23 March 2020
Miller Thomson LLP
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The Competition Bureau of Canada (the"Bureau") recently released the fifthvolume of its Deceptive Marketing Practices Digest. Inthis latest edition, the Bureau has again focused on issuesaffecting consumers in the online marketplace, including deceptiveprivacy practices, unsubstantiated weight loss claims and thepractice of "drip" pricing in the car rentalindustry.
Continuing its recent interest in the intersection of deceptivemarketing and privacy, the Bureau has set out its perspective onthe collection of consumer data in non-monetary transactions thatcould create a false or misleading impression. At issue inparticular are representations regarding whether consumer data willbe collected, what data will be collected, how often data will becollected, why the data is collected and the purposes for which itwill be used, whether the data will be sold to or otherwise sharedwith third-parties, whether consumer data will be retained, and howit will be maintained and deleted.
The rules relating to the advertising of non-monetarytransactions, such as the advertising of free digital products andservices, apply in the same way that they do to more traditionaladvertising. In the new digest, the Bureau re-affirms its positionthat the exchange of money or tangible products is not necessaryfor a representation to raise an issue under Canada'sCompetition Act. Representations may be false ormisleading if they lead consumers to give companies access to datathat they would not otherwise provide, or acquire digital productsor services they might not otherwise select.
Companies that produce free digital products and services mustensure they do not mislead consumers about the real cost of theirproducts or services. This cost often factors in the data that isbeing collected as well as how this data is used and maintained.Whether and how a company collects, uses, handles and sharesconsumer data has the potential to be a material factor in aconsumer's decision-making process.
We have all seen them miraculous product claims thatconsumers can get rid of unwanted fat, quickly and easily, andachieve their weight loss goals by merely using the advertisedproduct. These products continue to be on the Bureau'senforcement radar, and in the new digest, the Bureau restates thataggressive product claims require substantiation with adequate andproper testing.
As with all claims, it is important to determine the generalimpression that weight loss representations and advertisementsconvey. For example, does the claim create the general impressionthat the product will result in minor weight loss, or does itsuggest that weight loss will be substantial, or lead to asignificant transformation? The testing conducted will then need tosubstantiate those claims. With this in mind, it is not enough tohave test results that show modest weight loss if the generalimpression of the representation suggests that using the productwill yield significant results. Companies that produce andadvertise weight loss products must ensure that claims about theperformance of their products must be properly substantiated.
Following its string of consent agreements with car rentalcompanies, the Bureau has addressed its view of "drip"pricing practices in the new issue of the digest. This refers tothe practice of advertising prices that are unattainable due toadditional mandatory fees that are only disclosed later on duringcheckout. These additional costs are "dripped" on top ofthe initial advertised price.
In the Bureau's view, the advertising of unattainable pricesis misleading to consumers. Recently, the Bureau took enforcementaction against a number of car rental companies regarding pricerepresentations that were unattainable because consumers wererequired to pay additional non-optional fees. These non-optionalfees would increase the cost of the rental by 10% to 57%. Also atissue in these cases were the descriptions of these fees, which theBureau concluded gave the false impression that the charges weregovernment levies or taxes.
"Drip" pricing is not limited to the car rentalindustry. The Bureau has recently taken action against onlinesporting and entertainment ticket vendors for misleading onlineticket pricing claims.
Advertisers must be mindful of these marketing practices, asthey continue to be a high enforcement priority for the Bureau. Ifyou have any questions about the collection of consumer data innon-monetary transactions, or product claims inadvertising, reach out to Miller Thomson'sMarketing, Advertising & Product Compliance Group.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.
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Hidden Digital Costs, Unsubstantiated Weight Loss Claims, And Drip Pricing The Focus Of The Competition Bureau's Newest Deceptive Marketing Practices...
