Area of Law: Consumer Law
Answer # 810
Dishonest businesses and misleading advertisingRegion: Ontario Answer # 810
Although most sellers and retailers make honest claims about the products and services they are selling, sometimes a dishonest seller may make overly exaggerated promises about the performance of a product. To protect consumers from such misleading sales claims and unfair business practices, the Ontario government has identified what unfair business practices are and under the Consumer Protection Act, established rights for consumers who have been victimized.
Some examples of false and misleading business practices include a seller stating that a product or service has sponsorship or approval that it really does not have, a seller stating that a product or service has a particular standard, quality, or style that it really does not have, a seller indicating that a product is new when it is not, or a seller or repair-person stating that a particular repair or replacement is needed when it is not. The law also takes into account whether the consumer was subject to undue pressure to purchase the product or service, whether the price was excessively high, and whether the consumer was unable to protect their interests because of a disability or illiteracy.
What is misleading advertising?
As we all know, some advertisers can be a bit too enthusiastic about their products and “over-sell” the benefits. Reasonable consumers know these claims cannot all be believed or true. In law, it’s often called “puffery” and few businesses are ever charged with misleading advertising for their exuberance.
Some businesses, however, do make claims that are knowingly false in an attempt to make us buy them or try to fool us into believing a product or service does what it cannot actually do. Some businesses try to get us into their stores with very low prices available in low (or no) quantities and then push a more expensive product on us (this technique is called a “bait-and-switch”). Others may claim “fire sale” or reduced sale prices that are really their everyday, ordinary prices. When serious enough, these misleading advertisements and pricing claims can be prosecuted in criminal court and sued in civil courts.
Federal Competition Act
Under the federal Competition Act, it is against the law to make any false or misleading representation to the public for the purpose of promoting a business interest, particularly if it is done deliberately or recklessly. This Act applies to advertising cases in both civil and criminal courts. If it’s not deliberate or reckless, the federal government may simply tell the business to “cease and desist,” pay a fine and publish information notices to the public telling of its errors.
The federal Competition Bureau is the independent law enforcement agency that administers the Competition Act. The Bureau protects consumers by promoting truth in advertising, discouraging deceptive business practices, and investigating anti-competitive activities.
If a consumer believes that an individual or company has contravened the Competition Act, they can make a complaint to the Competition Bureau which may investigate. For more information, visit competitionbureau.gc.ca.
Signing a contract
Be careful when signing any contract to ensure that the written document contains the promises or guarantees that the seller told you about. If the seller won’t write these “extras” in, then they are not really available. Never sign a contract you don’t fully understand.
Cancelling a contract or get your money back, one year time limit to give notice
If you have been convinced to buy a product or service based on a false, misleading, or deceptive sales pitch or advertisement, the law gives you the right to cancel the contract and receive compensation for any damages suffered. Under the law, cancelling a contract is called “rescission.” If it is impossible to cancel (rescind) the contract because the goods or services cannot be returned, or because cancelling the contract would affect someone else’s rights, then the purchaser is entitled to recover the payment they made. The agreement can be oral, implied or written.
In order to rescind the contract or get their money back and/or receive payment for damages suffered, the consumer must give notice of their intention to do so within one year after entering into the agreement. To rescind a contract or ask for your money back, you should begin by writing a letter to the company. In your letter, describe your problem and indicate that you wish to rescind the agreement or ask for your money back (as the case may be) because of an unfair practice.
If the company or sales person refuses to handle your complaint, your next step is to bring a civil lawsuit. You may be able to purse this in Small Claims Court, if the amount of damages is within the small claims limits. You can bring an action in Small Claims Court by yourself or with the help of a lawyer or paralegal, depending on the complexity of the case and the amount you are suing for.
The Ministry of Government and Consumer Services and other public organizations have created several consumer programs, such as Consumer Protection Ontario, that provide valuable information to consumers, promote and enforce public safety laws, investigate alleged violations and handle complaints.
For more information on these programs, and to learn more about your rights as a consumer under the Consumer Protection Act, visit Consumer Protection Ontario.
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