“Consumers expect to pay the advertised price. We’re taking action against Cineplex because misleading tactics like drip pricing only serve to deceive and harm consumers. For years, we have urged businesses, including ticket vendors, to display the full price of their products upfront. I remind all businesses to review their pricing claims to make sure they do not mislead consumers.”
Competition Bureau, “Competition Bureau sues
Cineplex for allegedly advertising misleading ticket prices” (May 18, 2023)
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False and misleading product price claims have consistently been one of the Competition Bureau’s top enforcement priorities under Canada’s federal Competition Act.
A number of provisions of the Competition Act can apply to price related advertising.
CIVIL REVIEWABLE MATTERS
Civil sections of the Competition Act that can apply to price related advertising claims include sections 74.01 (the general civil misleading advertising provision), 74.01(2) and 74.01(3) (ordinary selling price (OSP) claims in relation to sale and discount related claims), 74.011 (civil electronic marketing related provisions), 74.04 (bait and switch selling) and 74.05 (sale above advertised price).
CRIMINAL OFFENCES
Criminal offences under the Competition Act that can apply to price related advertising claims include sections 52 (the general criminal misleading advertising provision), 52.01 (criminal electronic marketing related provisions), 52.1 (deceptive telemarketing) and 54 (double ticketing).
DRIP PRICING
In June 2022, the Competition Act was amended to expressly add drip pricing as a potential criminal offence or reviewable matter under sections 52 and 74.01 of the Competition Act. Drip pricing is where the full price of a product or service is not disclosed upfront until later in a check-out or purchasing process when additional charges are added to the purchase.
For more information, see: Drip Pricing.
POTENTIAL PENALTIES
Some of the potential penalties for violating the civil deceptive marketing practices provisions under Part VII.1 of of the Competition Act include Competition Tribunal or court orders to stop the conduct, publish a corrective notice, pay restitution to consumers and administrative monetary penalties (AMPs).
Following 2022 amendments to the Competition Act, the maximum AMPs for civil deceptive marketing increased: (i) for individuals, up to the greater of $750,000 ($1 million for each subsequent order) and three times the value of the benefit derived from the deceptive conduct if that amount can be reasonably determined; and (ii) for corporations, up to the greater of $10 million ($15 million for each subsequent order), three times the value of the benefit derived from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues.
The potential penalties for violating the general criminal misleading advertising section of the Competition Act (section 52) include, on indictment, a fine in the discretion of the court and/or imprisonment for up to 14 years and, on summary conviction, a fine of up to $200,000 and/or imprisonment for up to one year.
For more information, see: Competition Bureau Enforcement.
PROVINCIAL/TERRITORIAL
CONSUMER PROTECTION LEGISLATION
False or misleading price claims can also raise issues under provincial and territorial consumer protection legislation. For example, section 14 of Ontario’s Consumer Protection Act prohibits false, misleading or deceptive representations.
In addition, sector specific regulation or voluntary industry codes of conduct also commonly include rules against false or misleading price claims.
For example, Ad Standards’ Canadian Code of Advertising Standards, which is a voluntary industry code of conduct administered by Ad Standards in Canada, includes specific clauses in relation to deceptive price claims, price comparisons, “regular price” claims, discount claims and bait and switch advertising.
COMPETITION BUREAU ENFORCEMENT PRIORITIES
Federally, some of the price-related advertising enforcement priorities for Canada’s Competition Bureau have consistently included the following:
Literally False Product/Service Price Claims
This is where the advertised price of a product or service is literally false.
Literally false advertising claims, including false price claims, can be enforced under either the general criminal or civil misleading advertising provisions of the Competition Act (sections 52 and 74.01).
For more information, see: Misleading Advertising.
Misleading Price Claims
An advertising claim does not need to be literally false to violate the Competition Act. In this regard, the general impression test of advertising claims is relevant in addition to the literal meaning.
Misleading price claims can include, for example, “drip pricing” (under sections 52(1.3) and 74.01(1.1) of the Competition Act) where only part of a price is advertised upfront with the full price and additional fees only disclosed later in the purchase or check-out process.
Failing to adequately disclose upfront the full price of a product (or additional fees or charges) has been challenged by the Bureau in numerous cases. See, for example, here, here and here.
Also, in June 2022, the Competition Act was amended to expressly add drip-pricing as a criminal offence or civil reviewable matter under sections 52 and 74.01 of the Competition Act.
For more information, see: Misleading Advertising. See also: Drip Pricing and General Impression Test.
False or Misleading Sales Claims
False or misleading sales claims can include, for example, where “sales” are held without end or when no price reduction has been made when a sale is held.
For more information, see: Ordinary Selling Price (OSP) Claims and Sale Claims.
Misleading Ordinary Selling Price (OSP) Claims
These types of advertising claims are when an advertiser refers to their own “regular” or “ordinary” price (or similar claims) or the regular/ordinary price in the market generally without meeting the required time or volume tests set out in sections 74.01(2) and 74.01(3) of the Competition Act.
The Competition Bureau has commenced enforcement against a number of both traditional and online retailers over the past twenty-five years for allegedly failing to comply with the Competition Act’s ordinary selling price provisions, including Forzani, Suzy Shier, Hudson’s Bay, Sears, Michaels and Amazon, among others.
For more information, see: Ordinary Selling Price (OSP) Claims and Sale Claims.
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SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to anti-spam legislation (CASL), Competition Bureau complaints, the general misleading advertising provisions of the federal Competition Act, Internet, new media and social media advertising and marketing, promotional contests (sweepstakes) and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
