Prepaid Calling Cards - Marketing Representations

A long distance prepaid calling card company sought an advisory opinion in June 2004 for guidance on the application of the Competition Act to the proposed marketing representations and promotional plans that the company proposed to make in its prepaid telephone calling card products.

The Competition Bureau examined the proposal under both the criminal and civil misleading representations and deceptive marketing practices provisions of the Act, sections 74.01(1)(a) and 52(1). Based on its understanding of the facts, the Bureau determined that for the proposed material relating to two calling cards, they were unable to conclude whether the Commissioner has sufficient grounds to commence an inquiry because the information relating to these cards did not provide absolute clarity on how charges must be applied to these cards.

With respect to the promotional materials for the other three cards, the Bureau was of the opinion that the representations contained in these cards would provide the Commissioner with sufficient grounds to commence an inquiry. The material provided by the company contained fine print disclosures that contradict the general impression created for the advertised rates as well as the potential available minutes for each card denomination. The Bureau was also of the opinion that certain language used in the promotional materials for these cards was ambiguous, which could mislead consumers in their choice of prepaid telephone calling card products.  Finally, it appeared that in some instances it was impossible to achieve the long distance minutes represented, raising serious concern that the representations would be found false or misleading.

For the above reasons, the Bureau provided the company the opinion on December 24, 2004, that the promotional material proposed for three of the calling cards would give the Commissioner grounds to commence an inquiry under the misleading representations and deceptive marketing practices provisions of the Act.

(3079224)