Archive for the 'Advertising' Category
The U.S. Federal Trade Commission has announced that it has filed a $450 million internet fraud civil suit against an Alberta online operator.
According to the FTC, Jesse Willms, an online operator with ten marketing companies, has:
“… raked in more than $450 million from consumers in the United States, Canada, the United Kingdom, Australia, and New Zealand by luring them into ‘free’ or ‘risk-free’ offers, and then charging them for products and services they did not want or agree to purchase. … The defendants used the lure of a ‘free’ offer to open an illegal pipeline to consumers’ credit card and bank accounts.” See: FTC Charges Online Marketers with Scamming Consumers out of Hundreds of Millions of Dollars with “Free” Trial Offers.
The FTC’s complaint alleges, among other things, that Willms and the companies he controls:
– Used deceptive tactics in offering “free trials” for various online products, including acai berry weight-loss pills, teeth whiteners and health supplements.
– Obtained consumers’ credit or debit card account numbers, by enticing them with “bogus ‘free’ or ‘risk-free’ trial offers that supposedly required only small shipping and handling fees, and also promised phony ‘bonus’ offers just for signing up” (and were charged for trial and bonus products plus recurring monthly fees).
– Made false claims about the total cost of products, recurring charges and the availability of refunds.
– Made false weight loss and cancer cure claims in relation to products.
– Provided merchant banks with false or misleading information to acquire and maintain credit and debit card processing services from the banks in light of “mounting chargeback rates and consumer complaints.”
– Concealed important terms and conditions relating to product sales.
According to the FTC, it worked closely with Canadian law enforcement officials, including the federal Competition Bureau, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud and the Edmonton Better Business Bureau.
In Canada, the federal Competition Act contains both civil and criminal provisions dealing with false or misleading representations and also governs a variety of specific forms of marketing conduct including “ordinary selling price” claims, selling above an advertised price, deceptive telemarketing, promotional contests and performance claims.
Generally speaking, the civil misleading advertising provisions of the Act prohibit representations to the public, for the purpose of promoting a product or business interest, that are false or misleading in a material respect. The criminal provisions, which are substantially similar, prohibit false or misleading representations that are made intentionally (i.e., knowingly or recklessly).
Some of the types of claims that have been of concern for Canadian courts and the Competition Bureau in the past include literally false claims, omitting key information relating to the price or terms of sale of products and false claims regarding the performance of products (product performance claims must be supported by “adequate and proper” tests before any claim is made).
As with the FTC claims, the Competition Bureau has also pursued companies for inaccurate use of the term “free” in connection with marketing claims (see: False or Misleading Representations and Deceptive Marketing Practices and Misleading Advertising Guidelines) and has also issued specific guidelines setting out its enforcement position for online marketing and advertising (see: Application of the Competition Act to Representations on the Internet).
As a result of amendments to the Act in 2009, it is also not necessary to show that a misleading claim was made to Canadian consumers or was made in a publicly accessible place. These changes were recently made to address perceived gaps in the Act and to specifically address misleading claims made in Canada targeting foreign consumers (as is alleged in this FTC case, albeit from a U.S. enforcement perspective) and claims originating in places without direct consumer contact (e.g., in the context of online marketing operations).
For copies of the FTC’s complaint and motion for injunction see:
Complaint for Permanent Injunction and Other Equitable Relief
Motion for Preliminary Injunction and Memorandum of Points and Authorities in Support
For Jessie Willms’ news release in reply to the FTC’s allegations see:
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For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Below are some of my media interviews, articles and columns:
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Quoted, Toronto Star, Competition watchdog ramps up scrutiny of digital giants.
Column, Canadian Lawyer, Should advertising regulators enforce wokeness?
Column, Canadian Lawyer, CRTC ups the CASL liability ante for directors and officers.
Quoted, CBC, Controversial anti-vaccine billboards made headlines in Toronto – so who regulates them?
Column, Canadian Lawyer, New competition bureau immunity and leniency programs alter risk-benefit analysis for applicants.
Quoted, Yahoo! Finance, After 31 years, the biggest Roll up the Rim winner
Competition Policy International (CPI), January, 2017 Blog-o-Blogs
Columnist, Canadian Lawyer (competition and advertising law topics)
Quoted, CBC Radio, competition law class action against Air Canada and WestJet
Quoted, Condo Business, Inquiry puts spotlight on procurement practices
Quoted, Canadian Lawyer, Kellogg Canada agrees to $60,000 fine for alleged anti-spam violation
Quoted, Canadian Lawyer, Competition Bureau targets trade associations
Interviewed, Law Times, on the Competition Bureau’s premium text messaging case
Quoted, Corporate Counsel, Deceptive Pricing Litigation Grows in Canada
Quoted, Canadian Lawyer, Canadians Gearing Up to Go After Spammers in 2017
Quoted, London Free Press, Six Areas of Canadian Law Every Marketers Should Know
Quoted, The Bottom Line (LexisNexis), on the landmark Ottawa bid-rigging IT trial: IT providers acquitted in bid rigging case
Included, Competition Policy International (CPI), Blog-o-Blogs (June 2015): Competition Bureau Makes Major Changes to Canadian Competition Compliance Programs
Interviewed, CBC radio (in 8 markets), on the Google abuse of dominance case in Europe and Canada
Quoted, Canadian Lawyer, Quebec company hit with $1.1 million penalty under CASL
Quoted, CBA National Magazine, Can the rideshare service find salvation in the Competition Act?
Interviewed, PaRR (Policy and Regulatory Report), Supreme Court of Canada’s decision to allow competition law plaintiffs access to Competition Bureau wiretap evidence
Quoted, Canadian Lawyer, on innovation and law: The Next Frontier
Quoted, Canadian Lawyer, Competition Bureau releases process used in reviewing recent mega retail mergers
Assistance/credit with Competition Policy International (CPI), Antitrust Chronicle: “Intersection of Antitrust and Advertising”: CPI
Interviewed – CBC TV – Advertisting law topic (forthcoming)
Interviewed, Policy and Regulatory Report (PaRR), Competition Bureau’s new Communication during Inquiries Bulletin
Interviewed, CBC, on the topic of misleading “free offer” claims
Interviewed, background, CBC, Holcim-Lafarge cement merger
Op Ed, Canadian Lawyer, The Toronto Food Truck Debate: More Competition or Legislated Cartel?
Interviewed, CBC radio, On the Coast, March 12, 2014, on the topics of “price gouging”, abuse of dominance and price regulation in Canada, link: here
Podcast, Is Your Social Media Contest Breaking The Law (TopDog Social Media)
Quoted, Canadian Lawyer, Rogers Escapes Steep Fine
Quoted, Canadian Lawyer, It’s a ‘tragedy’ but business is about the work, not the brand
Interviewed, Blacklock’s Reporter, Google search case in Canada
Quoted, Canadian Lawyer, Six months to prepare for ‘overkill’ CASL legislation
Interviewed, CBC Go Public, Contests and deceptive prize notices
Quoted, Creditcards.com, Beware “buy now, pay later” ads
Quoted, Creditcards.com, Dealing With Deceptive Credit Card Advertisements
Quoted, Law Times, Focus: Is Verizon’s Retreat a Small Victory in Losing War for Incumbents?
Quoted, Canadian Lawyer, Competition Bureau promises whistleblower protection, more transparency
Quoted, Canadian Lawyer, Competition Bureau Has No Beef With Hog Deal
Interviewed, dealReporter, implications of CNOOC/Nexen transaction, new Investment Canada SOE rules
Quoted, Global Legal Post, “Canadian Authorities Conflict Over Competition Crack-Down”
Quoted, Canadian Lawyer Magazine, Feds Get Tough on White-collar Crimes
Quoted, Lawyers Weekly, “Judge urges tougher price-fixing penalties”
Competition Policy International, Blog o’ Blogs
Competition Policy International, Blog o’ Blogs
Quoted, Financial Post, Fallout From Libor Scandal Likely to Hit Canada’s Financial Industry
Interviewed, Dave Rutherford Show, QR 77, Target’s expansion into Canada (Heritage Canada cultural review)
Interviewed, dealReporter, Maple/TMX merger
Business News Network (BNN) – Maple/TMX merger (interview)
Quoted, Globe and Mail, Report on Business, Competition Watchdog presents high hurdles for Maple
Quoted, Globe and Mail, Report on Business, “Aitken an ‘Aggressive, No Nonsense Commissioner'”
Quoted, Globe and Mail, Report on Business, High hurdles face Maple bid from Competition watchdog
Quoted, CTV News, “Competition Watchdog Presents High Hurdles for Maple”
Quoted, Fox Business, China Tells State Companies to Explore Potash Bid
Quoted, Reuters, China Tells State Companies to Explore Potash Bid
Quoted, Reuters, Analysis: China Posturing on Potash Sector Deals
Quoted, BusinessDay, China Anxious to Block Potash Deal
Quoted, REM Magazine, CREA Seeks Settlement Over MLS Policies
Quoted, Globe and Mail, Report on Business, Telus Sues Rogers Over Ad Claims
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For more information about my regulatory law services: contact
For more regulatory law updates follow me on Twitter: @CanadaAttorney
On May 24th, the European Commission announced that it had fined Suez Environment and Lyonnaise des Eaux €8 million for breaching a seal during a regulatory inspection.
In making the announcement, the Commission stated:
“Joaquín Almunia, Vice President of the Commission in charge of competition policy, said: ‘Inspections are a key tool in the fight against cartels as companies rarely voluntarily hand over evidence of anti-competitive practices. Even when a company does give evidence in return for immunity, the Commission must still prove the participation of others, the practices themselves and their duration. It is therefore important that companies do not break seals, which may be necessary when there is more than one office to inspect or a day is not enough.’
From 13 to 16 April 2010 the Commission conducted an inspection at the premises of water management companies in France, including LDE, over suspicions of anti-competitive behaviour (see MEMO/10/134). Coming back the morning of the second day, the Commission officials found that a seal had been broken at LDE’s headquarters. The Commission immediately started an investigation (see IP/10/691). LDE and Suez Environnement admitted that an LDE employee breached the seal, arguing an unintentional act
Breaches of seals are a serious infringement of competition law. The Commission however took into account the immediate and constructive cooperation of Suez Environnement and LDE, which provided more information than was its obligation, when setting the fine.
The investigation into suspected anticompetitive practices in the water and waste water markets is still on-going (see MEMO/10/134).”
Like the European Commission, the Competition Bureau has a wide range of enforcement powers available to it to investigate potential violations of competition law under the Competition Act. These include the power to obtain search warrants, document production orders, orders compelling testimony under oath and wiretaps. The Bureau is increasingly resorting to these powers, particularly in relation to its enforcement priorities that include the detection and investigation of criminal cartels and deceptive and fraudulent marketing.
The Competition Act also contains obstruction provisions, which make it a criminal offence to impede or prevent (or attempt to impede or prevent) inquiries or examinations under the Act[1] (see for example: Morgan Companies Fined $1 Million for Obstruction and Price-fixing).
As such, companies and organizations that may realistically face the prospect of a competition law investigation or search at some point – for example, companies in higher risk industries including construction, oil and gas, trade associations, etc – are well advised to adopt basic search and seizure guidelines to reduce the likelihood of breaching Canadian competition law in the event of a search.
These commonly include guidelines dealing with how to deal with Bureau officials during a search, advising company/organization personnel, the control of information and PR, inspecting the search warrant and reducing the risk of breaching the obstruction provisions of the Act which can lead to additional liability (such as by breaching sealed boxes or rooms or impeding Bureau officers during a search).
For the full news release see: Commission Fines Suez Environnement and Lyonnaise des Eaux €8 Million for the Breach of a Seal During an Inspection.
For more information about the Competition Bureau’s enforcement powers see: Competition Bureau Enforcement.
[1] Obstruction of an inquiry or examination is a criminal offence under the Act, with potential penalties, on summary conviction, of a fine up to $100,000, imprisonment for up to 2 years, or both and, on indictment, an unlimited fine (i.e., in the discretion of the court), imprisonment for up to 10 years, or both (Act, subsections 64(1), (2)). Failure to comply with sections 11 (section 11 orders) or 15 (search warrants) are also criminal offences, with potential penalties, on summary conviction, of a fine up to 100,000, imprisonment for up to 2 years, or both and, on indictment, an unlimited fine (i.e., in the discretion of the court), imprisonment for up to 2 years, or both (Act, subsections 65(1), (2)). In addition, destruction or alteration of records that are sought by the Bureau under section 11 (section 11 orders) or 15 (search warrants) is punishable, on summary conviction, by fines up to 100,000, imprisonment for up to 2 years, or both and, on indictment, by unlimited fines (i.e., in the discretion of the court), imprisonment up to 10 years, or both (Act, subsection 65(3)). The Act also provides that corporate officers, directors or agents may be liable independently of whether a company is prosecuted for a failure to comply (Act, subsection 64(4)).
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For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
January 18, 2011
The Competition Bureau has announced that it has reached a settlement with two spa retailers in relation to allegedly false energy savings claims (see: Spa Retailers Required to Stop Making False ENERGY Star Claims). According to the Bureau, the retailers had made misleading representations incorrectly conveying the impression that their hot tubs or insulation met the criteria of the ENERGY STAR Program.
December 29, 2010
Earlier this month, Canada passed its long-awaited anti-spam bill (Bill C-28 – the Fighting Internet and Wireless Spam Act) (“FISA”).
November 19, 2010
The Competition Bureau announced earlier today that it has commenced legal proceedings against Rogers to stop what, according to the Bureau, constitutes misleading advertising in connection with Rogers’ Chatr discount cell phone service.
CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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Promotional contests in Canada are largely governed by the Competition Act, the Criminal Code, privacy legislation and the common law of contract. In addition, Quebec has a separate regulatory regime governing contests and contest authority (the Régie des alcools, des courses et des jeux). Canada’s federal anti-spam legislation (CASL) also commonly applies to Canadian contests and other promotions (see below).
November 1, 2010
The Canadian Commissioner of Competition recently addressed the Canadian Bar Association Fall Competition Law Conference.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
