Urgency cues remain near the top of the Competition Bureau’s misleading advertising enforcement priorities, as demonstrated by the Bureau’s recent consent agreement with a furniture chain retailer.

Following an investigation into the marketing practices of The Dufresne Group, Inc. and its affiliates (“Dufresne”) on their websites, in-store and other advertising channels, the Competition Bureau concluded that the retailer:

• made claims to consumers using urgency cues (also known as scarcity cues) that gave the false or misleading impression that deals on certain products would no longer be available after a particular date or time; and
• made unsupported savings claims to the public by promoting products at sale prices that were based on inflated regular prices.

Dufresne agreed to pay a $3.25 million penalty and $100,000 towards the Bureau’s enforcement costs, committed to have its marketing practices comply with the Competition Act, and to establish and maintain a corporate compliance program. The amount of the fine is consistent with recent Bureau settlements involving unsupported savings claims.

Below are our key takeaways from this matter for companies who rely on advertising sale discounts and use urgency cues like countdown timers to market their products to consumers.

Urgency cues must be truthful

The Dufresne consent agreement and Bureau guidance in a recent Deceptive Marketing Practices Digest indicate that the Bureau will continue scrutinizing marketing tactics that may mislead consumers into making purchases that may not be in their best interests or what they intended to purchase.

According to the consent agreement, Dufresne used urgency cues to make representations to the public that its discounted prices on certain products would no longer be available after a particular date or time (such as “40% OFF (Sale ends on Sep 19 2022)”) when the represented urgency was not accurate in some instances. The Bureau will consider urgency cue misrepresentations to be material to consumers if they create an expectation that consumers must quickly purchase a product before the end of a promotion when, in fact, the promotion is renewed or replaced by another one.

Canadian businesses should review their websites, in-store promotions and other advertising channels to assess whether any urgency cues they are using (such as “limited time offer” callouts or “countdown clocks”) convey accurate information about a promotion or the availability of a price, product or service rather than simply existing to pressure consumers into making hasty purchasing decisions.

Consumer savings cannot be exaggerated

The Dufresne consent agreement also provides a good reminder about the importance for Canadian businesses to have properly supported sales claims. Claims relating to the regular price of a product must meet either the “time test” or “volume test” to be considered onside.

The Bureau observed that Dufresne did not meet the time test since the retailer offered certain products to the public at reduced prices for more than half of the time. As such, the Bureau concluded that Dufresne offered certain products at inflated regular prices and advertised them at discounts that appeared to provide significant savings to consumers.

Canadian businesses are advised to monitor the number of days their products are offered at a regular price when planning their sales cycle and track how frequently products are offered for sale to avoid a potential investigation into deceptive marketing practices.

[View source.]