Bureau obtains judgment against Polar Spas in deceptive marketing case

Ottawa, April 12, 2007 – The Federal Court has granted the Competition Bureau a default judgment against Polar Spas, a Calgary-based hot tub dealer, and Ken Nickel, company president, for breaking their commitments to pay monetary penalties in settling an inquiry under the deceptive marketing provisions of the Competition Act .

In 2004 and 2005, Polar Spas used a “cashable vouchers” program to promote the sale of hot tubs and other home leisure products. In a consent agreement negotiated in August 2006, the company agreed to stop making false or misleading representations, specifically in relation to cash back or rebate offers.

The “cashable vouchers” program offered customers a voucher supposedly worth most or all of their purchase price, if they simply remembered to file a claim three years after the purchase. In its investigation, the Bureau found evidence the company had misled its customers by telling them the “cash back” was “guaranteed” provided they passed the “financial memory test”. In fact, there were other stringent conditions that had to be met, and the final value - if any - of any voucher was contingent on the number of claims filed. In December 2005, Consumers Trust, the administrators of the program, filed for bankruptcy in the U.S.

Relying on promises of getting cash back, consumers were willing to pay full retail price, and some borrowed money to make their purchases, expecting that the cash back would more than cover interest payments.

The Bureau issued an information bulletin in December 2004, advising consumers that under the cashable vouchers program, cash back was not guaranteed, and they should be sure they would be happy with the price and quality of the product, if the cash back did not materialize.

The Bureau had hoped to resolve its concerns with the consent agreement negotiated last year, but with the company's failure to pay, the Bureau filed the suit in Federal Court, asking for payments of $35,000 from the company and $10,000 from Ken Nickel. Neither Polar Spas nor Ken Nickel filed a defence.

Polar Spas operates retail outlets in Calgary, Red Deer and Edmonton, in Alberta, and in Surrey, BC. The company also had affiliated stores in Mississauga and London, Ontario, which are no longer in operation.

The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

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