In this presentation delivered at the Law Society of Upper Canada’s Six Minute Business Lawyer Conference on June 6, 2013, Bill Hearn addresses recent developments and trends in Canadian consumer protection law.

1. Consumer Protection:
Recent Developments & Trends
By Bill Hearn*
The Law Society of Upper Canada
The Six-Minute Business Lawyer 2013
Toronto, June 6, 2013
* The author acknowledges, with thanks, that Jennifer Saville, a law student
summering at Davis LLP, helped prepare this presentation.

2. 2
• Do your clients advertise, market or sell to consumers?
• In the context of consumer protection laws, “consumers” are
individuals who purchase for personal, family or household purposes
(not for business purposes)
Overview

3. 3
• Bill 55, Stronger Protection for Ontario Consumers Act, 2013 -
protection against unscrupulous (a) door-to-door salespersons, (b)
real estate and business brokers and (c) collection agencies
• Richard v. Time (SCC, 2012) - the “credulous person” standard
under Quebec’s consumer protection legislation
• Canada’s Anti-Spam Legislation (CASL) - protection of consumers
against deception with respect to locator, sender information or
subject matter of an electronic message sent to promote a business
interest or supply/use of a product
Overview

4. 4
• Digital Advertising Alliance of Canada’s (DAAC) “Ad Choices Icon”
program - protecting consumers by increasing transparency of, and
giving consumers choices for, online behavioural advertising (OBA)
• Commissioner of Competition v. Bell, Rogers, Telus and CWTA
(Ontario litigation commenced September 2012) - emerging
consumer protection issues (such as alleged “subscription traps”
and “mobile cramming”)
• US Federal Trade Commission (FTC)’s Dot.Com Disclosures, March
2013 - revised guidance on effective disclosures in digital
advertising
Overview

5. 5
Ontario Bill 55, Stronger Protection
for Ontario Consumers Act, 2013
Source: http://www.waterheaterdoortodoor.com/

6. 6
• 1st Reading April 18, 2013
• Schedule 2 of the Bill amends the Consumer Protection Act, 2002
• The existing 10-day cooling-off period is extended to 20 days,
providing consumers with more time to consider their purchases under
so-called “direct agreements” - i.e., agreements concluded at a place
other than the supplier’s place of business or at a marketplace, an
auction, trade fair, agricultural fair or exhibition - e.g., door-to-door
sales
Ontario Bill 55

7. 7
• A supplier under a direct agreement cannot supply a water heater, or
any other goods or services prescribed by regulation, to a consumer
until the 20-day cooling-off period has expired
• If goods or services are supplied to a consumer in contravention of
this restriction, the goods or services are deemed to be “unsolicited”
(meaning, among other things, that the consumer has no legal
obligation in respect of their use or disposal)
Ontario Bill 55

8. 8
• Schedule 3 of the Bill amends the Real Estate and Business Brokers
Act, 2002 (REBBA)
• A registered brokerage acting for a seller is required to retain, for the
period of time prescribed by the regulations, copies of all written offers
that it receives to purchase real estate
• A person who has made a written offer to purchase real estate may
request that the registrar inquire into and disclose the number of
written offers that a brokerage acting for a seller has received to
purchase the real estate
• Amends the REBBA so that commission or other remuneration can be
a combination of both an amount and a percentage
Ontario Bill 55

9. 9
• Schedule 1 of the Bill amends the Collection Agencies Act to regulate
the debt settlement services that a collection agency provides to a
debtor for remuneration. In particular, a collection agency must enter
into an agreement with the debtor
• With respect to that agreement, the regulations will specify what
representations a collection agency is prohibited from making and
what representations it must make. The regulations may also restrict
the amount of any advance payment the collection agency may
require from the debtor
• The debtor may cancel the agreement within 10 days of receiving a
copy or within one year of the date of entering into it if the debtor does
not receive that copy
Ontario Bill 55

10. 10
Richard v. Time, SCC 2012

11. 11
Richard v. Time
SCC’s Decision, 2012
► Held that the “general impression” test for deceptive advertising under Quebec’s
Consumer Protection Act is as follows:
“… that of the first impression … the one a person has after an initial contact
with the entire advertisement, and it relates to both the layout of the
advertisement and the meaning of the words used.”
► Ignored the disclaimers that were “inconspicuous” and “buried in a sea of text”
and, with respect to the average consumer for determining the general impression of
an ad, expressly rejected the standards of:
• the consumer with an average level of intelligence, skepticism and curiosity,
• the careful and diligent consumer

12. 12
SCC’s Decision, 2012
► Instead, applied the “credulous person” standard describing it as the
standard of:
“… ordinary hurried purchasers, that is, consumers who take no more
than ordinary care to observe that which is staring them in the face upon their
first contact with an advertisement”, and
“… the credulous and inexperienced consumer - i.e., not “a well-informed
person” … but “someone who is not particularly experienced at detecting
falsehoods and subtleties found in commercial representations”.
Richard v. Time

13. 13
Richard v. Time - Possible Implications
► The SCC’s decision has possible implications for (i) the “general impression”
test in determining whether ads are deceptive and (ii) the appropriate use of
disclaimers in ads
► Arguably, (i) the “credulous” person standard in Richard v. Time should be
limited to Quebec’s Consumer Protection Act and (ii) it is bad law and bad policy to
extend that standard to the deceptive advertising provisions of the Competition Act
SHOULD LIMIT DECISION TO QUEBEC CONSUMER PROTECTION LAW
► Strictly speaking, in Richard v. Time, all the SCC did was apply the
longstanding “credulous person” standard under Quebec’s Consumer Protection
Act that the Quebec Court of Appeal mistakenly ignored when it applied the
“reasonable person” standard

14. 14
► For many years, the “reasonable person” approach to ad interpretation has been
taken by courts and regulators in Canada*, excluding Quebec (as well as in the US,
UK, & EU) - i.e., attributing at least a “reasonable degree of sophistication” to the
notional “average consumer” when determining the general impression of the ad
being interpreted
* Again, not only under federal Competition Act but also under Canada’s provincial
consumer protection laws outside Quebec (e.g., in British Columbia, Alberta and
Ontario)
Richard v. Time - Some Observations

15. 15
► Historically, the leading cases and the Competition Bureau’s enforcement policies
have imputed to the notional “average purchaser” a level of discernment that has
varied based on factors such as:
• the type and complexity of the product/service/offer, and
• the sophistication/vulnerability of the audience targeted and of the audience
likely to be reached by the ad
Richard v. Time - Some Observations

16. 16
What standard applies under the provincial consumer protection laws
elsewhere in Canada?
Ontario
• A false, misleading or deceptive representation, defined under Ontario’s
Consumer Protection Act, 2002 includes "a failure to state a material fact if such
failure deceives or tends to deceive", which is determined objectively, by reference
to what would be conveyed to a reasonable person. See Matoni v CBS Interactive
Multimedia Inc, 2008, ON Sup. Ct.
Richard v. Time

17. 17
What standard applies under the provincial consumer protection laws
elsewhere in Canada?
Alberta
•Section 6(4) of Alberta’s Fair Trading Act states that an unfair practice includes “a
supplier’s doing or saying anything that might reasonably deceive or mislead a
consumer.” Case law has interpreted this section as setting out an objective
standard, and the consumer is defined as a “reasonable” consumer. See Bagh v
Danish Design Inc, 2009, AB Prov. Ct.
Richard v. Time

18. 18
What standard applies under the provincial consumer protection laws
elsewhere in Canada?
British Columbia
•Section 4 of British Columbia’s Business Practices and Consumer Protection Act
defines a deceptive act or practice as any conduct by a supplier that has the
capability, tendency or effect of deceiving or misleading a consumer or guarantor.
In determining whether an unfair practice has been committed, courts use an
objective standard and view the average consumer as a “reasonable person”. See
Wakelam v Johnson & Johnson, 2011 BCSC
Richard v. Time

19. 19
Canada’s Anti Spam Legislation
(CASL)

20. 20
• CASL creates new and broader standalone criminal offences and
reviewable practices in the Competition Act for deceptive advertising
in the locator, sender information or subject matter of an electronic
message sent to promote a business interest or supply/use of a
product (PEM)
• These apply to any false or misleading representations made in the
locator, sender information or subject matter of a PEM
• The standard for deception is not limited to representations that are
false or misleading in a material respect. The materiality qualifier has
been dropped
CASL

21. 21
• This creates a higher standard for defending claims about allegedly
deceptive representations in PEMs
• This may chill the use of enticing representations being made in the
subject line that are intended to be read in the context of the entire
body of the PEM
• Digital advertisers will have to consider whether the subject line of a
PEM is deceptive when viewed in isolation of the rest of the PEM
CASL

22. 22
DAAC’s “Ad Choices Icon” Program

23. 23
• Online Behavioural Advertising (OBA) - or Interest Based Advertising
(IBA) - involves tracking consumers’ online activities over time to
deliver ads targeted to their inferred interests
• Once launched, the Ad Choices Icon will appear in or around OBA
ads. Consumers will click on the Icon to find out more about OBA
from those serving OBA ads or collecting info for OBA. Links will be
provided to various levels of opt-outs and to full opt-out
• Advertising Standards Canada (ASC) will monitor the program to
ensure the Icon is being displayed correctly, that opt-outs are set
correctly, and that privacy policies have not changed without user
notification
DAAC’s “Ad Choices Icon” Program

24. 24
•This is a consumer opt-out tool and self-regulatory best practices effort
•The Ad Choices Icon is in line with Canada’s current privacy law and the
Federal Privacy Commissioner’s December 2011 and June 2012 OBA
guidelines
•The program is set to launch this summer; when available, get your
clients to sign up for info webinars explaining program to prospective
Canadian business users
•Future home of DAAC’s Self-Regulatory Program For Online Behavioral
Advertising: http://youradchoices.ca/
DAAC’s “Ad Choices Icon” Program

25. 25
Commissioner of Competition
v. Telcos and CWTA:
Emerging Issues in Mobile Sector
/

26. 26
• On September 14, 2012, the Competition Bureau began legal
proceedings against Bell Canada, Rogers Communications, Inc.,
TELUS Corporation and the Canadian Wireless Telecommunications
Association (CWTA) alleging misleading advertising that promotes
"premium text messaging” and “rich content” services
• The Bureau is seeking full customer refunds and administrative
monetary penalties (AMPs) — $10 million each from Bell, Rogers and
Telus, and $1 million from the CWTA
Competition Litigation Against Telcos and CWTA

27. 27
• From statements made by Competition Bureau officials at conferences
over the past 9 months, this case seems to have been brought out of
a growing concern over so-called online “subscription traps”
• Among consumer protection and competition authorities
internationally, there has also been a growing concern over so-called
“mobile cramming” (i.e., the emerging practice of unauthorized third-
party charges on mobile phone bills)
• The FTC hosted a Roundtable on May 8, 2013 to explore how mobile
cramming occurs and how best to protect consumers from this
practice
Competition Litigation Against Telcos and CWTA

28. 28
FTC’s Revised Guidance on
Dot.Com Disclosures - How to Make
Effective Disclosures in Digital
Advertising, March 2013

29. 29
• The FTC recently updated its 2000 guidelines for disclosures in digital
media. The guide addresses the expanding use of smart phones,
tablets, and other mobile devices by consumers, as well as the
increased use of social media marketing by businesses
• “Dot.Com Disclosures: How to Make Effective Disclosures in
Digital Advertising” -
http://www.ftc.gov/os/2013/03/130312dotcomdisclosures.pdf
FTC’s Dot.Com Disclosures

30. 30
Scrolling: Preferably, design ads so that
“scrolling” is not necessary to find a disclosure

31. 31
• Well-labeled hyperlinks may be used for disclosures that are not
integral to a claim
• Hyperlinks should be clearly labeled to communicate the
importance, nature, and relevance of the information to which they
lead
• A hyperlink should take consumers directly to the disclosure
Information about Hyperlinks

32. 32
•Hyperlinks should not be used to disclose core information that is an
inseparable part of the claim, such as certain cost and safety
disclosures
•Disclosures necessary to prevent deception should never be
relegated to “terms of use” and similar contractual agreements
•Hyperlinks can be useful if a disclosure is lengthy, has complicated
details, or if it needs to be repeated frequently on a website
Information about Hyperlinks

33. 33
•If a space-constrained ad contains a claim that requires qualification,
the advertiser disseminating it is not exempt from disclosure
requirements
•When a disclosure is necessary, a brief effective one can often be
incorporated into a tweet itself. For example, if a tweet is paid for, it can
start with “Ad:” to inform consumers that they’re seeing a paid ad
@Tweets and other #space-constrained-ads

34. 34
•When a necessary disclosure won’t fit into a tweet or other ad, there
are circumstances when it may be okay for the disclosure to be on the
click-through:
• when a teaser ad does not actually identify the product being
advertised, so the consumer must click through to learn its
identity, or
• when the advertised product is sold only through the advertiser’s
own website and the consumer must click through in order to
take any action
•In other circumstances, if a necessary qualification to a claim won’t fit
in the tweet itself, then the claim shouldn’t be made in a tweet
@Tweets and other #space-constrained-ads

35. 35
• These recent developments & trends suggest an increase in
consumer protection initiatives in terms of new legislation,
regulations, guidance documents and strategic enforcement action
• Given the global nature of the online and mobile marketplace,
regulators are acting in concert with other regulators internationally -
conducting so-called consumer protection “sweeps” - e.g., see the
good work of the International Consumer Protection and
Enforcement Network (ICPEN), an organization composed of
consumer protection authorities from over 50 countries:
https://icpen.org/
Wrap Up

36. 36
• Canadian regulators are leading the charge in this area - e.g., in
September 2012, the Competition Bureau coordinated a joint
internet sweep by members of ICPEN targeting deceptive
advertising in the rapidly growing online and mobile markets
• The focus of the sweep was on suppliers who did not properly
disclose the terms of online and mobile transactions that can result
in consumers facing recurring charges, usage fees and contract
terms they did not intend to accept
• The Bureau has warned that the results of the ICPEN sweep will be
analyzed and follow-up enforcement action will be taken, as
necessary
Wrap Up

37. 37
Bill Hearn
Davis LLP, Toronto
bhearn@davis.ca
416.369.5298
Questions?