
Bill C-393 also proposes that steps be taken in order for specific negative option programs to be legal. Why? Because the bill recognizes that situations may exist where a consumer would benefit from a negative option billing arrangement. This is supported by a document produced by Industry Canada entitled “Negative Option Marketing: A Discussion Paper” wherein it is stated “Negative option marketing takes many forms and in some circumstances may benefit consumers as well as industry”.
This bill does not seek to impede successful industry in Canada. It does however ensure that consumers are able to make informed decisions and express consent before entering into an agreement with additional charges. Moreover, Bill C-393 recognizes or provides for exemptions in order that specific enterprises remain competitive in their sector of activity while maintaining consumer protection.
The bill in section 128(1.1) states:
The Governor in Council may, by regulation, exempt from the definition of “service” in section 53 any service that, in the opinion of the Governor in Council, should be exempted in order to allow enterprises to which this section applies to remain competitive in their sector of activity, provided that the exemption does not deprive consumers of their right to competitive prices and product choices.
This provision would allow any minister or department to express concern for services under their purview that might be effected. For example, Heritage Canada could propose justification for exemption based on concerns relating to heritage.
Bill C-393 provides for warranted protection of certain services against unfair competition which in turn protects consumers and, as in the example given, possible cultural or heritage issues as well. This provision however does not exclude consumer protection. In fact, it specifies clearly that the exemption must not deprive consumers of their right to competitive prices and product choices.
Recently the Consumers Association of Canada issued a statement with respect to Bill C-393: “It is timely that private member's Bill C-393 is being debated in parliament this week prior to world consumers rights day. World consumers rights day celebrates eight fundamental consumer rights of which the right of choice is paramount. A piece of legislation that bans abusive negative option marketing is a positive step in the promotion of consumers' right to choice”.
In this era of deregulation and government downsizing, it is important that we establish a regulatory framework which is consumer oriented. It is my contention that Bill C-393 addresses the inconsistency between negative option marketing and accepted contract norms. In doing so, this bill protects consumers by offering them a choice of which products they desire while increasing the competitiveness of the marketplace.