On July 9, 2013, the Competition Bureau announced that it would
be pursuing civil charges of deceptive marketing under the
Competition Act against Canadian
furniture retailers Leon's Furniture Ltd. and The Brick Ltd.
(acquired by Leon's earlier in 2013).
In a civil action filed with the Ontario Superior Court of
Justice, the Bureau alleges that the retailers' "buy now,
pay later" programs, in which consumers are encouraged to
purchase products under a deferred payment program, gives the false
general impression that consumers can take advantage of the
programs at no extra charge, and fails to adequately disclose the
surcharges that will be applied to the balance of the purchase
price (section 74.01(1)(a)). By way of example, a customer
wanting to defer payment on a $1500 sofa could be required to pay
up to $350 at the time of purchase, despite advertisements stating
customers would pay "absolutely nothing" for up to 21
The Bureau also alleges that the administration and processing
fees applicable to the deferred payment programs are
"hidden", and can result in substantial additional costs
(including both up-front costs as well as costs added to the
balance to be paid), which result in the final price of the product
being higher than the advertised price (section 74.05(1)).
The Bureau acknowledged that, in many instances, the
representations were accompanied by disclaimers that referenced the
need to pay certain fees at the time of purchase. It noted,
however, that lengthy disclaimers buried in the fine print and not
in close proximity to the associated representations, particularly
if the disclaimers contradicted the representations' literal
meaning and/or general impression, are ineffective in addressing
the reviewable conduct. In a statement, Commissioner of
Competition John Pecman said that "Canadian consumers must
receive clear and accurate information about what must be paid at
the time of purchase, and what the actual cost of a particular item
is if they use a deferred payment option." He went on to say
that "[r]etailers cannot hide details of additional fees in
The Bureau has increasingly shown indications that it considers
it a priority to pursue deceptive marketing and disclaimer
practices, which, it is argued, take advantage of a struggling
economy to exploit vulnerable consumers. In September 2012,
the Bureau took action against cell phone
providers Bell, Rogers and Telus for fine-print disclaimers and
allegedly "hidden" cell phone fees.
It has been estimated that "buy now, pay later"
transactions could comprise up to 50% of the furniture
retailers' transactions across Canada. Leon's and The Brick
have indicated that they will defend their positions in court.
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