It is against the law for businesses and individuals to advertise or market goods and services to Canadians in a way that is false or misleading. False or misleading marketing practices can:
- harm consumers
- harm businesses engaging in honest practices
- negatively impact the economy
One of the objectives of the Competition Act is to deter deceptive marketing practices and to ensure consumers receive truthful information to help them make informed buying decisions.
The Act applies to anyone inside or outside of Canada who is promoting the supply or use of a product, service or any business interest through:
- printed or electronic advertisements
- written or oral presentations
- illustrations
- audio-visual promotions
Examples of conduct covered by the Competition Act
| Type of practice | Section, subsection and paragraph of the Act | Description |
|---|---|---|
| False or misleading representations | section 52 and paragraph 74.01(1)(a) | It is against the law to make materially false or misleading representations to promote a product, service or business interest. A representation is “material” if the general impression it conveys leads someone to take a particular course of action, like buying or using a product or service. A “representation” refers to any marketing material, including online and in-store advertisements, direct mail, social media messages, promotional emails, and endorsements, among other things. |
| Drip pricing | Subsection 52(1.3) and subsection 74.01(1.1) | Drip pricing involves offering a product or service at a price that is unattainable because consumers must also pay additional charges or fees to buy the product or service. Subsections 52(1.3) and 74.01(1.1) confirm that offering a price that a customer cannot actually attain because there are mandatory fixed additional (non-governmental) charges or fees is a false or misleading representation. |
| Multi-level marketing | section 55 | Multi-level marketing (MLM) is a legal business model for selling goods and services. Participants in an MLM plan earn compensation from supplying products to other participants or customers. However, it’s illegal for operators or participants in an MLM plan to make any compensation claims, unless the claims include fair and reasonable disclosure of the amount of money likely to be earned by a typical participant. |
| Pyramid selling | section 55.1 | Pyramid selling generates profits by recruiting others and not necessarily from the sale of products. It is a criminal offence to establish, operate, advertise, or promote a pyramid selling scheme. |
| Warranties and guarantees | paragraph 74.01(1)(c) | It is against the law to make a representation about the warranty or guarantee of a product if it is misleading or there is no reasonable prospect that it will be carried out. This includes any promise to replace, maintain, or repair a product, or to continue a service until it has achieved a specified result. |
| Performance claims not based on an adequate and proper tests | paragraph 74.01(1)(b) | A business who makes a claim about a product’s performance, effectiveness or length of life, must be able to prove the claim is based on an adequate and proper test. |
| Use of tests and testimonials | section 74.02 | The law prohibits the unauthorized use or the distortion of test and testimonials. |
| Double ticketing | section 54 | Double ticketing is supplying a product at a price that exceeds the lowest of two or more displayed prices. |
| Ordinary selling price | subsections 74.01(2) and (3) | A price cannot be referred to as the ordinary price when it is inflated to create the illusion of offering a better deal. |
| Bait and switch | section 74.04 | Bait and switch selling is when a product is advertised at a “bargain price” but the product is not available for sale in reasonable quantities. |
| Sale above advertised price | section 74.05 | Businesses cannot sell or rent a product at a price above its advertised price within a particular market. |
| Deceptive prize notices | section 53 | It is a criminal offence to send prize notices that give recipients the general impression that they have won (or will win) a prize but requires them to pay a fee or incur a cost to collect their prize unless they have actually won the prize and the sender makes specific disclosures and satisfies certain other requirements. |
| Promotional contests | section 74.06 | Contest organizers must: disclose the number and approximate value of prizes and information relating to the chances of winning. They cannot unduly delay the distribution of prizes, and must choose the participants and award the prizes either randomly or on the basis of skill. |
| Deceptive telemarketing | section 52.1 | In telemarketing, it is a criminal offence to fail to make certain disclosures at the beginning of each communication. It is also a criminal offence to make or allow the making of false or misleading claims to promote a product or a business interest when communicating orally over the phone or by using any form of telecommunications, including recorded messages and robocalls. |
| Representations in electronic messages and web addresses. | sections 52.01 and 74.011 | It is against the law to make false or misleading representations in the sender, subject and content of electronic messages, as well as in locator information such as URLs. |
Penalties and remedies for non-compliance
The consequences associated with engaging in deceptive marketing practices depend on which provisions of the Competition Act the conduct violates:
- Under the criminal provisions of the Act, violators can be tried in criminal court. This requires proof of each element of the offence “beyond a reasonable doubt.”
- Under the civil provisions, practices are brought before the Competition Tribunal, the Federal Court, or the superior court of a province or territory. To be found in violation requires that each element of the conduct be proven “on a balance of probabilities.”
Compliance programs
Having a credible and effective compliance program can provide benefits for businesses in dealing with the Competition Bureau to resolve a violation of one of the legislation it enforces. A compliance program can also help:
- reduce the risk of potentially illegal conduct
- protect your brand and reputation
- detect instances of potentially illegal conduct at an early stage
- identify when others might put you at risk
Commissioner’s opinions
To find out more information on written opinions under section 124.1 of the Competition Act, contact the Bureau’s Information Centre toll-free at 1-800-348-5358 or online. If a written opinion is provided by the Commissioner, a fee will apply based upon the section of the Act the proposed conduct or practice applies to. A written opinion is binding on the Commissioner as long as the facts submitted are accurate, and it remains binding if the facts on which the opinion is based remain substantially unchanged and your conduct or practice is carried out, as proposed. All fees and service standards for written opinions are set out in the Competition Bureau Fee and Service Standards Policy.
Further reading
- Written opinions
- Advertising dos and don’ts
- Enforcement guidelines:
- Compliance Bootcamp: Avoiding Deceptive Marketing
- Deceptive Marketing Practices Digest:
Get technical guidance and the Bureau’s perspective on matters of ongoing interest in advertising and marketing:- Volume 1: Online advertising, disclaimers, online reviews
- Volume 2: Performance claims, consent agreements, precious metals marking, Canadian Anti-Fraud Centre
- Volume 3: International fora, mobile phone billing, unlimited claims in telecommunications services
- Volume 4: Influencer marketing, “Made in Canada” claims, saving claims
- Volume 5: Collection of consumer data in exchange for “free” online products and services, unsubstantiated weight loss claims, unattainable prices in the car rental market
- Canada’s anti-spam law and deceptive marketing practices
- False or misleading representations: An in-depth review
- Scanner price accuracy
- Terms and conditions: Best practices for businesses
- Consumer Measures Committee Canadian Consumer Handbook
- Packaging and labelling requirements for non-food products
- Potential for immunity: Incentives for ending participation in illegal activity
- Protection for whistleblowers
- Misleading representations and deceptive marketing practices: Choice of criminal or civil track
- How we foster competition
- Competition Act: