Consumer Protection: Recent Developments and Trends


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In this presentation delivered at the Law Society of Upper Canada’s Six Minute Business Lawyer Conference on June 6, 2013, Bill Hearn addresses recent developments and trends in Canadian consumer protection law.

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Consumer Protection: Recent Developments and Trends

  1. 1. Consumer Protection:Recent Developments & TrendsBy Bill Hearn*The Law Society of Upper CanadaThe Six-Minute Business Lawyer 2013Toronto, June 6, 2013* The author acknowledges, with thanks, that Jennifer Saville, a law studentsummering at Davis LLP, helped prepare this presentation.
  2. 2. 2• Do your clients advertise, market or sell to consumers?• In the context of consumer protection laws, “consumers” areindividuals who purchase for personal, family or household purposes(not for business purposes)Overview
  3. 3. 3• Bill 55, Stronger Protection for Ontario Consumers Act, 2013 -protection against unscrupulous (a) door-to-door salespersons, (b)real estate and business brokers and (c) collection agencies• Richard v. Time (SCC, 2012) - the “credulous person” standardunder Quebec’s consumer protection legislation• Canada’s Anti-Spam Legislation (CASL) - protection of consumersagainst deception with respect to locator, sender information orsubject matter of an electronic message sent to promote a businessinterest or supply/use of a productOverview
  4. 4. 4• Digital Advertising Alliance of Canada’s (DAAC) “Ad Choices Icon”program - protecting consumers by increasing transparency of, andgiving consumers choices for, online behavioural advertising (OBA)• Commissioner of Competition v. Bell, Rogers, Telus and CWTA(Ontario litigation commenced September 2012) - emergingconsumer protection issues (such as alleged “subscription traps”and “mobile cramming”)• US Federal Trade Commission (FTC)’s Dot.Com Disclosures, March2013 - revised guidance on effective disclosures in digitaladvertisingOverview
  5. 5. 5Ontario Bill 55, Stronger Protectionfor Ontario Consumers Act, 2013Source:
  6. 6. 6• 1st Reading April 18, 2013• Schedule 2 of the Bill amends the Consumer Protection Act, 2002• The existing 10-day cooling-off period is extended to 20 days,providing consumers with more time to consider their purchases underso-called “direct agreements” - i.e., agreements concluded at a placeother than the supplier’s place of business or at a marketplace, anauction, trade fair, agricultural fair or exhibition - e.g., door-to-doorsalesOntario Bill 55
  7. 7. 7• A supplier under a direct agreement cannot supply a water heater, orany other goods or services prescribed by regulation, to a consumeruntil the 20-day cooling-off period has expired• If goods or services are supplied to a consumer in contravention ofthis restriction, the goods or services are deemed to be “unsolicited”(meaning, among other things, that the consumer has no legalobligation in respect of their use or disposal)Ontario Bill 55
  8. 8. 8• Schedule 3 of the Bill amends the Real Estate and Business BrokersAct, 2002 (REBBA)• A registered brokerage acting for a seller is required to retain, for theperiod of time prescribed by the regulations, copies of all written offersthat it receives to purchase real estate• A person who has made a written offer to purchase real estate mayrequest that the registrar inquire into and disclose the number ofwritten offers that a brokerage acting for a seller has received topurchase the real estate• Amends the REBBA so that commission or other remuneration can bea combination of both an amount and a percentageOntario Bill 55
  9. 9. 9• Schedule 1 of the Bill amends the Collection Agencies Act to regulatethe debt settlement services that a collection agency provides to adebtor for remuneration. In particular, a collection agency must enterinto an agreement with the debtor• With respect to that agreement, the regulations will specify whatrepresentations a collection agency is prohibited from making andwhat representations it must make. The regulations may also restrictthe amount of any advance payment the collection agency mayrequire from the debtor• The debtor may cancel the agreement within 10 days of receiving acopy or within one year of the date of entering into it if the debtor doesnot receive that copyOntario Bill 55
  10. 10. 10Richard v. Time, SCC 2012
  11. 11. 11Richard v. TimeSCC’s Decision, 2012► Held that the “general impression” test for deceptive advertising under Quebec’sConsumer Protection Act is as follows:“… that of the first impression … the one a person has after an initial contactwith the entire advertisement, and it relates to both the layout of theadvertisement and the meaning of the words used.”► Ignored the disclaimers that were “inconspicuous” and “buried in a sea of text”and, with respect to the average consumer for determining the general impression ofan ad, expressly rejected the standards of:• the consumer with an average level of intelligence, skepticism and curiosity,• the careful and diligent consumer
  12. 12. 12SCC’s Decision, 2012► Instead, applied the “credulous person” standard describing it as thestandard of:“… ordinary hurried purchasers, that is, consumers who take no morethan ordinary care to observe that which is staring them in the face upon theirfirst contact with an advertisement”, and“… the credulous and inexperienced consumer - i.e., not “a well-informedperson” … but “someone who is not particularly experienced at detectingfalsehoods and subtleties found in commercial representations”.Richard v. Time
  13. 13. 13Richard v. Time - Possible Implications► The SCC’s decision has possible implications for (i) the “general impression”test in determining whether ads are deceptive and (ii) the appropriate use ofdisclaimers in ads► Arguably, (i) the “credulous” person standard in Richard v. Time should belimited to Quebec’s Consumer Protection Act and (ii) it is bad law and bad policy toextend that standard to the deceptive advertising provisions of the Competition ActSHOULD LIMIT DECISION TO QUEBEC CONSUMER PROTECTION LAW► Strictly speaking, in Richard v. Time, all the SCC did was apply thelongstanding “credulous person” standard under Quebec’s Consumer ProtectionAct that the Quebec Court of Appeal mistakenly ignored when it applied the“reasonable person” standard
  14. 14. 14► For many years, the “reasonable person” approach to ad interpretation has beentaken by courts and regulators in Canada*, excluding Quebec (as well as in the US,UK, & EU) - i.e., attributing at least a “reasonable degree of sophistication” to thenotional “average consumer” when determining the general impression of the adbeing interpreted* Again, not only under federal Competition Act but also under Canada’s provincialconsumer protection laws outside Quebec (e.g., in British Columbia, Alberta andOntario)Richard v. Time - Some Observations
  15. 15. 15► Historically, the leading cases and the Competition Bureau’s enforcement policieshave imputed to the notional “average purchaser” a level of discernment that hasvaried based on factors such as:• the type and complexity of the product/service/offer, and• the sophistication/vulnerability of the audience targeted and of the audiencelikely to be reached by the adRichard v. Time - Some Observations
  16. 16. 16What standard applies under the provincial consumer protection lawselsewhere in Canada?Ontario• A false, misleading or deceptive representation, defined under Ontario’sConsumer Protection Act, 2002 includes "a failure to state a material fact if suchfailure deceives or tends to deceive", which is determined objectively, by referenceto what would be conveyed to a reasonable person. See Matoni v CBS InteractiveMultimedia Inc, 2008, ON Sup. Ct.Richard v. Time
  17. 17. 17What standard applies under the provincial consumer protection lawselsewhere in Canada?Alberta•Section 6(4) of Alberta’s Fair Trading Act states that an unfair practice includes “asupplier’s doing or saying anything that might reasonably deceive or mislead aconsumer.” Case law has interpreted this section as setting out an objectivestandard, and the consumer is defined as a “reasonable” consumer. See Bagh vDanish Design Inc, 2009, AB Prov. Ct.Richard v. Time
  18. 18. 18What standard applies under the provincial consumer protection lawselsewhere in Canada?British Columbia•Section 4 of British Columbia’s Business Practices and Consumer Protection Actdefines a deceptive act or practice as any conduct by a supplier that has thecapability, tendency or effect of deceiving or misleading a consumer or guarantor.In determining whether an unfair practice has been committed, courts use anobjective standard and view the average consumer as a “reasonable person”. SeeWakelam v Johnson & Johnson, 2011 BCSCRichard v. Time
  19. 19. 19Canada’s Anti Spam Legislation(CASL)
  20. 20. 20• CASL creates new and broader standalone criminal offences andreviewable practices in the Competition Act for deceptive advertisingin the locator, sender information or subject matter of an electronicmessage sent to promote a business interest or supply/use of aproduct (PEM)• These apply to any false or misleading representations made in thelocator, sender information or subject matter of a PEM• The standard for deception is not limited to representations that arefalse or misleading in a material respect. The materiality qualifier hasbeen droppedCASL
  21. 21. 21• This creates a higher standard for defending claims about allegedlydeceptive representations in PEMs• This may chill the use of enticing representations being made in thesubject line that are intended to be read in the context of the entirebody of the PEM• Digital advertisers will have to consider whether the subject line of aPEM is deceptive when viewed in isolation of the rest of the PEMCASL
  22. 22. 22DAAC’s “Ad Choices Icon” Program
  23. 23. 23• Online Behavioural Advertising (OBA) - or Interest Based Advertising(IBA) - involves tracking consumers’ online activities over time todeliver ads targeted to their inferred interests• Once launched, the Ad Choices Icon will appear in or around OBAads. Consumers will click on the Icon to find out more about OBAfrom those serving OBA ads or collecting info for OBA. Links will beprovided to various levels of opt-outs and to full opt-out• Advertising Standards Canada (ASC) will monitor the program toensure the Icon is being displayed correctly, that opt-outs are setcorrectly, and that privacy policies have not changed without usernotificationDAAC’s “Ad Choices Icon” Program
  24. 24. 24•This is a consumer opt-out tool and self-regulatory best practices effort•The Ad Choices Icon is in line with Canada’s current privacy law and theFederal Privacy Commissioner’s December 2011 and June 2012 OBAguidelines•The program is set to launch this summer; when available, get yourclients to sign up for info webinars explaining program to prospectiveCanadian business users•Future home of DAAC’s Self-Regulatory Program For Online BehavioralAdvertising:’s “Ad Choices Icon” Program
  25. 25. 25Commissioner of Competitionv. Telcos and CWTA:Emerging Issues in Mobile Sector/
  26. 26. 26• On September 14, 2012, the Competition Bureau began legalproceedings against Bell Canada, Rogers Communications, Inc.,TELUS Corporation and the Canadian Wireless TelecommunicationsAssociation (CWTA) alleging misleading advertising that promotes"premium text messaging” and “rich content” services• The Bureau is seeking full customer refunds and administrativemonetary penalties (AMPs) — $10 million each from Bell, Rogers andTelus, and $1 million from the CWTACompetition Litigation Against Telcos and CWTA
  27. 27. 27• From statements made by Competition Bureau officials at conferencesover the past 9 months, this case seems to have been brought out ofa growing concern over so-called online “subscription traps”• Among consumer protection and competition authoritiesinternationally, there has also been a growing concern over so-called“mobile cramming” (i.e., the emerging practice of unauthorized third-party charges on mobile phone bills)• The FTC hosted a Roundtable on May 8, 2013 to explore how mobilecramming occurs and how best to protect consumers from thispracticeCompetition Litigation Against Telcos and CWTA
  28. 28. 28FTC’s Revised Guidance onDot.Com Disclosures - How to MakeEffective Disclosures in DigitalAdvertising, March 2013
  29. 29. 29• The FTC recently updated its 2000 guidelines for disclosures in digitalmedia. The guide addresses the expanding use of smart phones,tablets, and other mobile devices by consumers, as well as theincreased use of social media marketing by businesses• “Dot.Com Disclosures: How to Make Effective Disclosures inDigital Advertising” -’s Dot.Com Disclosures
  30. 30. 30Scrolling: Preferably, design ads so that“scrolling” is not necessary to find a disclosure
  31. 31. 31• Well-labeled hyperlinks may be used for disclosures that are notintegral to a claim• Hyperlinks should be clearly labeled to communicate theimportance, nature, and relevance of the information to which theylead• A hyperlink should take consumers directly to the disclosureInformation about Hyperlinks
  32. 32. 32•Hyperlinks should not be used to disclose core information that is aninseparable part of the claim, such as certain cost and safetydisclosures•Disclosures necessary to prevent deception should never berelegated to “terms of use” and similar contractual agreements•Hyperlinks can be useful if a disclosure is lengthy, has complicateddetails, or if it needs to be repeated frequently on a websiteInformation about Hyperlinks
  33. 33. 33•If a space-constrained ad contains a claim that requires qualification,the advertiser disseminating it is not exempt from disclosurerequirements•When a disclosure is necessary, a brief effective one can often beincorporated into a tweet itself. For example, if a tweet is paid for, it canstart with “Ad:” to inform consumers that they’re seeing a paid ad@Tweets and other #space-constrained-ads
  34. 34. 34•When a necessary disclosure won’t fit into a tweet or other ad, thereare circumstances when it may be okay for the disclosure to be on theclick-through:• when a teaser ad does not actually identify the product beingadvertised, so the consumer must click through to learn itsidentity, or• when the advertised product is sold only through the advertiser’sown website and the consumer must click through in order totake any action•In other circumstances, if a necessary qualification to a claim won’t fitin the tweet itself, then the claim shouldn’t be made in a tweet@Tweets and other #space-constrained-ads
  35. 35. 35• These recent developments & trends suggest an increase inconsumer protection initiatives in terms of new legislation,regulations, guidance documents and strategic enforcement action• Given the global nature of the online and mobile marketplace,regulators are acting in concert with other regulators internationally -conducting so-called consumer protection “sweeps” - e.g., see thegood work of the International Consumer Protection andEnforcement Network (ICPEN), an organization composed ofconsumer protection authorities from over 50 countries: Up
  36. 36. 36• Canadian regulators are leading the charge in this area - e.g., inSeptember 2012, the Competition Bureau coordinated a jointinternet sweep by members of ICPEN targeting deceptiveadvertising in the rapidly growing online and mobile markets• The focus of the sweep was on suppliers who did not properlydisclose the terms of online and mobile transactions that can resultin consumers facing recurring charges, usage fees and contractterms they did not intend to accept• The Bureau has warned that the results of the ICPEN sweep will beanalyzed and follow-up enforcement action will be taken, asnecessaryWrap Up
  37. 37. 37Bill HearnDavis LLP, Torontobhearn@davis.ca416.369.5298Questions?