In mid-September, Comwave Networks Inc. (Comwave) entered into a
consent agreement with the Commissioner of Competition regarding
allegations that it contravened the civil misleading advertising
provisions of the Competition Act (the Act). Under the consent
agreement, Comwave is required to pay an administrative monetary
penalty (AMP) of $300,000, and $60,000 towards the Bureau's
costs of the investigation. Additionally, Comwave has agreed to
remove all problematic representations (across all media), issue a
corrective notice to the public to its customers, and establish and
implement a corporate compliance program.
Based on its investigation into Comwave's advertising since
2011, the Bureau concluded that Comwave made false and misleading
representations to the public about the pricing and level of
services for its various telecommunications services. With respect
to pricing, Comwave allegedly engaged in two problematic
Services were advertised for prices
that were not actually attainable because "non-optional
fees" were charged to each customer over and above the price
Special price offerings such as
("6 months free home phone service") that were subject to
additional terms and conditions (e.g., mandatory contract terms)
prior to the completion of the sale and installation of the
With respect to the level of services, Comwave made
representations on "unlimited" services using phrases
such as "unlimited local calling" for its home phone
services and "no caps on downloads", "limit
free", "now you can watch all the movies you want"
and other similar phrases for its internet service offerings.
However, in reality, residential phone services were subject to a
3000 minutes per month cap, and internet usage was effectively
limited for consumers by significantly slower download speeds after
certain amounts of data usage.
Use of Disclaimers
Although Comwave used fine print disclaimers in its
representations through advertisements and its telephone intake
process, the Bureau found that these disclaimers were insufficient
to alter the general impression conveyed to consumers about the
advertised prices and level of services that Comwave advertised,
but that were effectively unattainable.
This is yet another case involving attempts by various telcos
using disclaimers to "cure" inherently false and
misleading representations regarding pricing and service levels.
This case also serves as a useful reminder regarding the permitted
use of disclaimers under the misleading advertising provisions of
the Act, namely that:
While "fine print" can
expand on representations made to promote a product and provide
other useful information, they cannot be used contradict or negate
the main message. In the case of Comwave, the fine print used to
disclaim the words "unlimited" and other similar language
essentially restricted and contradicted the main text.
Online advertising can complicate the
use of effective disclaimers. When using different platforms for
representations, businesses need to ensure that disclaimers are
still readily accessible, located where they are likely to be read
by consumers, and not "lost in translation" if shared
between users on different platforms.
This case reiterates the Commissioner's focus on both the
misleading advertising provisions of the Act and the use of
disclaimers in the digital/mobile space. Accordingly, in addition
to ensuring their use of disclaimers is compliant generally,
businesses must proactively ensure that their disclaimers are
effective across all electronic platforms on which it is likely to
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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