July 9, 2013

Earlier today, the Competition Bureau announced that it was commencing proceedings in Ontario Superior Court against Leon’s and The Brick, two of Canada’s largest furniture and home appliance retailers, for making allegedly deceptive “Buy Now, Pay Later” promotional claims (see: Competition Bureau Takes Action Against Leon’s and The Brick for Deceptive ‘Buy Now, Pay Later’ Promotions).

While none of the allegations have been proven, according to the Bureau, while the furniture retailers made “buy now, pay later” claims, customers were in fact required to pay up-front fees with the retailers “[burying] details of additional up-front fees in fine print, which led to the final price of the product being higher than the advertised price for consumers who used a deferred payment option.”

In making the announcement, Canada’s new Commissioner of Competition John Pecman said:

“Canadian consumers must receive clear and accurate information about what must be paid at the time of purchase, and what the actual cost of a particular item is if they use a deferred payment option. … Retailers cannot hide details of additional fees in lengthy disclaimers.”

This latest advertising challenge brought by the Bureau shows several current Bureau priorities including clear up-front disclosure of price and enforcement against ineffective (or arguably ineffective) disclaimers, which may raise issues where headline claims are contradicted, that are ineffective in altering the false or misleading general impression of headline claims, are not effectively brought to the attention of consumers or that include technical or unclear language to average consumers.

This case, as well as other recent similar advertising enforcement by the Bureau, means that retailers that want to reduce risk should consider the following: taking steps to ensure that pricing claims are accurate (and fees are clearly and fully disclosed up-front); that headline promotional claims can stand on their own – both in terms of literal accuracy and general impression; and that disclaimers, if used, add to and clarify primary claims (not contradict them) and are clearly and effectively brought to the attention of consumers, including any significant conditions or limitations.

This latest Bureau advertising challenge in the retail sector is as well another reminder to advertisers to consider the overall general impression of all key advertising claims – what I sometimes call the “10-15 second test” for consumers.

For more about Canadian misleading advertising law see: Misleading Advertising.


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