In depth

Drip pricing

Although drip pricing was informally considered a deceptive marketing practice under the Act for a number of years, the Act was amended in 2022 to explicitly identify drip pricing as a prohibited practice.¹ Drip pricing, which involves offering a product or service at a price that is unattainable due to the requirement for a consumer to pay additional charges or fees (often referred to as 'junk fees'), are permitted only if the unattainable price is due to fixed mandatory charges or fees (such as taxes and levies) that are imposed by a federal or provincial government. However, the Act does not currently specify on whom such charges and fees must be imposed on for the exemption to apply.

The Standing Committee Amendments seek to further restrict this exemption by clarifying that only government-created charges and fees that are imposed directly on an end purchaser will benefit from the drip pricing exemption. In other words, the only amounts that can be excluded from an advertised price are amounts (such as sales taxes or consumer environmental levies) imposed on an end purchaser and not fees payable by an advertiser, effectively creating an all-in price retail pricing regime on the federal level in Canada.

Ordinary selling price

Currently, the Act prohibits advertisers from making materially false or misleading representations to the public about the ordinary selling price (OSP) of a good or service. The provision prohibits advertisers from continuously or constantly claiming that a product is on sale, with the result that the ordinary (or original) price is not the bona fide regular price, and the sale claim is then false or misleading.² Under the existing prohibition, the Commissioner has the onus of establishing that the sale price is false or misleading.

The Standing Committee Amendments would create a reverse onus such that the advertiser would be required to establish the OSP – making it easier for the Competition Bureau (“Bureau”) to challenge prohibited OSP representations.

Environmental claims

The Standing Committee Amendments also expand the application of Bill C-59's greenwashing prohibition, which currently proposes to prohibit product-based greenwashing representations related to environmental and ecological claims that are not adequately substantiated.³ However, critics have argued that Bill C-59 does not go far enough, as it would not apply to more general environmental claims in the form of business commitments, such as carbon neutral, net zero, and other types of environmental, social, and governance (ESG) claims.

The Standing Committee Amendments expand the proposed greenwashing amendment to prohibit representations that protect or restore the environment or that mitigate the environmental, social and ecological causes or effects of climate change, where these are not based on an adequate and proper test. This change will expand the application of the greenwashing prohibition to broader environmental and social claims and target unfounded ESG business commitments.

1 For more information on the drip pricing prohibition recently added to the Act’s deceptive marketing provisions, see our client alert here.
2 For more information on the current ordinary selling price provision, including the relevant tests required to determine the OSP, see our client alert here.
3 For more information on the Bill C-59 greenwashing provision, including a discussion on the adequate and proposer test, see our ADvantage client alert here.