The compliance burden for small business in Canada got heavier late last year when the national do-not-call registry was approved, according to the Canadian Federation of Independent Business (CFIB).
Bill C-37 (An Act to amend the Telecommunications Act) received royal assent on Nov. 25. Once the registry is operational, Canadians who don't want to get calls from businesses that use the telephone to market goods and services can add their telephone numbers to a centralized list that telemarketers will have to pay to acquire and respect.
The legislation allows for fines of up to $1,500 per offending call made by individuals and $15,000 for those made by companies.
"One of the biggest issues facing small business is the compliance burden," says Rob Taylor, policy and communications co-ordinator in the CFIB's Ottawa office. "It's costing Canadian business $33 billion a year. This burden is compounded for smaller businesses as they have fewer people to distribute that workload to. Usually, it is one person carrying that burden."
Mariam Gennaro, media relations manager for the Canadian Radio-television and Telecommunications Commission (CRTC), says the registry will not be operational until the end of 2007 at the earliest.
"Public consultations on the legislation will be initiated this year and will be open to all Canadians. There will be a competitive process to select the third-party operator to set up the list. Details of the consultations will be set out in a public notice," she says.
A parliamentary committee will review the legislation in three years to ensure that the list is operating effectively. As well, the CRTC must file an annual report with the minister of Industry Canada.
Ian Jack, spokesman for outgoing Industry Canada Minister David Emerson, says "the intent of the legislation is not to put entire industries out of business."
"The do-not-call legislation adds to the administrative cost," Taylor says. "They (small businesses) are now forced to purchase phone lists through a central agency yet to be determined ... Getting the list is a huge cost for micro businesses."
In a news release issued when Bill C-37 was introduced in the House of Commons in December 2004, John Gustavson, president and CEO of the Canadian Marketing Association (CMA), estimated that the telemarketing industry employs more than 270,000 Canadians and generates more than $16 billion in annual sales.
Wally Hill, CMA vice-president of public affairs and communications, says "consumers find telemarketing a more intrusive form of marketing."
According to an Environics survey done on telemarketing in December 2003, the 2,002 Canadians (aged 18 and older) questioned said they received 3.43 unsolicited calls per week on average. The survey also said 59 per cent of respondents were annoyed by or hated unsolicited calls, and 79 per cent would support a national do-not-call list.
The CMA, a strong proponent of the legislation, "has had a do-not-call component in place since 1989," Hill says. "It is a much smaller program, with about half a million listings, than the national one should be. People register their phone, cell or fax number online or by phone and the service is supported by the businesses using it who must subscribe to the list.
"Being conservative, in fairly short order, there should be five million and more listings (in Canada) if the U.S. experience is any indication," Hill says.
Industry Canada's Jack says the legislation is comparable to that in the United States. "There are well into the tens of millions of Americans who are registered and the system is operating smoothly."
Calls from charities, political parties, polling companies and existing business contacts are excluded from the do-not-call legislation.
"A lot of telemarketing calls will be excluded," Jack says. "Some people made legitimate submissions about what needed to be excluded. We had a minority Parliament, we had to listen to the Opposition, too. We didn't ban all calls, but we did make some inroads."
Taylor, however, says the new rules have been diluted and do not catch the biggest offenders. "The highest frequency calls that households receive are not from small business. They are from charities, polling companies, political parties, which are all exempted from the legislation."
Glen Stone, public affairs manager for the Toronto Board of Trade, says: "The exemptions for charities and legitimate business contacts - for example, to confirm a business order - are OK. You can't really argue with a call from folks collecting used clothing for the homeless. We can tolerate a call like this once in a while."
Taylor agrees that "charities are a touchy area. We want them to have the ability to raise funds."
"Survey companies need to be able to do their jobs," Hill says. "Charitable organizations argued that they're important to their communities and that they're much more dependent on this form of marketing, that their volunteering comes from telephone canvassing."
"Polling companies and political parties are the biggest offenders," Taylor says. "There will be no cessation in the level of calls from them."
"It may be true that a lot of people don't want to talk to pollsters," Jack says. "In a democracy, it's hard to ban all polling and surveying."
"The fact of the matter is, no exemptions would have been a tighter system," Hill says, "but I'm not sure all Canadians would have supported that."
He says he is convinced that "the new do-not-call regime will put businesses on a level playing field in relation to telemarketing. It should reduce the costs for all participants in the program. The result will be a more efficient and effective registry."
Stone sees it otherwise. "Many legitimate businesses depend on this (telemarketing) to sustain themselves. It's unfortunate that legitimate businesses are being hurt by the 'cowboys' - the small number who aren't conducting their business the way they should be.
"Whenever you close one door, there's pressure to open another," Stone says. "So many businesses need direct-to-consumer contact. Will the do-not-call legislation result in more e-mail solicitations? With anti-spam capabilities, businesses may go back to direct mail, which is more expensive, slower, labour-intensive and not environmentally friendly."
Stone also wonders about U.S.-based call centres making calls into Canada. "They aren't subject to the legislation, they don't have to respect the do-not-call list. How will VoIP play into this - do the requirements catch you?" Likewise, Taylor notes that when the CFIB appeared before the Senate about Bill C-37, there were "two or three different answers about the definition of an existing business relationship."
"A very small business may use a ballot box at a tradeshow to drum up business," Taylor says. "Does it need to vet those leads against the registry or does filling out a ballot mean that there is an existing business relationship in place?" Stone says: "Businesses will need to do more targeted types of calling, more market research first, rather than general, geographic-based calling to come up with a more specific list of potential customers."
Hill advises businesses to become more targeted in their approach. "Many thousands of businesses in Canada use telemarketing. It's an effective marketing channel. Probably, it's even more effective when it focuses on those who want to receive the calls.
"It's effective when it's targeted to consumers who are receptive," he says. "You are increasing the efficiency of every call you make. Where consumers insist that they don't want to be contacted via phone, businesses do better to contact them through other channels, like mail."
Taylor says: "When dealing with customers on the phone, small businesses should ask if it's OK to call again, to get consent.”
He sees the need for "a big communication campaign to educate the public. People think that they won't get any calls if they register.”
And, he adds, there should be a "a transition period where complaints are registered, but no fines are levied as we go through the growing pains."
Stone says businesses aren't the only ones that will potentially suffer from the legislation. Consumers who opt to be on the do-not-call list "may miss out on stuff - for example, having their driveway resurfaced. What they gain in no intrusion, they may lose in choice, competition and knowledge of new products and services. Consumers need to think about this before they opt into the list."
(Anastasia MacLean can be reached at maclean@businessedge.ca)
