Ontario Energy Board Staff Issues Bulletin on Verification of Internet Enrollments, Network Marketing Requirements

Staff of the Ontario Energy Board has issued a bulletin pertaining to (i) requirements that apply in the context of "network" or "multi-level" activities; and (ii) the status of internet transactions effected while a salesperson is present, whether occurring in the context of "network" or "multi-level" activities or otherwise.

The views expressed in the bulletin are solely those of Board Staff and are not binding on the Board.

Staff noted that Section 2 of the Energy Consumer Protection Act of 2010 defines a salesperson as a person who, for the purpose of effecting sales of gas or electricity or entering into agency agreements with consumers, conducts marketing or retailing on behalf of a supplier or makes one or more representations to one or more consumers on behalf of a supplier, whether as an employee of the supplier or not. Furthermore, the Codes define the term "salesperson" by reference to section 2 of the ECPA, and for greater certainty add that a salesperson includes any person that offers or negotiates the renewal or extension of a contract on behalf of a supplier.

"Based on the foregoing, it is Board staff's view that a supplier using a multi-level marketing business model is engaging in retailing or marketing, and that persons acting on the supplier's behalf are 'salespersons' within the meaning of the ECPA and the Codes. Therefore, all legal and regulatory requirements pertaining to the conduct of salespersons apply to such persons. This includes: (i) the requirement to offer a business card and to wear an identification badge as required by and in accordance with section 2 of the Codes and sections 5 and 6, respectively, of the Licence Regulation; and (ii) the requirement to have successfully completed training before retailing or marketing to a consumer as required by and in accordance with section 5 of the Codes and section 7 of the Licence Regulation," Staff said.

Staff has also become aware of a sales approach whereby a consumer completes an internet-based contracting process while the supplier's salesperson is present. Staff is aware that this approach has been used in the context of the multi-level business model, but it may also be used in other circumstances. Staff's views expressed below are therefore not limited to the multi-level business model context.

Staff discussed that while the ECPA waives the contract verification requirement under certain circumstances, in such instances, "the consumer is entering into a contract having had the opportunity to consider the matter at his or her own leisure, absent any pressure or influence that may arise by virtue of the presence of a salesperson or of the expectation of a salesperson returning imminently after the consumer completes the transaction."

"Board staff believes that, where a consumer is completing an internet contracting transaction in the presence of a salesperson, the transaction is properly treated as an 'in person' transaction by virtue of the presence of the supplier's salesperson at the relevant time. To be compliant, the transaction must therefore meet all of the requirements applicable to 'in person' transactions, including verification under section 15 of the ECPA and in relation to the manner in which the contract is to be provided to the consumer and in which the consumer acknowledges receipt of the contract (section 10(1) of the ECPA Regulation)."

"Board staff emphasizes that this will be the case even if the supplier's salesperson absents himself or herself from the premises while the consumer is completing the internet transaction, if the salesperson indicates that he or she will return to the premises on or imminently after completion of the transaction. Where, however, the salesperson leaves the premises, makes no representation about returning, and is not present when the consumer completes the internet transaction, then the requirements pertaining to internet contracts will apply."