Although advertising campaigns which use flashy representations
to grab consumers' attention might be effective, the Supreme
Court of Canada ("SCC") recently ruled that they might
also entitle those consumers to compensatory and punitive damages
against the merchant. In Richard v. Time Inc., the plaintiff
instituted an action against the defendants Time Inc. and Time
Consumer Marketing Inc. after learning that the "Official
Sweepstakes Notification" that he had received in the mail
(and which had induced him to mail back the enclosed "Reply
Coupon" in order to claim his anticipated winnings, thereby
also subscribing to Time magazine for two years) was in fact only
intended to be an invitation to participate in a sweepstakes, and
not confirmation that he had already won the sweepstakes.
The advertisement had contained several exclamatory sentences in
bold uppercase letters, whose purpose was to catch the reader's
attention by suggesting that he or she had won a cash prize of USD
$833,337. These representations were tempered by inconspicuous
conditional clauses in smaller print, to the effect that
entitlement to the prize was subject to the coupon being selected
as the winning ticket.
Suffice it to say, the plaintiff did not have the winning
ticket. The SCC agreed with the trial court's opinion that the
advertising contravened Québec's Consumer Protection Act
("CPA"), since an average consumer who is "credulous
and inexperienced and takes no more than ordinary care" when
observing the general impression of the advertisement, would be
misled by it. This involved analysing both the text of the
advertisement, as well as its layout (i.e. the visual emphasis
placed on certain representations, rendered misleading due to the
small print used to convey the ambiguously-phrased conditions). In
this case, the general impression imparted by the advertisement was
that the consumer had already won the sweepstakes.
In coming to its decision, the SCC rejected the Court of
Appeal's opinion that advertising should be assessed from the
perspective of a consumer "with an average level of
intelligence, scepticism and curiosity", since the purpose of
the CPA is to protect unsophisticated and vulnerable consumers who
do not necessarily exercise due diligence and prudence when
The SCC ordered the defendants to pay $1,000 in compensatory
damages, and $15,000 in punitive damages.
Software license agreements generally require the customer to pay fees for the software license and related services, which fees are usually based upon the duration of the license and the manner in which the customer is allowed to use the software, together with applicable taxes and withholdings.
In less than nine months, on July 1, 2017, persons affected by a contravention of Canada's anti-spam legislation will be able to invoke a private right of action to sue for compensation and potentially substantial statutory damages.
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