Annual Report 1994/95 - Discontinued Inquiries: Marketing Practices - Other Reasons

Furniture 52(1)(a) The advertiser offered "complimentary airfare" to various destinations with the purchase of furniture. The airfare had additional charges and required expensive accommodation. Because of steps the company had taken to assure itself that the certificates were legitimate, it was arguable the defence of "due diligence" could be available if charges were to be laid.

Given the resources required and the penalty likely to be imposed if the prosecution were successful, the Department of Justice was of the view that the Attorney General of Canada would not undertake a prosecution in these circumstances.

Food 52(1)(a) The advertiser promoted comparison prices to those of a competitor. The competitor provided survey evidence to the effect that savings claims were false. During the inquiry, it became apparent that the methodology of the 'price' and 'product' surveys was flawed. In addition, the advertiser had abandoned this form of advertising.

Office Supplies 52(1)(a) A firm used telemarketing solicitations that prompted many complaints that it had misrepresented itself as the complainants' regular supplier. A search warrant was authorized but not successfully executed. The company had ceased operations and records to make any case against the primary corporate officer were inadvertently destroyed by a third party. This individual subsequently became involved in a similar new venture and a new inquiry was initiated with formal powers authorized.

Clothing 52(1)(d) The advertiser promoted large, allegedly inflated, savings on poor quality leather garments in an Atlantic province. A related corporate entity operating in Ontario was before the courts for engaging in similar practices and the advertiser ceased doing business in the Atlantic province.

Drugs 52(1)(a) In a section 9 application for inquiry, a competitor claimed that an advertiser's comparative advertising claims were based on misleading conclusions from a research study. Health experts consulted subsequently could not find fault with the study's conclusions.

Health clubs 52(1)(a) & 59(1)(a) A company used "scratch and win" cards to induce membership sales. The requirement for a "nominal" maintenance fee was found, in fact, to equal half the regular membership fee.

A parallel case against the directing mind of the promotion and another health club resulted in a finding of not guilty based on the lack of original materials from Canada Post. Due to the loss of important records by Canada Post, the inability to introduce evidence linking the accused to the promotion and the decision of the court in the related prosecution, it was determined not to refer the matter to the Attorney General of Canada.

Multi-Level Marketing 55(2) & 55.1(1)(b) The company distributed a brochure to prospective participants containing representations relating to compensation and the representations did not constitute or include fair, reasonable or timely disclosure of compensation.

Due to the timely corrective action initiated by the company, the fact that the company received inaccurate advice from its counsel, and assurances provided by the company, the issues of the Director's concern were addressed as to future compliance with s. 55(2) and 55.1(1)(b) .

Automobiles 52(1)(a) & 52(1)(d) Preliminary examination revealed that an advertiser's savings implied in an advertisement were fictitious as the vehicles did not normally sell at the M.S.R.P.

Upon having the issue brought to its attention by the Bureau and on its own initiative, the advertiser published a corrective notice in the newspaper.

Product distributorships 52(1)(a) & 52(1)(b) Brochures published by the advertiser stated that its water conditioner "takes the place of a water softener without using salt", and that the fuel saver "improves mileage".

Preliminary examination of this matter revealed that advertising for a magnetic water conditioner did not soften water or reduce scaling and secondly that a fuel saving device did not increase engine performance orprovide better combustion.

The advertiser died and his company no longer carried on business in Canada or in the United States.

Health club memberships 52(1)(a) & 52(1)(d) Preliminary examination indicated advertised membership discounts were false and not based on the regular price of the marketplace or of this firm.

It was established that the firm had closed several locations and ceased advertising after charges were laid by provincial consumer protection authorities.

Jewelry 52(1)(a) & 52(1)(d) An advertiser promoted diamonds with comparison sale prices that inflated the regular price of the diamonds in question.

Inquiry revealed that a new company existed in the advertiser's business location and the directing mind for the diamond advertising could not be determined.

Automobiles 52(1)(a) and others On application by six residents under s. 9, an inquiry was initiated regarding a car manufacturer's brochure which stated, in part, "Only your... dealer can offer you real peace of mind knowing that you'll get parts that were made specifically for your car. And you can rest assured because they will be installed by specially trained technicians who know your (car) through andthrough."

The applicants alleged that this representation was false based on the experience of one of the applicants who had her car serviced by a dealer. The applicants have represented that instead of using specially trained technicians, mechanics and/or apprentices worked on the car and knew little about it.

Information gathered during the inquiry indicated that there was insufficient evidence to prove beyond a reasonable doubt that an offence occurred.

Time-sharing investments 52(1)(a) and 59(1) Complainants alleged that promotion of a vacation time-sharing investment by mail flyers misled recipients who were told that they had won a gift. During the inquiry, it was discovered that the Ontario Ministry of Consumer and Commercial Relations, through its Real Estate Branch, had been in contact with the company regarding these mailouts and had authorized the solicitations under the Real Estate and Business Brokers Act.

The company was of the view that the nature of the representation in the solicitation was also authorized, which was not the case.

There were also a number of difficulties in obtaining evidence from potential witnesses who were reluctant to assist in the investigation because they might not be able to resell their units due to a clause within the purchase agreement which allowed the promoter to not accept new buyers

It was also determined that a number of unsatisfied consumers had initiated a civil action against the time-share promoter.

Hearing devices 52(1)(a) & 52(1)(b) Consumers alleged a company was making inaccurate representations in promoting the sale of a hearing device.

Shortly after the initiation of this inquiry, the company ceased marketing the product. Bureau staff monitored the marketplace during the inquiry and neither the product nor the advertisements promoting it were found.

Expert evidence was inconclusive as to the quality of the device.

The company was under inquiry for engaging in unsubstantiated performance claims in another matter with wider implications for the mail solicitation industry. Resources were re-allocated to that inquiry.

Real Estate Developments 52(1)(a) Consumers complained that a developer advertised area amenities inaccurately.

After this inquiry was initiated, a number of affected consumers started civil actions against the advertiser. In addition, there were also delays in obtaining evidence from the municipality and from an architect, both of which were reluctant to assist in the investigation.

During the inquiry, the firm ceased operations and successor companies had minimal roles in the advertising being considered.

Clothing 52(1)(a) & 52(1)(d) Consumers alleged that suggested savings were inflated for leather goods advertised by a national clothing retailer.

During the course of the inquiry, the regular market prices for the items were fluctuating thereby causing difficulties in ascertaining the ordinary selling price of the product. Further expert evidence as to the appraised value and quality of the leather products was inconclusive.