On September 21, 2009, the Competition Bureau released its
Enforcement Guidelines on Consumer Rebate Promotions. These
Guidelines set out the Bureau's (non-binding) interpretation of
both the criminal and the civil provisions relating to false or
misleading representations under the Competition Act, the
Consumer Packaging and Labelling Act, and the Textile
Labelling Act as applied to consumer rebate promotions, and
include examples of recommended best practices.
The Guidelines define consumer rebate promotions to include any
type of promotion that involves a partial refund or discount from a
manufacturer or retailer to consumers upon purchase, and make a
distinction between "instant" rebates and
"mail-in" rebates, the latter of which include any rebate
obtained other than immediately at the time of purchase. The Bureau
does not consider gift cards and other forms of credit on future
purchases to be "rebates" for the purposes of the
Guidelines, apparently taking the view that most consumers are
likely to associate the term "rebate" specifically with
the return of a portion of the price paid for the article or
service in question.
The Guidelines review the issue of who bears responsibility for
making false or misleading representations in connection with
consumer rebates. As a general principle, liability for a
representation attaches only to the person(s) who cause the
representation to be made. The Guidelines make it clear that,
pursuant to statute, the Bureau will generally view both the
manufacturer and the retailer to be liable for misleading consumer
rebate representations on or accompanying a product, unless the
manufacturer is outside Canada, in which case the Bureau will view
the importer and the retailer to be liable.
The heart of the Guidelines describes, with examples, the following
five consumer rebate promotion practices that, in the Bureau's
view, could comprise false or misleading representations, and in
each case advises how to avoid problematic representations:
- Inadequate Disclosure of Rebate Conditions, Limitations and
Exclusions - avoided by clear and conspicuous disclosure of all
information that may be material to a consumer's purchase
decision (a list is provided);
- Rebates Disguised as the Sale Price or Regular Price - avoided
by refraining from the use of "sale" in reference to a
consumer rebate;
- Mail-in Rebates Disguised as Instant Rebates - avoided by
prominent disclosure of the type of rebate offered;
- Discounts on Future Purchases Disguised as Rebates - avoided by
excluding any gift card or other future-purchase discount from
representations as to the "price" of a product or as a
"rebate";
- Mail-in Rebates that are not Fulfilled - avoided by taking measures to ensure fulfillment houses and other service providers are performing in accordance with the rebate terms and conditions. The Guidelines go on to provide hypothetical examples of best practices with respect to instant and mail-in rebate offers.
The Guidelines reaffirm the Bureau's view that a case-by-case
application of the false and misleading representations
prohibitions under the legislation it administers is most
appropriate for a wide variety of marketing practices, including
consumer rebate promotions. However, the Guidelines also signal
that the Bureau will firmly apply certain rules, at least
presumptively, as it enforces these prohibitions. In particular,
the Bureau clearly opposes the framing of any "in kind"
payments to consumers (e.g., gift cards) as "rebates,"
and the characterization of a "rebate" as a type of
"sale." In view of this, marketers will do well to ensure
that any use of "rebate" or "sale" is
accompanied "clear and conspicuous disclosure" to
consumers of just what is meant by these terms as used in the
representations in question.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.