Genuine or fake sales? Review of regulatory frameworks in Canada and abroad and data collection study in the Canadian retail market

Author

Jean-Francois Vinet

Organization

Option consommateurs

Published

2011

Summary

In a market economy marked by fierce competition, one way to attract customers is through sales. However, the hunger for profit sometimes translates into dishonest practices. Indeed, certain retailers may regularly advertise the same items as being on sale. In other word, they advertise false discounts.

This misleading trade practice is not new. In fact, it is regulated by the governments of most economically advanced countries, for two main reasons. First, the practice harms competition because dishonest retailers attract custom at the expense of honest ones. Second, the practice harms consumers as they tend to shop around less when an item is advertised on sale, even when the discount is a fake. The practice of advertising with the use of false discounts is so damaging to the economy that it has been designated a criminal offence in Canada.

In light of our data collection conducted every two weeks over a one-year period in 16 stores in the Montreal and Ottawa regions, we have noted several business practices that appear to us as misleading. Advertising the same items on sale over very long periods seems to be the practice the most commonly found in our data collection. The authorities have an obligation to ensure that Canada’s consumer protection laws are enforced more strictly.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

Contact information

Source: Consumer Policy Research Database