Misleading Advertising – Competition Bureau’s Enforcement Priorities

| 16 minutes

On February 4, 2014, Lisa Campbell, Deputy Commissioner of the Fair Business Practices Branch, and Sophie Beaulieu, Competition Law Officer, participated in a lunch seminar at McCarthy Tétrault’s Montreal office to discuss the Competition Bureau’s current enforcement priorities and recent enforcement actions in the area of misleading advertising and marketing. The following are key takeaways from their presentation.

Recognizing the growing importance of the digital economy, the Bureau continues to focus on online and mobile advertising, as well as mobile payment:

  • Through various initiatives at the national and international level, including a workshop held last fall with University of Ottawa’s Canadian Internet Policy and Public Interest Clinic, the Bureau looks at emerging online and mobile advertising technologies and trends. The Bureau monitors these developments not only to detect potential misleading claims and representations to consumers, but also to understand the role of the different parties involved (advertisers, publishers, advertising affiliates, etc.) to determine at what level it should intervene, if appropriate, to increase conformity.
  • The Bureau is concerned with deceptive online endorsements, testimonials and consumer ratings and reviews (or "astroturfing"). Contrary to the U.S. Federal Trade Commission, the Bureau has no specific guidelines on the use of endorsements and testimonials in advertising, but it has indicated that reviews and endorsements should disclose when the author has a connection with the advertiser or advertised product. For example, reviews by employees of the advertiser or of a third-party hired by the advertiser should appropriately disclose such connection.

The Bureau is preparing for the enforcement of the new provisions of the Competition Act introduced under Canada’s Anti-Spam Legislation (« CASL ») that will come into force on July 1, 2014. These new provisions specifically prohibit, under both civil and criminal provisions, false or misleading representations in electronic messages, including false or misleading sender or subject matter information, or in the locator (e.g. URL, metadata). Violation of the new criminal provisions will be punishable by a fine at the discretion of the court and/or imprisonment of up to 14 years. Under the new civil provisions, the Bureau will be able to apply to a court for an order to stop the conduct, publish corrective notices, refund consumers and impose an administrative monetary penalty of up to $10 million.

Misleading representations related to prices is another priority area for the Bureau. More specifically, the Bureau is concerned with "drip pricing" practices, which refer to advertising part of a product’s price and imposing additional fees and surcharges later in the buying process. The Bureau is currently investigating Avis Budget with respect to alleged improper disclosure of fees and surcharges associated with online car rentals.

Finally, the Bureau will continue to take action against inappropriate fine-print disclaimers. The Bureau has consistently taken the position that while fine print disclaimers may clarify ambiguities or provide reasonable qualifications, they should not contradict the literal meaning and general impression conveyed by the overall advertisement. More specifically, the Bureau has taken enforcement action in cases where it considered that advertising a price to consumers and disclosing additional mandatory costs in accompanying fine-print disclaimers was misleading.

The Bureau will continue to seek administrative monetary penalties in civil misleading advertising cases, and has sought the $10 million maximum in recent cases. In light of the Bureau’s recent aggressive enforcement approach, care should be taken to ensure that the general impression conveyed by advertisements and claims, especially in the online and mobile environment and with respect to prices, is not false or misleading.