Laws Available to Deter and Prosecute
Jurisdictional Issues Which Hamper Law Enforcement Efforts
Telemarketing fraud has become a serious and expanding problem
on both sides of the Canada - U.S. border. No single government,
organization or agency in either country, working alone, can solve
Thousands of North Americans are losing money every day to scam
artists operating beyond our respective boundaries. In many cases,
these international crooks are sitting across the border in Canada
- just far enough away from U.S. laws and jurisdiction to reduce
the chances that American victims will ever recover their money.
In almost as many cases, the opposite holds true as Canadian victims
are being called by American hustlers.
U.S. law enforcement agents say that con artists may be setting
up shop in neighboring countries to avoid prosecution under the
Telemarketing Sales Rule, which sets operating standards for legitimate
telemarketers, spells out stiff penalties for fraudulent ones,
and for the first time, gives state law enforcement agents the
power to prosecute across state lines.
Victims often assume they are dealing within their own country
because long-distance con artists often give a "mail drop" address
in a nearby city. In addition, Canada, the U.S. and most Caribbean
island nations use telephone area codes that are integrated and
accessible by direct dialing without obvious foreign "country-codes."
Even within the respective countries, criminals in one state or
province will use that location as a base to victimize citizens
of other states or provinces. They rely on jurisdictional barriers
as well as geographical distance to avoid prosecution. If the victims
were located in the same state or province as the boiler rooms,
prosecution would be much easier.
Out-of-state cons know that sometimes elderly victims may die
or become incapacitated before they can testify, particularly when
the accused must be extradited before they can be prosecuted. Often
the aged victims are physically unable to travel to testify at
trials held in the jurisdictions of the offenders or other victims.
An effective campaign will require cooperation in developing strategies
and options and in putting them into effect. With a sound strategy
and the right combination of tools and tactics, the United States
and Canada can cooperate to meet the increasingly international
challenge of this serious white-collar crime.
Mutual Assistance At Odds With Information Sharing Restrictions
Mutual Assistance Treaties are limited to criminal matters and
because they lack criminal authority, the FTC cannot use the U.S.-Canada
MLAT to obtain information from Canadian law enforcement agencies
about fraud schemes operating in Canada.
Further, both U.S. and Canadian law impose certain limits on information
sharing. While there are substantive reasons why the law protects
the confidentiality of certain information, these protections may
in some cases hinder cross-border fraud prosecutions.
On the Canadian side, Section 29 of the Canadian Competition Act,
prohibits the FTC counterpart, the Competition Bureau of Industry
Canada, from communicating to any person other than a Canadian
law enforcement agency or for the purposes of the administration
or enforcement of the Act.
On the U.S. side, the nondisclosure provisions of the FTC Act
also prevent them from sharing certain categories of investigative
information with their foreign counterparts. The breadth of the
FTC’s information-sharing constraints hampers their ability
to coordinate cross-border law enforcement.
Although existing cross-border agreements allow for the sharing
of some information–including, in particular, consumer complaints–there
is other information the FTC is unable to share.
The FTC must withhold the affected categories of information from
Canadian law enforcement authorities even when the same information
may be shared with domestic law enforcement agencies, and even
when sharing it would significantly advance the FTC’s own
While the FTC is unable to share significant information with
their foreign counterparts, other U.S. agencies may be able to
do so if they are covered by an MLAT similar to the U.S.-Canada
one. Even in instances when Canadian law enforcement agencies
may have authority to obtain and share information in some of these
categories with FTC staff, the FTC may not reciprocate.
Canada - US Cross-Border Co-operation
In 1997, as a result of a meeting between Prime Minister Jean
Chrétien and President Bill Clinton, a binational group
met to discuss cross-border deceptive telemarketing. They recommended
a strong co-ordination of strategies between the two countries
in terms of surveillance, education and investigations.
Two subgroups co-chaired by the Competition Bureau were created
to address specific issues, namely Co-operative Strategy and Education.
Canadian and US authorities have since worked jointly to investigate
telemarketing fraud through interagency task forces, one led by
the RCMP in Montreal, called Project Colt and another, managed
by the RCMP in Vancouver, called Project Emptor. A third interagency
effort, although not a formal task force, operates in the Greater
Toronto Area, under the leadership of the Ontario Attorney General's
The task forces are focal points for both national anti-telemarketing
enforcement and Canada-U.S. enforcement cooperation.
The Binational Telemarketing Fraud Group has become a permanent
sub-group of the Canada-U.S. Cross Border Crime Forum.
Following are the key initial recommendations of the Working
||that the governments and agencies
of both countries clearly identify telemarketing fraud as a
||that both countries explore the
use of remote testimony in criminal proceedings, by video-teleconferencing
or similar means, to reduce costs;
||Note: New legislation permits
the use of video and audio-link technology for the
purpose of providing testimony from witnesses located
in Canada or abroad.
||that the legal and technical potential
and limits of electronic surveillance as a tool against telemarketing
fraud be explored further;
||Note: Bill C-20 extended
the Criminal Code wiretap provisions to authorize
electronic surveillance where telemarketing offences
||that both governments examine the
regulation of telephone services and options for denying telephone
services to telemarketing offenders;
||Note: Following the passage
of Bill C-20, it is now possible to obtain orders concerning
telephone service providers in order to deny service
to a criminal telemarketer who has been convicted.
||that the scope of the existing
mutual legal assistance arrangements be considered to determine
whether they might be expanded to deal more effectively with
||Bill C-40 amended the Mutual
Legal Assistance in Criminal Matters Act by providing
that an order may be obtained from a Canadian judge
(based on a foreign request) to compel a witness
to provide a statement by audio or video-link.
||that both governments clarify the
circumstances under which mutual legal assistance requests
are needed, by providing information and advice to the agencies
||that extradition arrangements be
examined, and if possible modified, to facilitate and accelerate
extradition in telemarketing fraud cases;
||Note: A new Extradition
Act which came into force in June 1999 simplifies
and expands Canada’s capacity to extradite.
||Bill C-40, in amending
the Extradition Act, relaxed the evidentiary
burden by permitting the extradition judge to receive
as evidence a certified "record of the case" rather
than the previously required first-person non-hearsay
affidavits from all of the victims and other witnesses.
||that federal deportation laws which
might apply to foreign nationals engaging in telemarketing
fraud be reviewed, and that enforcement agencies be given information
about when deportation may be an option;
||that research be conducted into
offenders, victims and other aspects of telemarketing fraud
to create effective educational materials and strategies to
||that governments and agencies cooperate
as closely as possible in developing, maintaining and disseminating
educational materials, and in coordinating education and prevention
||that strategies to control telemarketing
fraud be coordinated between the United States and Canada at
the agency, regional and national levels;
||that an ongoing binational working
group serve as an overall coordinator and deal with national
and binational telemarketing fraud issues as they arise;
||that regional task-forces be encouraged
to cooperate across the international border to the maximum
extent possible; and
||that, to further coordination,
governments and agencies examine privacy and other laws relevant
to cross-border shared access information systems with a view
to expanding access to such systems to the maximum extent possible.
||Note: Recent agreements
between the RCMP and the U.S. law enforcement agencies
provide reciprocal direct access to each other’s
11/01/02 FTC Chairman Timothy J. Muris presented the FTC's new
Five-Point Plan for attacking cross-border fraud and highlighted
the complementarities of consumer protection and competition policies.
Speaking before the Fordham Corporate Law Institute's Twenty-Ninth
Annual Conference on International Antitrust Law and Policy in
New York, Muris outlined that under the Five-Point Plan, the FTC
||Advocate adoption of an OECD Recommendation
on Cross-Border Fraud;
||Seek legislative changes to improve
the FTC's ability to fight cross-border fraud;
||Hold a workshop on public/private
sector cooperation to combat cross-border fraud;
||Enter into new multilateral and
bilateral agreements, and strengthen existing arrangements,
to combat cross-border fraud through cooperation and coordinated
enforcement activities; and
||Provide targeted technical assistance
to developing countries.
Muris suggested that efforts to
promote cooperation and convergence in consumer protection could
draw upon the international hard-core cartel enforcement experience,
and that the convergence process could begin with a concerted
attack on international consumer fraud.
FraudLaw.org- The site
offers consumers introductory treatment of financial fraud matters
including a collection of laws, court decisions, articles, news,
and opinions. The focus is on common law fraud, securities fraud,
consumer protection fraud, loan and lending violations and other
statutory unlawful business practices.