August 31, 2010
On August 31st, the Bureau announced that a U.S. paint products company had agreed to stop engaging in allegedly misleading made in Canada and environmental claims.
According to the Bureau, the claims on its painting kits raised issues under the false or misleading representations and deceptive marketing practices provisions of the Competition Act, as well as potential issues under the Consumer Packaging and Labelling Act. In particular, the company claimed that its product was composed of biodegradable material. The company also displayed maple leaves on product labels that, according to the Bureau, created a false impression that the product was manufactured in Canada.
Under the terms of the settlement with the Bureau, the company has agreed to instruct its Canadian retailer to remove the product from Canadian store shelves, replace it with new kits that do not make the allegedly false environmental or “made in Canada” claims and remove the allegedly false claims from products sold in Canada. The company was also able, evidently, to negotiate confidentiality with the Bureau, which did not disclose the company’s name in its news release.
The false or misleading representations provisions of the Competition Act (generally known as the “misleading advertising provisions”) prohibit representations to the public to promote a product or any business interest that are false or misleading in a material respect.
In addition to the general misleading advertising provisions, the Act also contains other criminal and civil provisions prohibiting or regulating specific types of marketing practices including deceptive telemarketing, deceptive prize notices, double ticketing, multi-level marketing, pyramid selling schemes, representations that are not based on an adequate and proper test, bait and switch selling and promotional contests.
While a variety of resolutions are possible where the misleading advertising provisions of the Competition Act have been violated, the potential penalties can be severe and include fines of up to $750,000 (for individuals) and $10 million (for corporations).
For more see the Bureau’s News Release: Paint Products Company Agrees to End Alleged Misleading Environmental and Made in Canada Claims and CB in Brief: CB in Brief: The Competition Bureau’s Month in Review, August 2010.
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