419 scam (aka Nigerian scam, West African scam or advance fee fraud).

Competition Bureau, The Little Black Book of Scams (2012): “The Nigerian scam (also called the 419 fraud) has been on the rise since the early-to-mid 1990s in Canada. Although many of these sorts of scams originated in Nigeria, similar scams have been started all over the world (particularly in other parts of West Africa and in Asia). These scams are increasingly referred to as ‘advance fee fraud’.  In the classic Nigerian scam, you receive an email or letter from a scammer asking your help to transfer a large amount of money overseas. You are then offered a share of the money if you agree to give them your bank account details to help with the transfer. They will then ask you to pay all kinds of taxes and fees before you can receive your ‘reward’. You will never be sent any of the money, and will lose the fees you paid.”

RCMP, Internet Security: “Fraud letters from Nigeria (and other African countries) is a type of scam that has been around for a number of years. Businesses, educational institutions and government departments were originally the prime targets of electronic messages bearing the promise of substantial amounts of money from alleged government or company officials in Nigeria. The general public is now also targeted, and thousands of people like you receive similar e-mail messages in their personal mail boxes. In some cases, con artists even send stolen or forged cheques to their victims. This scam can also be done by phone and from many countries. In addition to money you can be asked for confidential information against the promise of profits.”

Joewein.de LLC: “The so-called ‘419’ scam (aka ‘Nigeria scam’ or ‘West African’ scam) is a type of fraud named after an article of the Nigerian penal code under which it is prosecuted. It is also known as ‘Advance Fee Fraud’ because the common principle of all the scam format is to get the victim to send cash (or other items of value) upfront by promising them a large amount of money that they would receive later if they cooperate. In almost all cases, the criminals receive money using Western Union and MoneyGram, instant wire transfer services with which the recipient can’t be traced once the money has been picked up. These services should never be used with people you only know by email or telephone!  Typically, victims of the scam are promised a lottery win or a large sum of money sitting in a bank account or in a deposit box at a security company. Often the storyline involves a family member of a former member of government of an African country, a ministerial official, an orphan or widow of a rich businessman, etc. Variants of the plot involving the Philippines, Taiwan, China, Hong Kong, Korea, Iraq, Kuwait, UAE, Mauritius, etc. are also known. Some emails include pictures of boxes stuffed with dollar bills, scans of fake passports, bank or government documents and pictures of supposedly the sender.”

Facial recognition technology.

A technology used for targeted marketing.

U.S. Federal Trade Commission, Report, Facing Facts: Best Practices for Common Uses of Facial Recognition Technologies (October, 2012): “In the 2002 film Minority Report, Steven Spielberg imagined a world in which companies use biometric technology to identify us and serve us targeted ads.  Ten years later, that vision is coming closer to reality. Having overcome the high costs and poor accuracy that once stunted its growth, one form of biometric technology – facial recognition – is quickly moving out of the realm of science fiction and into the commercial marketplace.  Today, companies are deploying facial recognition technologies in a wide array of contexts, reflecting a spectrum of increasing technological sophistication. At the simplest level, the technology can be used for facial detection; that is, merely to detect and locate a face in a photo. Current uses of facial detection include refining search engine results to include only those results that contain a face; locating faces in images in order to blur them; ensuring that the frame for a video chat feed actually includes a face; or developing virtual eyeglass fitting systems and virtual makeover tools that allow consumers to upload their photos online and ‘try on’ a pair of glasses or a new hairstyle.  A more refined version of facial recognition technology allows companies to assess characteristics of facial images.  For instance, companies can identify moods or emotions from facial expressions to determine a player’s engagement with a video game or a viewer’s excitement during a movie. Companies can also place cameras into digital signs to determine the demographic characteristics of a face – such as age range and gender – and deliver targeted advertisements in real-time in retail spaces.  In the most advanced application, companies can use the technology to compare individuals’ facial characteristics across different images in order to identify them. In this application, an image of an individual is matched with another image of the same individual. If the face in either of the two images is identified – that is, the name of the individual is known – then, in addition to being able to demonstrate a match between two faces, the technology can be used to identify previously anonymous faces. This is the use of facial recognition that potentially raises the most serious privacy concerns because it can identify anonymous individuals in images.  One prevalent current use of this application is to enable semi-automated photo tagging or photo organization on social networks and in photo management applications. On social networks this feature typically works by scanning new photos a user uploads against existing “tagged” photos. The social network then identifies the user’s “friends” in the new photos so the user can tag them.”

Fake news website.

Competition Bureau, news release, “Advertising on the Internet – Use of ‘Fake News Websites’”: “A recent trend in misleading Internet advertising has been to make product advertisements appear to be legitimate and reputable news websites. These sophisticated advertisements, disguised as investigative news stories seem to contain all the attributes of a legitimate news website. However, many scammers create fake news websites to promote bogus products with unfounded and misleading claims. Such advertisements may be used to promote a variety of products and services, from health products to job opportunity scams.  A typical fake news website uses deceptive testimonials and fabricated reader comments, false endorsements by celebrities, and illegitimately inserts web logos from trusted mainstream media, or popular television programs. Almost every aspect of the website is fake, with multiple hyperlinks inserted, encouraging consumers to buy, or sign up for a ‘free’ trial of a product. Affiliate marketers are using these fake news websites to manipulate consumers’ trust in legitimate news organizations.”

Fake online endorsement.

Competition Bureau, Fraud Facts 2017: “Consumers are often enticed to purchase a product or service based on reviews by social media influencers or those with a significant online presence. Unfortunately, there’s a chance that these reviews are not genuine and have in fact been paid for by a company as a marketing tactic. By not revealing their business interests and creating what seem to be authentic experiences or opinions, these influencers are misleading consumers and could be subject to action under the Competition Act.”

Fidelity discount.

OECD, Policy Roundtable, Fidelity and Bundled Rebates and Discounts (2008):  “For the purposes of this roundtable, single-product loyalty discount refers to the practice of offering discounts or rebates on all units purchased of a single-product conditioned upon the level (or share) of purchases — the discounts or rebates apply to all units of the buyer’s purchases of the product rather than just the units beyond the level (or share) of purchases needed to obtain them. These discounts are also referred to as loyalty discounts or rebates. In this paper, we use the terms ‘fidelity’ and ‘loyalty’ interchangeably and the terms ‘rebate’ and ‘discount’ interchangeably.”

OFT Draft Guidelines on Assessment of Conduct (2004): “Aris[ing] where a supplier (e.g., a manufacturer) effectively offers a customer (e.g., a wholesaler or a retailer) a discount that is conditional not on the size of the customer’s order, but on the share of the customer’s needs purchased from the supplier.”

OECD, Policy Roundtable, Loyalty and Fidelity Discounts and Rebates (2002): “… fidelity discounts are defined to be pricing structures offering lower prices in return for a buyer’s agreed or de factocommitment to source a large share of his requirements with the discounter.  Fidelity discounts could have both pro- and anticompetitive effects … It is sometimes difficult to distinguish a fidelity discount from a straightforward quantity discount.  For example, a 50 percent discount conditional on some minimum purchase quantity over a certain period of time, offered on exactly the same terms to all buyers, may or may not be a fidelity discount.  The determining factor would be whether the minimum purchase quantity corresponds to a significant number of buyers’ probable total or near total requirements in the period referred to. … Most fidelity discounts make use of what we will refer to as a ‘reference period’ in calculating the percentage discount awarded.  The reference period will typically be considerably longer than the time normally elapsing between buyers’ purchases.  For example, a taxi operator working an average of 24 days per month and purchasing 40 litres of gasoline a day, might receive a ten percent fidelity discount if it purchases more than 900 litres a month from a particular petroleum distributor.  The reference period would be one month and the taxi company’s requirements would be stated as 960 litres per month.  More formally, a buyer’s requirements are his estimated total purchases of some properly defined product (i.e. including appropriate substitutes) over the reference period used to determine eligibility for a particular fidelity discount.  Fidelity discounts can take a wider range of forms than simply a lower price or a percentage reduction. Sometimes they are offered in the form of ‘complimentary’ goods. In return for a purchase of 20 or more litres of petrol, a service station might, for example, give away a statuette belonging to a set of twenty well-known football players.  The desire to obtain a complete set could make this function like a fidelity discount, especially if the offer will be terminated in say six months. The same applies to many toys offered by breakfast cereal producers.”

Hoffman-La Roche v. Commission [1979] ECR 461: “… discounts conditional on the customer’s obtaining all or most of its requirements – whether the quantity of its purchases be large or small – from the undertaking in a dominant position.”

Field marketing.

Canadian Marketing Association, Code of Ethics and Standards of Practice:  “Field marketing is face-to-face promotion or sale of products or services to consumers.  It includes merchandising, sampling, demonstrations and events.”

First Party Targeted Ads.

One form of Internet advertising.  Office of the Privacy Commissioner of Canada, Policy Position on Online Behavioural Advertising:  “The first party with which an individual has a relationship creates a profile about an individual, and serves them advertisements based on this profile. The user is not tracked over different unrelated websites.”

Foreign Lottery Schemes.

Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Telemarketers offer victims the opportunity to “invest” in tickets in well-known foreign lotteries (e.g., Canada or Australia), or give them a ‘one in six’ chance of winning a substantial prize.  This is a common cross-border offence, since it plays upon the ignorance of victims of the rules (or even the existence) of foreign lotteries.  If offenders purport to sell real lottery chances but deceive victims about their chances of winning, it may be both a gambling offence and fraud; if real chances are sold without deception, it may still be a gambling offence.”

Fraudulent misrepresentation / tort of deceit

XY, Inc. v. International Newtech Development Incorporated, 2012 BCSC 319 (CanLII): “The tort of deceit, also known as civil fraud, is concerned with the intentional inducement of another person to rely upon a representation that the representor knows to be untrue.  The elements that make up this tort are: (1) a false representation of fact by the defendant; (2) made with the knowledge of its falsity or recklessly, i.e., not caring whether it is true or not; (3) made with the intention that the plaintiff would act on it; (4) with the intention that the plaintiff would act on it; and (5) the plaintiff suffered damages.”

Derry v. Peek (1889) 14 App. Cas. 337 (H.L.) [Combining the fourth and fifth elements]: “(1) A false representation or statement made by the defendant; (2) the statement was knowingly false; (3) the statement was made with the intention to deceive the plaintiff; and (4) the statement materially induced the plaintiff to act, resulting in damage.”

Spencer Bower, Turner and Handley, Actionable Misrepresentation (4th ed., 2000): “An action for damages for fraudulent misrepresentation at common law was an action for deceit.  The Court of Chancery exercised a concurrent jurisdiction with the Courts of Law in cases of actual fraud, and could award equitable compensation on similar, but not identical, principles, and also specific relief.  In either case a representee must allege and prove: (1) a representation; (2) that the defendant was the representor; (3) that the plaintiff was a representee; (4) inducement; (5) falsity; (6) alteration of position; (7) fraud; (8) damage.  The first six matters are common to all claims for misrepresentation … The seventh and eighth, fraud and damage, are peculiar to actions in deceit.  From the earliest times it has been recognized that the concurrence of fraud and damage is essential to a claim for damages for fraudulent misrepresentation.”


Competition Bureau, Pamphlet, False or Misleading Representations and Deceptive Marketing Practices: “Don’t increase the price of a product or service to cover the cost of a free product or service.”  Competition Bureau, Ensuring Truth in Advertising, False or Misleading Representations: “… where article A is advertised as being free with the purchase of article B, but article B is available at a discount or lesser price if the ‘free’ article is foregone, then article A is not if fact free. … Nor is it ‘free’ in a ‘two-for-one’ situation where the price of the first article is inflated to cover the cost of the second.”

U.S. Federal Trade Commission, FTC Guide Concerning Use of the Word “Free” and Similar Representations:  “Meaning of “Free” … The public understands that, except in the case of introductory offers in connection with the sale of a product or service … an offer of ‘Free’’ merchandise or service is based upon a regular price for the merchandise or service which must be purchased by consumers in order to avail themselves of that which is represented to be ‘Free’. In other words, when the purchaser is told that an article is ‘Free’ to him if another article is purchased, the word ‘Free’ indicates that he is paying nothing for that article and no more than the regular price for the other.  Thus, a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased, by the substitution of inferior merchandise or service, or otherwise.”

Future performance agreement.

Ontario Consumer Protection Act: “future performance agreement” means a consumer agreement in respect of which delivery, performance or payment in full is not made when the parties enter the agreement.”



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