Misleading Advertising
| This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Alison Ward in August 2018. |
Consumers are protected under the law from misleading advertising by sellers.
Client problems
- Client has a problem involving misleading advertising, double ticketing, or “bait and switch” selling.
- Client has a problem involving pyramid selling.
Summary of the law
While most consumer and credit law is under provincial jurisdiction, a number of provisions in the federal Competition Act may help consumers, although some of these overlap with the provincial Business Practices and Consumer Protection Act. As with the provincial legislation, the relevance of the Competition Act to consumer problems is two-fold:
- A seller may be prosecuted for violations of the Competition Act.
- If there has been a violation of a consumer-related provision in the Competition Act, the consumer has a statutory cause of action to seek damages from the seller.
The following is a summary of the more important consumer protection provisions in the Competition Act.
Misleading advertising
Under section 74.01, various aspects of misleading advertising are prohibited. There is a general prohibition against anything that is misleading in a material respect. The next provision prohibits representations in the form of a statement, warranty or guarantee of the performance of a product that is not based on adequate tests. Another provision prohibits misleading warranty promises. Others deal with, and prohibit, misleading price advertising.
Double ticketing
Double ticketing is the practice of having two or more prices marked on a product. If this happens, the Competition Act requires that the product be supplied at the lower price. It is an offence to charge the higher price.
Section 74.04(2) prohibits advertising a product at a bargain price when the seller does not have the product available in reasonable quantities. This is known as “bait and switch” selling. Once at the store, the consumer discovers that what was advertised (the “bait”), is sold out. The seller tries to “switch” the consumer to buy some other (typically more expensive) item. The seller can’t do that. The seller has to stock reasonable quantities or offer the consumer a rain check.
Pyramid selling
Section 55 and section 55.1 govern pyramid selling and multi-level marketing plans. In a multi‑level marketing plan, participants earn money by supplying products to other participants or customers. Multi-level marketing plans are a legal business model for selling goods and services.
By contrast, in pyramid selling, participants earn money primarily by recruiting others and not from selling products. Pyramid selling is prohibited.
Information gathering
Obtain full details of the transaction, as well as copies of any communication the client has had with the seller.
Solving the problem
Arguably, the Competition Act has less direct relevance to most consumer complaints than provincial law (including the common law and BC statute law). The Competition Act focuses on advertising, while provincial law encompasses a broader range of contractual representations. Prohibitions against double ticketing and bait and switch selling, for example, focus on relatively narrow areas of consumer protection.
The administration of the Competition Act has been less concerned with resolving individual consumer complaints, and more concerned with prosecuting breaches of the Act and generally ensuring compliance with it. Finally, breaches of the Act often have a relatively minor impact on individual consumers, so that seeking compensation under the Act is not practical.
Keep the following situations in mind:
- If the breach of a provision in the Competition Act is particularly widespread by a seller (for example, continuously misrepresenting the availability of products), it may be appropriate for you to bring the matter to the attention of the Competition Bureau. You can make a complaint online or by telephone, fax or mail.
- Under the Act, if there is a successful prosecution of a seller, any consumer affected by the seller’s conduct may have a civil remedy against the seller for any losses suffered (see section 36).
- For problems that clients have with pyramid selling, the Competition Bureau publishes guidelines distinguishing pyramid schemes and multi-level marketing plans.
Related topics and materials
See the other sections on making a purchase:
- Sale of Goods Law
- Deposits in Consumer Transactions
- Unfair or Deceptive Practices
- Unsolicited Goods and Services
- Leases
See also the sections under contracts:
See also People’s Law School’s pages on making a purchase, the Canadian Consumer Handbook from the federal government’s Office of Consumer Affairs, and the chapter “Consumer Protection” from the manual used by the UBC Law Students’ Legal Advice Program.
By contrast, in pyramid selling, participants earn money primarily by recruiting others and not from selling products. Pyramid selling is prohibited.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 Consumer and Debt Law © People's Law School is, except for the images, licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Licence.
|