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Quebec company hit with $1.1-million penalty under CASL

|Written By Jennifer Brown
Quebec company hit with $1.1-million penalty under CASL
Lisa Chamzuk says the penalties are not ‘designed to punish but to encourage compliance.’

Almost a year after coming into force, the CRTC has issued its first fine and notice of violation under Canada’s anti-spam rules to a Quebec company it says was in “flagrant” violation of the law.

The Canadian Radio-television and Telecommunications Commission’s chief compliance and enforcement officer issued a notice to Compu-Finder March 5. At $1.1 million the fine is well under the $10-million maximum allowable under the law.

In a statement, Manon Bombardier, chief compliance and enforcement officer with the CRTC said Compu-Finder “ . . . flagrantly violated the basic principles of the law by continuing to send unsolicited commercial electronic messages after the law came into force to e-mail addresses it found by scouring web sites. Complaints submitted to the Spam Reporting Centre clearly indicate that consumers didn’t find Compu-Finder’s offerings relevant to them. By issuing this Notice of Violation, my goal is to encourage a change of behaviour on the part of Compu-Finder such that it adapts its business practices to the modern reality of electronic commerce and the requirements of the anti-spam law.”

The investigation found Compu-Finder sent commercial electronic messages without the recipient’s consent as well as e-mails in which the unsubscribe mechanisms did not work.

The e-mails sent by Compu-Finder promoted training courses to businesses. The four alleged violations occurred between July 2, 2014 and Sept. 16, 2014. An analysis of the complaints made to the Spam Reporting Centre of this industry sector shows that Compu-Finder accounts for 26 per cent of all complaints submitted.

“It’s interesting that it’s a B2B case,” says Steve Szentesi of Steve Szentesi Law PC. “It’s an example of the fact that just because there are categories of B2B implied consent, they are not blanket exemptions and they still have requirements associated to meet them.”

Compu-Finder has 30 days to submit written representation to the CRTC, or pay the penalty. It also has the option of requesting an undertaking with the CRTC — a form of settlement under the legislation to which the CRTC would have to agree.

“The ball is now in the court of the company,” says Lisa Chamzuk, a partner with Lawson Lundell LLP in Vancouver. “It will be interesting to see if the company actually sees this as a violation. If the company doesn’t make any representation they will be deemed to be in violation of the act.”

Chamzuk says the penalties are not “designed to punish but to encourage compliance.”

“I think this will make everybody sit up and take notice and look at their own policies,” she says.

Compu-Finder declined comment when contacted by Canadian Lawyer InHouse.

The process in place is an unusual one, says Michael Fekete of Osler Hoskin & Harcourt LLP in Toronto. If an organization that receives the notice of violation disagrees they can challenge the notice of violation.

“The fact they have mentioned the undertaking is interesting — I think they are highlighting that it is an option for organizations to come and make a deal with the CRTC rather than have the notice of violation and related fine stand. It isn’t entirely clear,” he says.

The fine may be considered appropriate given the size of the company, says Fekete.

“I think the CRTC would have balanced the desire to have a meaningful penalty that really does send the right message to organizations that they must comply, at the same time not put this company out of business,” Fekete says.

Others think the fine is fairly steep.

“I’m actually a little bit surprised at the size of the fine for the first penalty we’ve seen publicly announced,” says Shaun Brown of nNovation LLP in Ottawa. “It is, however, consistent with how the CRTC has done enforcement under the unsolicited telecommunications rules. If you look at the fines under that in the past — all the facts they have published seem to be clear that it has involved multiple violations.”

There have been more than 245,000 complaints about spam registered with the CRTC.

“We expect as the CRTC deals with the low-hanging fruit, it will likely move to investigate organizations that may not be so obviously in violation of the law, or their practices may not violate the principles of the law but they may find they violated a specific rule or requirement of the law,” says Fekete.

As part of its powers, the CRTC can also issue warning letters, preservation demands, notices to produce, restraining orders, and notices of violation.

Canada’s anti-spam legislation came into force on July 1, 2014.

  • President

    Jerry Lamontagne
    As a business owner, I receive quite a bit of unsolicited emails. If I don't want to receive them again, I simply block them or delete them! It's much easier than opening actual mail and then having to dispose of it if it's junk mail. I find it annoying that the government has to play a role in such a silly situation.

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