Rebates

“Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product.  Refunds are normally paid in the form of cash or a cheque.  For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.  Rebates can be beneficial to both consumers and businesses.  For consumers, rebates can result in lower effective prices.  For businesses, rebates provide a flexible tool that may increase the volume of sales.  However, when rebates are not promoted or administered correctly, consumers may ultimately pay more than intended, and competitors can be unfairly disadvantaged.  There are two types of rebates: Instant rebates – Consumers receive the rebate at the time of purchase.  The rebate is generally available to anyone who purchases the product, without further condition; Mail-in rebates – Consumers apply for the rebate after the purchase, by mail-in application, online or by other means.  ‘Mail-in rebate’ includes mail-in, Internet and other delayed- payment rebates.  Various market participants may be involved in promoting and administering rebates.”

(Competition Bureau, Enforcement Guidelines,
Consumer Rebate Promotions)

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“True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

(Competition Bureau, “Are You Getting the Real Deal?
Understand Rebate Promotions Before You Buy”)

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REBATES

In September, 2009, the Competition Bureau issued Enforcement Guidelines on Consumer Rebate Promotions (the “Rebate Guidelines”).

The Rebate Guidelines, which originated, in part, from the Bureau’s concern with the use of deceptive mail-in rebates, set out the Bureau’s approach to interpreting the false or misleading representations provisions of the Competition Act, Consumer Packaging and Labelling Act and Textile Labelling Act in the area of consumer rebate promotions.

Definition of Rebate

They define consumer rebates as:

“Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product.  Refunds are normally paid in the form of cash or a cheque.  For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.”

Potential Issues

The Rebate Guidelines set out five examples of when consumer rebate promotions may violate the criminal or civil misleading advertising provisions of the Competition Act (sections 52 or 74.01) as follows: (i) inadequate disclosure of rebate conditions, limitations or exclusions; (ii) rebates disguised as the sale price or regular price; (iii) mail-in rebates disguised as instant rebates (i.e., available at the time of purchase); (iv) discounts on future purchases disguised as rebates; and (v) unfulfilled mail-in rebates.

Best Practices

The Rebate Guidelines set out the following best practices for rebate offers: (i) prominently and clearly disclose all conditions, limitations or exclusions that are inconsistent with consumers’ general impression, all in a manner that is likely to come to their attention; (ii) show the price consumers will pay at the time of purchase; (iii) clearly indicate the amount of the rebate that may apply; (iv) clearly identify the type of rebate offered (i.e., whether mail-in or instant rebate); and (v) clearly explain, in the case of a mail-in rebate, that if the after-rebate price is stated, this price is subject to conditions, and ensure that this information is prominently disclosed in a manner that is likely to come to consumers’ attention.

Over the past few years, the Bureau has also generally advised consumers (which is helpful for advertisers to understand the Bureau’s key concerns) to determine whether: there is a deadline to apply or an expiry for the rebate; they must buy another product to qualify; they need to provide more than just a receipt to receive a rebate (e.g., a UPC code); there is any limit on the number of rebates per household; there are any restrictions on geographic location and/or mailing address (such as a rural address) that may affect eligibility; a rebate is only valid if a purchase is made at certain retailers; or there are any other limitations or conditions that may affect eligibility.

Advisory Opinions

The Bureau also reminds advertisers in its Rebate Guidelines that binding advisory opinions are available under the Competition Act, including for interpretation of the application of the misleading advertising provisions to rebate promotions.

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SERVICES AND CONTACT

I help clients practically navigate Canada’s advertising and marketing laws and offer Canadian advertising law services in relation to print, online, new media, social media and e-mail marketing.

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