Recent developments in Canadian advertising law.

1. Disclaimers in Ads – Resting Not Dead?
Recent Developments in Deceptive Advertising Law -
What Advertisers Need to Know
Bill Hearn and Hubert Sibre, Davis LLP
Presentation to Association of Canadian Advertisers
October 29, 2012

2. Overview
• Why are disclaimers in ads hotter than ever?
• What’s a disclaimer? Why and how are they used in
advertising?
• When do disclaimers cause problems? What are the
costs?
2

3. Overview
• What are the rules for properly using disclaimers?
 under federal statutes (like the Competition Act)
 as enforced by regulators (like the Competition
Bureau)*
 as interpreted by Canadian courts
 as administered by ASC
*May touch on requirements of other Canadian regulators – e.g., OMVIC
3

4. Overview
• What did the Supreme Court of Canada recently say
about disclaimers in Richard v. Time? and what are
the implications of that judgment?
• Some conclusions (are disclaimers really dead?), Q&A
and, time permitting, a discussion of some disclaimers
in action
4

5. Why Are Disclaimers In Ads So Hot?
5

6. Disclaimers are commonplace but
should not be an afterthought
Truth Works!
• Tell the Truth: Honesty Is Your Most Powerful
Marketing Tool, Sue Unerman and Jonathan Baskin
• Extreme Trust: Honesty as a Competitive
Advantage, Don Pepper and Martha Rogers, Ph.D.
6

7. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Bell’s Consent (June 2011)
• Bell Canada voluntarily (and without admitting liability) paid a
$10 million administrative monetary penalty in a consent
agreement following an investigation and allegations by the
Competition Bureau that, despite the disclaimers in Bell’s ads
being literally true, the general impression created by these ads
was deceptive contrary to the false and misleading advertising
provisions of the Competition Act
7

8. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Bell’s Consent (June 2011)
• Advertised prices were not actually available to anyone due to extra
fees. The Commissioner concluded that:
 consumers would be required to review disclaimers on Bell’s
website or elsewhere to identify the additional fees for which
consumers were liable
 the disclaimers were in any event insufficient to alter the general
impression of the representations
• Consent Agreement required that Bell “make no price representation
that uses a disclaimer that contradicts the general impression of the
representation to which it relates”
8

9. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner’s Warning (October 2011)
• Canada’s then Commissioner of Competition Melanie Aitken
warned in a speech to competition lawyers that: “Including a
fine-print disclaimer is no license to advertise prices that are not
available … We are investigating several industries where we are
concerned that Canadians have been taken advantage of, in this
or related ways. All I can say at this point is: stay tuned”
9

10. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner of Competition v. Yellow Page Marketing
(March 2012)
• In an action brought by the Competition Bureau, the Ontario
Superior Court of Justice found that 5 companies and 3
individuals had advertised deceptively and ordered them to (a)
pay over $9 million in administrative monetary penalties (to
date, the highest ever awarded in contested proceedings for
deceptive advertising in Canada), (b) pay restitution to affected
consumers and (c) publish corrective notices
10

11. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner of Competition v. Yellow Page Marketing
(March 2012)
• The advertising was mainly unsolicited faxes that deceived
recipients into believing they were dealing with the well-known
“Yellow Pages Group” and were merely updating their existing
records for its “telephone directory business”
• The fine print disclaimer, however, revealed that they were
actually signing a new 2-year contract with the unknown “Yellow
Marketing Group” for “internet business directory” services
(which cost $2,856)
11

12. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner of Competition v. Yellow Page Marketing
(March 2012)
• The Court held that the advertising was intended to deceive and
did, in fact, deceive recipients into believing they were dealing
with the Yellow Pages Group. The Court also held that
• the fact that the fine print of the advertising stated that
returning the unsolicited fax would bind the recipient to a
two-year contract did not reduce its deceptive nature
• the fine print did not clarify that the unsolicited faxes had not
been sent by the Yellow Pages Group and the disclosure was
insufficiently prominent
12

13. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner Announces Resignation (June 2012)
• On June 28, 2012, then Commissioner Aitken announced she
would be stepping down on September 21, 2012
• Bureau press release listed as one of her accomplishments that
“Canadians today .. are better protected against misleading
representations, including those resulting from fine-print
disclaimers.”
13

14. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Bureau Sues Carriers and CWTA for Allegedly Deceptive Ads
(September 2012)
• On September 14, 2012, following a 5-month investigation, the
Competition Bureau sues Bell, Rogers, Telus and the Canadian
Wireless Telecommunications Association in the Ontario
Superior Court of Justice seeking full customer refunds and
administrative monetary penalties totaling $31 million for
premium text messaging and rich content services (such as trivia
questions and ring tones) the advertising for which the Bureau
alleges has been deceptive
14

15. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Bureau Sues Carriers and CWTA for Allegedly Deceptive Ads
(September 2012)
• Bureau alleges that customers were misled into believing this
content was free when it was not.
• Lisa Campbell, Deputy Commissioner, Fair Business Practices
Branch stated “We want to ensure that consumers are not
misled and have greater control over third-party charges on their
wireless invoices.”
15

16. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner’s Remarks (September 2012)
• On September 20, 2012, then Commissioner Aitken (in her last
public speech in that capacity) emphasized the importance of the
Competition Bureau being and remaining “a strong enforcer”
• “Canadians benefit from a rigorous competition framework,
combined with a Bureau that has teeth and is not afraid to
bite, when required.”
16

17. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
Commissioner’s Remarks (September 2012)
• “By looking at cases through the lens that we must always be
ready for litigation – as much as we would rather not go that
route – has allowed us to enhance our credibility, many times
over, as a principled and active enforcement agency.”
• “Today, right across the spectrum, we have an
unprecedented number of contested cases in progress. We
have taken steps internally to increase and improve our
capacity to suitably aggressively support our pursuit of these
cases.”
17

18. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
New Sheriff in Town (September 2012)
• On September 26, 2012 Minister of Industry Christian Paradis
appointed John Pecman as Interim Commissioner of Competition
to replace former Commissioner Aitken
• Commissioner Pecman is an economist by training and a 28-year
veteran of the Bureau who has worked in every enforcement
branch, most recently as Senior Deputy Commissioner of
Competition of the Criminal Matters Branch enforcing the price-
fixing and bid-rigging provisions of the Competition Act
18

19. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
ICPEN Sweep (September 2012)
• On September 28, 2012, the Competition Bureau announced it
had “coordinated a joint internet sweep by members of the
International Consumer Protection and Enforcement Network
(ICPEN) targeting fraudulent and deceptive advertising in the
rapidly growing online and mobile markets.”
• Consumer protection agencies worldwide participated in this
initiative aiming to increase consumer confidence in online
transactions by improving their ability to make informed
purchases
19

20. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
ICPEN Sweep (September 2012)
• Sweep intended to identify vendors who do not properly disclose
the terms of online and mobile transactions that can result in
consumers facing recurring charges, usage fees and contract
terms that they did not intend to accept
• “The results of the ICPEN sweep will be analyzed and follow-up
enforcement action will be taken, as necessary.”
• Both ICPEN and the Bureau have set-up “complaint hotline”
centres for consumers who believe they have been victims of
deceptive online or mobile practices 20

21. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” –
New Sheriff, Same Mandate and Priorities (October 2012)
• Appears the Bureau will keep fighting deceptive advertising as an
enforcement priority
• Appears the Bureau will continue to use all of the powers at its
disposal, including seeking significant penalties and restitution to
pursue instances of deceptive advertising
21

22. Disclaimers should be top of mind for
advertisers
Competition Bureau’s Recent Record as “Strong Enforcer” -
Former Commissioner Aitken’s “Exit Interview” (October 2012)
• On October 26th, in the November 2012 edition of The Globe and
Mail Report on Business Magazine, former Commissioner Aitken
said that, “[t]here was the Bell Canada case in the summer of
2011, for misleading advertising. They were hiding important
elements of the prices of phone, Internet and TV services in fine-
print disclaimers, and they were advertising prices that simply
weren’t available. By entering into a consent agreement to pay
the maximum fine possible – and most importantly, stopping the
conduct – they helped us send a signal to others in the
industry.”
22

23. Disclaimers should be top of mind for
advertisers
Other Regulators –
Competition Bureau Not Alone with Concerns – e.g., OMVIC
(August 2012)
• August 2012, Ontario Motor Vehicle Industry Council (OMVIC)
Dealer Bulletin “Problematic Trends in Dealer Advertising”
• Do not advertising using font or print that is not clear or legible
because of size/contrast/orientation on page (e.g., vertical)
23

24. Disclaimers should be top of mind for
advertisers
Other Regulators –
Competition Bureau Not Alone with Concerns – e.g., OMVIC
(August 2012)
• “Vertical fine print is not acceptable.”
• “All disclosure in advertisements appearing in newspapers,
periodicals and other publications must be printed in a font that
is, at a minimum, the same as that normally used in classified
advertising by the publication where the advertisement appears.”
24

25. Disclaimers should be top for mind for
advertisers
Supreme Court of Canada - Jean-Marc Richard v. Time Inc. –
New Standards for Consumer Protection?
• In February 2012, the Supreme Court of Canada ignored
disclaimers that were “inconspicuous” and “buried in a sea of text”
(lowering the bar for deceptive advertising in the consumer
protection context and moving from a “buyer beware” to a “seller
beware” standard)
25

26. Disclaimers should be top for mind for
advertisers
Supreme Court of Canada - Jean-Marc Richard v. Time Inc.
New Standard for Consumer Protection?
• The SCC expressly rejected the standards of
 the consumer with an average level of intelligence, skepticism
and curiosity, and
 the careful and diligent consumer
26

27. Disclaimers should be top for mind for
advertisers
Supreme Court of Canada - Jean-Marc Richard v. Time Inc.
New Standard for Consumer Protection?
• Instead, the SCC applied, in the consumer protection context, the
standards of
 the credulous and inexperienced consumer – i.e., someone
who is not particularly experienced at detecting falsehoods and
subtleties found in commercial representations, and
 the ordinary hurried purchaser – i.e., not the person who never
notices anything but the person who takes no more than
ordinary care to observe that which is staring them in the face
27

28. Why thinking like a comedian might help with
legal compliance
28

29. 29

30. Disclaimers In Ads: 101
30

31. Disclaimers – What, Why and How
• Dictionaries define a disclaimer as a renunciation or
denial – a statement that negates or limits in some way*
*Marketers should not use a disclaimer to negate the main message of an ad
• Marketers often make use of disclaimers in ads to
disclose important information that is required by law or
is necessary for the reader to better understand the ad
• This is commonly done by marking the headline with an
asterisk signaling to the reader that a footnote to the
headline is to be found elsewhere in the ad
31

32. Disclaimers – What, Why and How
• Disclaimers often serve a useful purpose and are usually
necessitated by the complexity of the offers being
advertised, by space restrictions in the ad medium being
used, and/or by financial constraints – e.g., there are
different compliance challenges for mobile marketing vs.
outdoor advertising
• In most cases, the text that is asterisked is the main
message and is in large easy-to-read print
• A disclaimer that properly adds information is not a
problem so long as the ad, taken as a whole, is not
materially deceptive
32

33. Disclaimers – Problems
• Problems arise when the asterisk refers to important
information which may negate or otherwise limit the
plain meaning of the main message
• Disclaimers that restrict rather than expand upon, or
contradict rather than clarify, the main message
usually raise legal concerns about deceptive
advertising
33

34. Disclaimers – Costs
• Costs to business and brand include loss of consumer
trust and bad PR associated with deceptive advertising
• Federal regulators (such as the Competition Bureau) may
take enforcement action and impose substantial fines
and jail terms
• Provincial regulators (in specialized areas such as OMVIC
for Ontario motor vehicle dealers and MTCU for Ontario
private career colleges) may take enforcement action
and impose sanctions including fines and revocation of
marketers’ licenses/registrations
34

35. Disclaimers – Costs
• ASC may seek compliance in response to consumer
and/or competitor complaints
• Competitors (especially where comparative claims are
being made and deceptively disclaimed) may seek
injunctive relief and/or substantial damages in private
court actions
• Consumers (as individuals and, more troubling, as a
class) may seek substantial damages in private court
actions
35

36. Disclaimers – Rules for Proper Use
Federal Ad Laws of General Application under
Competition Act*
The basic rule prohibiting deceptive advertising is whether
the general impression created by the ad is false or
misleading in a material respect
* There are numerous federal ad laws that apply to specific products (e.g.,
food, drugs and pesticides) that are enforced by specialized regulators. There
are also many provincial/territorial ad laws and specialized regulators (e.g., in
the motor vehicle dealer and career college sectors).
36

37. Disclaimers – Rules for Proper Use
Federal Ad Laws of General Application under
Competition Act
• This basic rule raises many questions, including
 What level of consumer sophistication may marketers assume?
 What is the general impression created? Is it materially false
and misleading or not?
 What is the impression without the disclaimer? Will the
disclaimer actually be noticed? Is the “main message” so strong
that the disclaimer can’t alter it?
• You can’t use disclaimers like you would defined terms in a
contract
37

38. Disclaimers – Rules for Proper Use
Some Guidance from the Competition Bureau
• Use of Disclaimers, Misleading Advertising Bulletin, 1986
• Asterisks, Disclaimers and Other Fine Print, Misleading
Advertising Bulletin, 1990
• Application of the Competition Act to Representations on the
Internet, Enforcement Guidelines, 2003 (updated 2009)
 Section on disclaimers with principles applicable to offline
ads too
• Remarks By Commissioner of Competition, CBA Conference,
2011
38

39. Disclaimers – Rules for Proper Use
Bureau’s 1986 Bulletin
• Disclaimers may properly clarify ambiguity or
provide qualification
• Main body of advertisement apart from the
disclaimer should be capable of standing alone
• It is unlikely that a disclaimer can change the general
impression of a misleading advertisement
39

40. Disclaimers – Rules for Proper Use
Bureau’s 1990 Bulletin
• A practical well-written summary
• Concludes with following observation:
“Advertisers considering using disclaimers and other fine print
should ask themselves the following questions: (1) Were there
any footnotes in this article? (2) Did you bother to read them?
and (3) Do you remember what they said?”
• Surprisingly, this article is not available on Bureau’s
website
40

41. Disclaimers – Rules for Proper Use
Bureau’s 1990 Bulletin
• Covers print, television and radio advertising and addresses:
 Disclaimer content, placement and format
 Use and placement of symbols
 Size of fine print
41

42. Disclaimers – Rules for Proper Use
Bureau’s 1990 Bulletin
• Not sufficient for disclaimer to be present – disclaimer must be
likely to be read and likely to alter the general impression
 On TV, need to keep disclaimer on screen long enough to read
and comprehend in one normal viewing
 When determining appropriate size of text for disclaimer,
should take context of ad and nature of target audience into
account
 The 7 point font rule:
“It is the [Bureau’s] position that disclaimers in print size smaller than 7 points will not save a
representation from being misleading … At the same time, this should not be taken to mean that
disclaimers in 7 point or larger sizes will be sufficient to affect the general impression in every case.
This determination depends on the circumstances of each case.”
42

43. Disclaimers – This is 7 point font
This product is meant for educational purposes only. Any resemblance to real persons, living or dead is purely coincidental. Void where prohibited. Some assembly required. List each check separately
by bank number. Batteries not included. Contents may settle during shipment. Use only as directed. No other warranty expressed or implied. Do not use while operating a motor vehicle or heavy
equipment. Postage will be paid by addressee. Subject to CAB approval. This is not an offer to sell securities. Apply only to affected area. May be too intense for some viewers. Do not stamp. Use
other side for additional listings. For recreational use only. Do not disturb. All models over 18 years of age. If condition persists, consult your physician. No user-serviceable parts inside. Freshest if
eaten before date on carton. Subject to change without notice. Times approximate. Simulated picture. No postage necessary if mailed in the United States. Breaking seal constitutes acceptance of
agreement. For off-road use only. As seen on TV. One size fits all. Many suitcases look alike. Contains a substantial amount of non-tobacco ingredients. Colors may, in time, fade. We have sent the
forms which seem right for you. Slippery when wet. For office use only. Not affiliated with the American Red Cross. Drop in any mailbox. Edited for television. Keep cool. process promptly. Post office
will not deliver without postage. List was current at time of printing. Return to sender, no forwarding order on file, unable to forward. Not responsible for direct, indirect, incidental or consequential
damages resulting from any defect, error or failure to perform. At participating locations only. Not the Beatles. Penalty for private use. See label for sequence. Substantial penalty for early withdrawal.
Do not write below this line. Falling rock. Lost ticket pays maximum rate. Your canceled check is your receipt. Add toner. Place stamp here. Avoid contact with skin. Sanitized for your protection. Be
sure each item is properly endorsed. Sign here without admitting guilt. Slightly higher west of the Mississippi. Employees and their families are not eligible. Beware of dog. Contestants have been
briefed on some questions before the show. Limited time offer, call now to ensure prompt delivery. You must be present to win. No passes accepted for this engagement. No purchase necessary.
Processed at location stamped in code at top of carton. Shading within a garment may occur. Use only in a well-ventilated are. Keep away from fire or flames. Replace with same type. Approved for
veterans. Booths for two or more. Check here if tax deductible. Some equipment shown is optional. Price does not include taxes. No Canadian coins. Not recommended for children. Prerecorded for
this time zone. Reproduction strictly prohibited. No solicitors. No alcohol, dogs or horses. No anchovies unless otherwise specified. Restaurant package, not for resale. List at least two alternate dates.
First pull up, then pull down. Call toll free before digging. Driver does not carry cash. Some of the trademarks mentioned in this product appear for identification purposes only. Record additional
transactions on back of previous stub. Unix is a registered trademark of AT&T. Do not fold, spindle or mutilate. No transfers issued until the bus comes to a complete stop. Package sold by weight, not
volume. Your mileage may vary. This article does not reflect the thoughts or opinions of either myself, my company, my friends, or my cat. Don't quote me on that. Don't quote me on anything. All
rights reserved. You may distribute this article freely but you may not make a profit from it. Terms are subject to change without notice. Illustrations are slightly enlarged to show detail. Any
resemblance to actual persons, living or dead, is unintentional and purely coincidental. Do not remove this disclaimer under penalty of law. Hand wash only, tumble dry on low heat. Do not bend, fold,
mutilate, or spindle. No substitutions allowed. For a limited time only. This article is void where prohibited, taxed, or otherwise restricted. Caveat emptor. Article is provided "as is" without any
warranties. Reader assumes full responsibility. An equal opportunity article. No shoes, no shirt, no articles. quantities are limited while supplies last. If any defects are discovered, do not attempt to read
them yourself, but return to an authorized service center. Read at your own risk. Parental advisory - explicit lyrics. Text may contain explicit materials some readers may find objectionable, parental
guidance is advised. Keep away from sunlight. Keep away from pets and small children. Limit one-per-family please. No money down. No purchase necessary. You need not be present to win. Some
assembly required. Batteries not included. Instructions are included. Action figures sold separately. No preservatives added. Slippery when wet. Safety goggles may be required during use. Sealed for
your protection, do not read if safety seal is broken. Call before you dig. Not liable for damages arising from use or misuse. For external use only. If rash, irritation, redness, or swelling develops,
discontinue reading. Read only with proper ventilation. Avoid extreme temperatures and store in a cool dry place. Keep away from open flames. Avoid contact with eyes and skin and avoid inhaling
fumes. Do not puncture, incinerate, or store above 120 degrees Fahrenheit. Do not place near a flammable or magnetic source. Smoking this article could be hazardous to your health. The best
safeguard, second only to abstinence, is the use of a condom. No salt, MSG, artificial color or flavoring added. If ingested, do not induce vomiting, and if symptoms persist, consult a physician.
Warning: Pregnant women, the elderly, and children should avoid prolonged exposure to Happy Fun Ball. Caution: Happy Fun Ball may suddenly accelerate to dangerous speeds. Happy Fun Ball
contains a liquid core, which if exposed due to rupture should not be touched, inhaled, or looked at. Do not use Happy Fun Ball on concrete. Discontinue use of Happy Fun Ball if any of the following
43

44. Disclaimers – This is 7 point font
occurs: Itching, Vertigo, Dizziness, Tingling in extremities, Loss of balance or coordination, Slurredspeech, Temporary blindness, Profuse Sweating, or Heart palpitations. If Happy Fun Ball begins to
smoke, get away immediately. Seek shelter and cover head. Happy Fun Ball may stick to certain types of skin. When not in use, Happy Fun Ball should be returned to its special container and kept
under refrigeration. Failure to do so relieves the makers of Happy Fun Ball, Wacky Products Incorporated, and it's parent company, Global Chemical Unlimited, of any and all liability. Ingredients of
Happy Fun Ball include an unknown glowing substance which fell to Earth, presumably from outer space. Do not taunt Happy Fun Ball. May cause any of the aforementioned effects and/or death.
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adjustments that are not covered in this list, and incidents owing to an airplane crash, ship sinking or taking on water, motor vehicle crashing, dropping the item, falling rocks, leaky roof, broken glass,
mud slides, forest fire, or projectile (which can include, but not be limited to, arrows, bullets, shot, BB's, shrapnel, lasers, napalm, torpedoes, or emissions of X-rays, Alpha, Beta and Gamma rays,
knives, stones, etc.). Seek help immediately if you are actually reading this! This product is meant for educational purposes only. Any resemblance to real persons, living or dead is purely coincidental.
Void where prohibited. Some assembly required. List each check separately by bank number. Batteries not included. Contents may settle during shipment. Use only as directed. No other warranty
expressed or implied. Do not use while operating a motor vehicle or heavy equipment. Postage will be paid by addressee. Subject to CAB approval. This is not an offer to sell securities. Apply only to
affected area. May be too intense for some viewers. Do not stamp. Use other side for additional listings. For recreational use only. Do not disturb. All models over 18 years of age. If condition persists,
consult your physician. No user-serviceable parts inside. Freshest if eaten before date on carton. Subject to change without notice. Times approximate. Simulated picture. No postage necessary if
mailed in the United States. Breaking seal constitutes acceptance of agreement. For off-road use only. As seen on TV. One size fits all. Many suitcases look alike. Contains a substantial amount of non-
tobacco ingredients. Colors may, in time, fade. We have sent the forms which seem right for you. Slippery when wet. For office use only. Not affiliated with the American Red Cross. Drop in any
mailbox. Edited for television. Keep cool. process promptly. Post office will not deliver without postage. List was current at time of printing. Return to sender, no forwarding order on file, unable to
forward. Not responsible for direct, indirect, incidental or consequential damages resulting from any defect, error or failure to perform. At participating locations only. Not the Beatles. Penalty for private
use. See label for sequence. Substantial penalty for early withdrawal. Do not write below this line. Falling rock. Lost ticket pays maximum rate. Your canceled check is your receipt. Add toner. Place
stamp here. Avoid contact with skin. Sanitized for your protection. Be sure each item is properly endorsed. Sign here without admitting guilt. Slightly higher west of the Mississippi. Employees and their
families are not eligible. Beware of dog. Contestants have been briefed on some questions before the show. Limited time offer, call now to ensure prompt delivery. You must be present to win. No
passes accepted for this engagement. No purchase necessary. Processed at location stamped in code at top of carton. Shading within a garment may occur. Use only in a well-ventilated are. Keep
away from fire or flames. Replace with same type. Approved for veterans. Booths for two or more. Check here if tax deductible. Some equipment shown is optional. Price does not include taxes. No
Canadian coins. Not recommended for children. Prerecorded for this time zone. Reproduction strictly prohibited. No solicitors. No alcohol, dogs or horses. No anchovies unless otherwise specified.
Restaurant package, not for resale. List at least two alternate dates. First pull up, then pull down. Call toll free before digging. Driver does not carry cash. Some of the trademarks mentioned in this
product appear for identification purposes only. Record additional transactions on back of previous stub. Unix is a registered trademark of AT&T. Do not fold, spindle or mutilate. No transfers issued until
the bus comes to a complete stop. Package sold by weight, not volume. Your mileage may vary. This article does not reflect the thoughts or opinions of either myself, my company, my friends, or my
cat. Don't quote me on that. Don't quote me on anything. All rights reserved. You may distribute this article freely but you may not make a profit from it. Terms are subject to change without notice.
Illustrations are slightly enlarged to show detail. Any resemblance to actual persons, living or dead, is unintentional and purely coincidental. Do not remove this disclaimer under penalty of law. Hand
wash only, tumble dry on low heat. Do not bend, fold, mutilate, or spindle. No substitutions allowed. For a limited time only. This article is void where prohibited, taxed, or otherwise restricted. Caveat
emptor. Article is provided "as is" without any warranties. Reader assumes full responsibility. An equal opportunity article. No shoes, no shirt, no articles. quantities are limited while supplies last. If any
defects are discovered, do not attempt to read them yourself, but return to an authorized service center. Read at your own risk. Parental advisory - explicit lyrics.Text may contain materials you find
44

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objectionable, parental guidance is advised. Keep away from sunlight. Keep away from pets and small children. do not attempt to read them yourself, but return Keep away from sunlight.
Keep away from pets and small children. Limit one-per-family please. No money down. No purchase necessary. You need not be present to win. Some assembly required. Batteries not
included. Instructions are included. Action figures sold separately. No preservatives added. Slippery when wet. Safety goggles may be required during use. Sealed for your protection, do
not read if safety seal is broken. Call before you dig. Not liable for damages arising from use or misuse. For external use only. If rash, irritation, redness, or swelling develops, discontinue
reading. Read only with proper ventilation. Avoid extreme temperatures and store in a cool dry place. Keep away from open flames. Avoid contact with eyes and skin and avoid inhaling
fumes. Do not puncture, incinerate, or store above 120 degrees Fahrenheit. Do not place near a flammable or magnetic source. Smoking this article could be hazardous to your health.
The best safeguard, second only to abstinence, is the use of a condom. No salt, MSG, artificial color or flavoring added. If ingested, do not induce vomiting, and if symptoms persist,
consult a physician. Warning: Pregnant women, the elderly, and children should avoid prolonged exposure to Happy Fun Ball. Caution: Happy FUn Ball may suddenly accelerate to
dangerous speeds. Happy Fun Ball contains a liquid core, which if exposed due to rupture should not be touched, inhaled, or looked at. Do not use Happy Fun Ball on concrete.
Discontinute use of Happy Fun Ball if any of the following occurs: Itching, Vertigo, Dizziness, Tingling in extremities, Loss of balance or coordination, Slurred speech, Temporary blindness,
Profuse Sweating, or Heart palpitations. If Happy Fun Ball begins to smoke, get away immediately. Seek shelter and cover head. Happy Fun Ball may stick to certain types of skin. When
not in use, Happy FunBall should be returned to its special container and kept under refrigeration. Failure to do so relieves the makers of Happy Fun Ball, Wacky Products Incorporated,
and it's parent company, Global Chemical Unlimited, of any and all liability. Ingredients of Happy Fun Ball include an unknown glowing substance which fell to Earth, presumably from outer
space. Happy Fun Ball has been shipped to our troops in Saudi Arabia and is also being dropped by our warplanes on Iraq. Do not taunt Happy Fun Ball. May cause any of the
aforementioned effects and/or death. Articles are ribbed for your pleasure. Possible penalties for early withdrawal. Offer valid only at participating sites. Slightly higher west of the Rockies.
Allow four to six weeks for delivery. Must be 18 to read. Disclaimer does not cover misuse, accident, lightning, flood, tornado, tsunami, volcanic eruption, earthquake, hurricanes and other
Acts of God, neglect, damage from improper reading, incorrect line voltage, improper or unauthorized reading, broken antenna or marred cabinet, missing oraltered serial numbers,
electromagnetic radiation from nuclear blasts, sonic boom vibrations, customer adjustments that are not covered in this list, and incidents owing to an airplane crash, ship sinking or taking
on water, motor vehicle crashing, dropping the item, falling rocks, leaky roof, broken glass, mud slides, forest fire, or projectile (which can include, but not be limited to, arrows, bullets,
shot, BB's, shrapnel, lasers, napalm, torpedoes, or emissions of X-rays, Alpha, Beta and Gamma rays, knives, stones, etc.). Other restrictions may apply.
This supersedes all previous notices.
45

46. Disclaimers – Rules for Proper Use
Bureau’s Online Reps Enforcement Guidelines
(2003 & 2009)
• Relevant qualifying information must be presented in ads
clearly and conspicuously – consumer must receive clear
and accurate information to make an informed choice
• Disclaimers may expand upon and add information to the
main message
• A disclaimer can only qualify a representation; it cannot
cure or retract a false or misleading representation
46

47. Disclaimers – Rules for Proper Use
Bureau’s Online Reps Enforcement Guidelines
(2003 & 2009)
• Generally the disclaimer should appear on the same
screen and close to the representation to which it
relates (but not always possible)
• Design of page should highlight the existence of
disclaimers (use of colour or contrast may assist)
• “See below for details” generally not explicit
enough; instead say … “restrictions on eligibility”
47

48. Disclaimers – Rules for Proper Use
Bureau’s Online Reps Enforcement Guidelines
(2003 & 2009)
• Attention-grabbing tools should not distract a consumer’s
attention away from disclaimers
• Audio disclaimer may not be sufficient; if audio
disclaimers used, volume and cadence are important
• Visual disclaimers need to be displayed long enough to be
read and understood
• Consider making clicking through a disclaimer compulsory
48

49. Disclaimers – Rules for Proper Use
Bureau’s Online Reps Enforcement Guidelines
(2003 & 2009)
• For “required disclosures” (such as contest rules and mini-
rules) disclosures must be made in a way that they are likely
to be read
• What is considered adequately displayed will depend on the
format and design of the website
• Readers should not be required to take an “active step” (such
as sending an email or placing a phone call) – clicking on a
clearly labelled hyperlink is not considered by the Bureau to
be an active step
49

50. Disclaimers – Rules for Proper Use
Commissioner Aitken’s CBA Speech, 2011
• “It’s very simple - don’t mislead the public by
hiding charges or conditions in fine print.”
• “It’s pretty easy - when a price is offered to
consumers, it better be accurate. Including a fine-
print disclaimer is no license to advertise prices
that are not available.”
• Is it really that simple and easy?
50

51. Disclaimers – Rules for Proper Use:
What Some Courts Have Said
R. v. Viceroy Construction Co. (1975) – D Ignored
• Catalogue for suburban houses
• Text and picture suggested two storey house
• Examination of specification sheet showed a one story
house
• Court held that “average person” would be fooled by the
ad
51

52. Disclaimers – Rules for Proper Use:
What Some Courts Have Said
R. v. International Vacations Ltd. (1980) – D Upheld
• Advertisement published the full schedule of the carrier
• Disclaimer noted that individual flight availabilities had
to be checked
• Court held that disclaimer (warning of flights being sold
out) was effective
• The disclaimer was “an integral part of the
advertisement.”
52

53. Disclaimers – Rules for Proper Use:
What Some Courts Have Said
Purolator v. UPS (1995) – D Upheld
• Disclaimers were right in the main text of ad – i.e., “Usually at
rates up to 40% less than other couriers charge”
• Court held that “A disclaimer does not automatically nullify a
misleading impression created by an ad. Its effect will depend
on several factors, including the degree to which a
representation misleads the public without the disclaimer, the
prominence which it is given in the context of the entire
advertisement, the degree of sophistication that the public to
whom the advertisement is directed exhibits, and the
likelihood that the audience would recognize the disclaimer.”
53

54. Disclaimers – Rules for Proper Use:
What Some Courts Have Said
Maritime Travel Inc. v. Go Travel Direct.com Inc. (2009)
– D Ignored
• Claim was “Go Travel Direct offers vacations for less by
eliminating the travel agent and passing the savings on to you”
• Small print disclaimer that the price comparison was to one
destination on one date
• Disclaimer not sufficient to overcome the general impression
that prices were generally lower
• Contrast with 1980 International Vacations case
54

55. Disclaimers – Rules for Proper Use:
What Some Courts Have Said
Commissioner of Competition v. Yellow Page Marketing
(2012) – D Ignored
• The Court found the advertising deceptive and, with respect to
the disclaimers, held that
• the fact that the fine print of the advertising stated that
returning the unsolicited fax would bind the recipient to a
two-year contract did not reduce its deceptive nature, and
• the fine print did not clarify that the unsolicited faxes had not
been sent by the Yellow Pages Group and the disclosure was
insufficiently prominent
55

56. Disclaimers – Rules for Proper Use:
What Some Courts Have Said
THE NEW LEADING CASE IN CONSUMER PROTECTION*
Richard v. Time, Supreme Court of Canada (2012)
* Restricted to Quebec and/or provincial/territorial consumer protection laws
or applicable generally including to the federal Competition Act?
56

57. Richard v. Time: How far can advertisers go
57

58. January 2011
Jean-Marc Richard v. Time Inc.
• Hearing before Supreme Court in January 2011
Claim for US $833,337
• Claim for US $833,337
58

59. Jean-Marc Richard v. Time Inc.
• Introductory facts
 Richard receives « Sweepstakes Notification » in 1999
 The Sweepstakes says:
• « Our sweepstakes results are now final: Mr. Jean Marc
Richard has won a cash prize of $833,337.00!
• We are now authorized to pay $833,337.00 in cash to
Mr. Jean Marc Richard!
• A bank cheque for $833,337.00 is on its way to xxxx st!
• You will forfeit the entire $833,337.00 if you fail to
respond to this notice! »
• The justification from Time:
 « If you have and return the Grand Prize winning entry»
59

60. Judgment of Carole Cohen, j.c.s.
• No contract between Time and Richard to pay the
amount promised, but:
• Many infractions to the Consumer Protection Act –
Title II – illegal commercial practices
• $100,000 of punitive damages and $1,000 of
compensatory damages (moral damages)
60

61. Judgment of the Quebec Court of Appeal
• Reverses first instance judgment
• Confirms that the Consumer Protection Act applies
to the relationship between Time and Richard,
whether a contract exists or not
• Modifies definition of average consumer
61

62. Judgment of the Court of Appeal
Other subjects discussed
• Punitive damages under sec. 272 of the Act
• Obligations imposed by the Act
• Average consumer in relation with the criteria to
determine illegal practices
• Quantum
• Compensatory damages
• Legal costs
62

63. Judgment of the Court of Appeal
• To justify the reversal of the first instance decision, the
Quebec Court of Appeal states the following (translated)
« The average consumer is not more naive that the average
person. I imagine him to be of average intelligence, of average
scepticism and of average curiosity. »
• In addition, the Court of Appeal states: « He knows, I believe,
that advertisement is, somewhat by definition, boastful. »
63

64. Judgment of the Court of Appeal
Consequently, the criteria of the average consumer,
as compared to the traditional definition of an
inexperienced and credulous consumer, was
substantially modified by the Court of Appeal
64

65. Leave to appeal to the Supreme Court
of Canada
• The impact of the Court of Appeal judgment on the
definition of the average consumer
• Leave to appeal allowed
65

66. Hearing before the Supreme Court of
Canada
Two main subjects
• The average consumer as applied to advertising
• Quantum of punitive damages
66

67. Judgment of the Supreme Court of
Canada - February 2012
• Reversal of the judgment of the Quebec Court of Appeal
• History of consumer protection
• Review on prohibited practices
 General impression
 Abstract analysis
67

68. Judgment of the Supreme Court of Canada
On the subject of the average consumer:
• Advertising and consumer law must protect more that
simply the average – a credulous and inexperienced
consumer
• Average consumer is not particularly experienced at
detecting falsehoods and subtleties
• The document from Time was purposefully drafted to be
misleading
• Proof of contract between Richard and Time was necessary
(here it existed because Richard subscribed to Time
magazines)
68

69. Judgment of the Supreme Court of Canada
On the subject of punitive damages:
• Consumer Protection Act allows for punitive damages (Section
272 of the Act)
 Contract is needed (Sections 1e, 2 and 272 of the Act)
 Independence of the recourse in damages
• Criteria as established continues to apply
• Quantum must be dissuasive, but proof of capability of
impugned person must be made
• No need to consider the Charter of the French Language for
quantum
• Costs awarded in favour of Richard because of the importance of
the questions raised before the Court 69

70. Canadian Code of Advertising Standards
• Cornerstone of advertising self-regulation
• Sets criteria for truthful and acceptable advertising
• Consumers’ complaints − Consumer Complaint
Procedure
• Disputes between adver sers − Advertising Dispute
Procedure
70

71. Clause 1: Accuracy and Clarity
• Ads must not make inaccurate or misleading claims
about a product/service
• General impression conveyed by an ad is important
in assessing truthfulness of a message
• Ads must not omit relevant information
• Details of an offer must be clearly stated
• All claims must be supportable
71

72. Canadian Code of Advertising Standards
• Consumers critically scrutinizing advertising
• 2011-2012 – misleading ads remains top complaint
issue
• Rise in number of complaints re: illegible disclaimers
in automobile, telecommunications and financial
services commercials
72

73. Standards Council Decision
Internet Ad: Telecommunications Service Provider
“Unlimited” service advertised at a specified monthly price
Complaint:
Ad did not disclose important limitations on the service
Decision:
• “Unlimited” meant no limitations or restrictions, but in reality the service
was limited. Limitations were not found on the main page, but elsewhere on
the advertiser’s website. Limitations should have been disclosed on the
main page
• Ad found to contain an inaccurate claim and omitted relevant information
Infraction: Clauses 1(a) and (b)
73

74. Standards Council Decision
Cosmetic Advertisements – 7 separate cases
Advertisements implied that the models’ very long eyelashes resulted from
using the advertised products
Complaints:
Depicted results could not have been achieved unless false lashes or lash
inserts were used in addition to the product
Decision:
The use of false eyelashes/inserts in mascara commercials is important
information that must be, but wasn’t, clearly communicated so that viewers
did not understand the basis for the depiction and claim
Infractions: Clauses 1(a) and (d)
74

75. Disclaimers In Ads: Wrap Up
75

76. Some Conclusions
• Advertisers must take seriously the use of disclaimers; given
the consequences, they can’t be an afterthought
• Advertisers must carefully think through the nature, content,
placement, format, size and prominence of disclaimers
• Competition Bureau has been consistent in articulating the
principle that the disclaimer cannot contradict the main
message
76

77. Some Conclusions
• Canadian courts have not been as consistent – one challenge
is that it is always easy to discern what’s a contradiction
• But now have the SCC’s articulation of the “general
impression” test in Richard v. Time for determining when an
advertisement is deceptive which, in the context of at least
the Quebec Consumer Protection Act, applies a low standard
of discernment/sophistication for the notional “average
consumer”
77

78. Some Conclusions
• Historically, the level of discernment/sophistication imputed
to the notional “average purchaser” under the deceptive
advertising provisions of the Competition Act has varied
based on the type of product and the target audience
• It is an open question whether the “general impression” test
in Richard v. Time will be applied to the federal Competition
Act or whether it will be restricted to Quebec (or at least
provincial/territorial) consumer protection laws
78

79. Some Conclusions
• In a presentation to the Canadian Bar Association’s
Competition Law Conference in Ottawa on September 20,
2012, Lisa Campbell Deputy Commissioner, Fair Business
Practices Branch, suggested that the Bureau’s view is that
the lower standard enunciated in Richard v. Time may well
apply (or, depending on the context, at least ought to apply)
to the interpretation of the deceptive advertising provisions
of the Competition Act
79

80. Some Conclusions
• As a practical matter, therefore, while there may be good
legal arguments that the standard of average consumer in
Richard v. Time under the Quebec Consumer Protection Act
should not apply to cases under the Competition Act, the risk
averse, prudent advertiser will, to the greatest extent
possible, put the disclaimers in its advertising under the
scrutiny of this pro-consumer, harsher-on-the-advertiser test
80

81. Some Conclusions
• In any event, fair to say that the SCC’s ruling on the “general
impression” test in determining whether an ad is deceptive
may influence interpretation of the deceptive advertising
provisions of the Competition Act
• Even if the reasoning in the Richard v. Time case is not
adopted in future Competition Act cases, it will likely be
argued to be relevant
81

82. Some Conclusions
• Disclaimers are not dead, and it would be silly for advertisers
to stop using them completely … But don’t be cute!
• Recent Bureau enforcement actions should put to rest the
idea, if it ever crosses an advertiser’s mind, that fine print
disclaimers are effective, convenient and costless devices to
trick consumers … That’s bad business and bad law!
• Disclaimers remain relevant and an important arrow in an
advertiser’s quiver if they are prominent, easy to read and do
not contradict main message of the advertising
82

83. Some Rules of Thumb
Disclaimers in ads should
• enlighten, not confuse consumers
• expand upon main message or clarify ambiguity
• not contradict or negate the main message
• be consistently placed and marked with symbols
throughout the ad
• be placed close to the main message to which it
relates
83

84. Why thinking like a comedian might help with
legal compliance
• SNL’s “Happy Fun Ball” Spoof TV Commercial
Saturday Night Live - Happy Fun Ball - Video - NBC.com
Happy Fun Ball (old SNL spoof commercial) - YouTube
84

85. Our Contact Info
Bill Hearn, Counsel
Davis LLP, Toronto
bhearn@davis.ca
416.369.5298
Hubert Sibre, Partner
Davis LLP, Montreal
hsibre@davis.ca
514.392.8447
85