Deceptive marketing practices (Competition Act)

The Competition Bureau says that under the Competition Act it is against the law to advertise or market something in a way that is false or misleading. A buyer of a retail or online business can ask what claims the business has made to the public, and what supports them.

How the Act frames it

Section 52 prohibits knowingly or recklessly making a representation to the public that is false or misleading in a material respect, for the purpose of promoting the supply or use of a product or any business interest. Section 74.01 describes reviewable conduct, which includes making such a representation to the public; under section 74.07, sections 74.01 to 74.06 do not apply to a person who publishes another person’s representation in good faith in the circumstances it sets out. In a prosecution under section 52, the Act says the general impression conveyed by a representation is taken into account as well as its literal meaning; section 74.03 says the same for proceedings on reviewable conduct. This entry covers the federal Act only.

What to ask

• Which price, performance and “sale” claims the business currently makes, and what supports each one
• Whether the business has received a complaint or an inquiry from the Competition Bureau
• Who approves advertising copy, and whether past versions were kept
• How the purchase agreement allocates responsibility for claims made before closing

See due diligence on an e-commerce business and representations and warranties.