Unfair or Deceptive Practices

From Clicklaw Wikibooks
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 unfair or deceptive practices by sellers.

Client problems

  • Salesperson made promises about the quality of a product, such as a car, which turned out not to be true, and now the client wants a remedy.

  • Client thinks they were treated unfairly by a business and that the business took advantage of them, and now the client wants a remedy.

  • A number of promises were made to a client about the quality of a product, but the promises were not put in a written sales contract, and now the salesperson says that the promises are not binding.


Summary of the law

Image via www.istockphoto.com

Trade practices legislation for the protection of consumers was first enacted in the 1970s as the Trade Practices Act. Its successor statute, the Business Practices and Consumer Protection Act, was enacted in 2004. Both statutes build on the law of contract, but try to cover situations where the common-law principles of contract law are insufficient to give a consumer a remedy.

Part 2 of the Business Practices and Consumer Protection Act, Unfair Practices, applies to consumer transactions. These are defined as the supply of goods, services, or real property by a supplier to a consumer for primarily personal, family, or household use. Consumer transactions also include solicitations, offers, advertisements, or promotions by a supplier for sales and services to a consumer. This part of the Act extends protections in three main areas:

  • misrepresentation (which the Act calls deceptive acts or practices)

  • unconscionability

  • unsolicited goods or services

Deceptive acts or practices

Section 4 of the Business Practices and Consumer Protection Act generally defines a deceptive act or practice as any form of representation capable of deceiving or misleading a person. The case law has interpreted this to mean an action that tends to lead the consumer to make an error of judgment. Section 4 also lists specific actions deemed to be deceptive, including misrepresentations (that is, untrue representations) about the quality of a product, prior history of a particular product (for example, a car), the price advantage the seller is offering, or the availability of an item.

Section 4(3)(c)(iii) says it is a deceptive practice to give an estimate that is “materially less” than the price eventually determined or demanded by the supplier if the consumer has not expressly consented to the higher price before the goods or services are supplied.

A number of reported court decisions have found some types of conduct to be deceptive practices under previous legislation (the Trade Practices Act). Most of the decisions involved representations by salespeople about the quality of consumer products, particularly cars.

Findlay v. Couldwell was an early case decided under the old Trade Practices Act. A salesperson for a used car dealership represented one of the used cars as a vehicle in good running order. Five days after purchase, the engine blew up while the buyer was driving on a highway. The court held that the representation of the car’s quality was a “deceptive act or practice” within the meaning of the Trade Practices Act. (The court also held that the buyer was entitled to succeed in common law on the basis that there had been a fundamental breach of the sales contract; the dealer was not entitled to rely on an “as is — where is” term in the sales contract to exempt itself from liability.)

In Steiner v. Personal Motors Ltd., the court found that a salesperson had made statements “grossly exaggerating” the condition of a car, and that the statements were deceptive within the meaning of the Trade Practices Act. The buyer was awarded exemplary damages of $500 as well as specific and general damages. Rushak v. Henneken is a 1991 Court of Appeal decision dealing with representations made about a car that summarizes the relevant legal principles and case law. In Casillan v. 565204 B.C. Ltd., the BC Supreme Court applied the principles in Rushak v. Henneken and found that a used car salesperson engaged in a deceptive act or practice under the Business Practices and Consumer Protection Act when a salesperson told a potential buyer that the powertrain of a car was under warranty without confirming if that was in fact the case. In fact, there was no powertrain warranty and the car engine needed to be replaced within five months of purchase, due to a major powertrain malfunction. The court awarded the buyer statutory damages of $13,512.61 under section 171 of the Business Practices and Consumer Protection Act, which was the cost of the engine replacement. In Simpsons-Sears Limited v. Paddock, the court awarded damages under the Trade Practices Act where a lower quality of roofing shingle than was represented in the sales contract was used.

Unconscionability

The Business Practices and Consumer Protection Act does not specifically define unconscionable acts or practices (but see the explanation in the section on Contract Defences), but it does list some of the circumstances that a court should consider when making a decision on unconscionability, including the following:

  • Was undue pressure put on the consumer?

  • Was the consumer taken advantage of because of physical or mental infirmity, ignorance, illiteracy, age or inability to understand anything related to the transaction?

  • Was the price charged to the consumer grossly above usual market prices?

  • At the time of the transaction, was there no reasonable probability that the consumer would ever be able to make full payment of the total price?

  • Were the terms of the transaction so harsh or adverse to the consumer as to be inequitable?


In Pacific Finance Acceptance Co. Ltd. v. Turgeon, the court found the conduct of the plaintiff-creditor unconscionable under the Trade Practices Act. In that case, the consumer-borrowers were initially given three months’ relief from loan payments, but were later pressured into refinancing at a higher interest rate under threat of legal action to claim the three payments. The court dismissed the creditor’s claim for the balance remaining on the outstanding loan agreement.

Unsolicited goods or services

The Business Practices and Consumer Protection Act states that consumers have no legal obligation to a supplier for goods or services that they have not requested unless they acknowledge in writing an intention to accept the goods or services. (See the section on Unsolicited Goods and Services.)

Remedies

Significantly, the Business Practices and Consumer Protection Act empowers both the consumer and Consumer Protection BC to seek a remedy for deceptive or unconscionable practices. This allows for the following possibilities:

  • A consumer can bring a civil action in Small Claims Court or Supreme Court under the Act.

  • Consumer Protection BC can bring a civil action (and take other administrative steps) against the seller on behalf of one or more consumers.

  • The Crown can prosecute a seller that has contravened the Act.


Consumer remedies

Section 171 of the Business Practices and Consumer Protection Act allows a consumer to bring an action for damages arising from a contravention of the Act, including a deceptive or unconscionable practice. If an unconscionable act or practice has occurred in a consumer transaction, section 10(1) provides that the transaction is not binding on the consumer. In effect, a consumer can use the Act either to bring an action or to defend against a claim by a seller.

One particular advantage for consumers bringing an action under the Act is the admissibility of parole evidence. In essence, this rule says that where there is a written contract that appears to contain all of the terms agreed to between the parties, the courts usually will not take notice of unwritten statements (for example, verbal promises or representations) that go beyond or contradict the terms of the written agreement.

Historically, this rule was a problem for consumers because most written consumer contracts had a clause specifically saying the agreement stood for the entire agreement, and there were to be no other representations or promises made between the parties. If a consumer tried to say in court that a salesperson made a verbal promise or representation about something they bought, and the promise or representation turned out not to be true, only in very limited situations would the court admit the consumer’s testimony about the verbal promise as part of the court case.

Section 187 of the Business Practices and Consumer Protection Act says that in any proceeding involving a consumer transaction (as defined under the Act), the parole evidence rule does not exclude or limit the admissibility of evidence relating to the understanding of the parties to the agreement, or to a particular term of it. The equivalent section in the Trade Practices Act was applied in the Findlay case, which is discussed above.

As well, Part 8 of the Business Practices and Consumer Protection Act provides for the establishment of compensation funds to provide compensation to consumer victims of deceptive or unconscionable acts or practices or other contraventions of the Act. (See also the section on travel services.)

Remedies available to Consumer Protection BC

In addition to the right to bring a court action against an offending seller, the Business Practices and Consumer Protection Act provides for a number of remedies that Consumer Protection BC may take on behalf of consumers. Consumer Protection BC may:

  • conduct an inspection

  • obtain an undertaking from a seller

  • make a compliance order

  • make a direct sales prohibition order (a direct sale is one made somewhere other than at the seller’s usual place of business, such as a door-to-door sale)

  • make an order freezing the property of a person under inspection 

  • impose administrative penalties of up to $5,000 for individuals and up to $50,000 for corporations 


Prosecutions

The Business Practices and Consumer Protection Act says it is an offence to contravene the Act. This means that sellers can be prosecuted in the criminal courts for deceptive or unconscionable practices. Where there is a prosecution and a conviction, a judge can, in addition to imposing fines or jail, order the seller to compensate a consumer for losses suffered as a result of the offence.

Information gathering

Obtain full details of the particular transaction that the consumer is complaining about, including:

  • Copies of all sales documents, warranties, correspondence, advertisements, sales brochures, or other promotional materials.

  • Conversations between the consumer and salespersons or others acting on behalf of the seller, including conversations made before, during, and after the making of any contract.

  • Any attempts by the consumer to resolve the complaint, and details of any promises of compensation that may have been made by the seller.

  • The particular product or service that the consumer is complaining about.

Solving the problem

The consumer has two main options for resolving a complaint that falls under the Business Practices and Consumer Protection Act:

  • Attempt to resolve the matter directly with the seller: The usual first step is to attempt to negotiate a resolution (for example, ask for a refund or some money back to compensate for a product that has been misrepresented). The consumer may have to consider court action if a settlement cannot be negotiated.

  • Complain to Consumer Protection BC: You can ask them to pursue a remedy on behalf of the consumer, and possibly other consumers who may have been the subject of deceptive or unconscionable practices. The advantage here is that the Business Practices and Consumer Protection Act has a number of remedies under the Act only granted to Consumer Protection BC (and not to consumers in their own court action). The consumer also gets the benefit of any court actions by Consumer Protection BC without incurring legal costs.


For most routine cases, the consumer should expect to negotiate or litigate for themselves.

Related topics and materials

See the other sections on making a purchase:

See related topics:

See also People’s Law School’s pages on making a purchase.


Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada Licence Consumer and Debt Law © People's Law School is, except for the images, licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada Licence.
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