The Dufresne Group (the “Group”), which operates Ashley Homestores and Dufresne Furniture and Appliances, must pay a substantial $3.25 million penalty, according to a statement from the Competition Bureau of Canada (the “Bureau”) released September 27, 2023. This settlement marks the resolution of concerns raised by the Bureau regarding the Group’s marketing practices.
The Bureau’s investigation into the Group’s marketing practices revealed a series of concerns related to the accuracy and honesty of their advertising claims. According to the Bureau, customers of Ashley Homestores were led to believe that they were benefiting from substantial discounts, based on assertions made through online platforms and various other advertising mediums within physical stores. Notably, the Bureau found that these apparent discounts were artificially exaggerated based on inflated regular prices, contrary to the ordinary price claims provisions of the Competition Act (the “Act”).
Additionally, the Bureau’s investigation found that the Group employed marketing techniques that misled consumers into thinking that specific product discounts would expire after a set time, which, in reality, was not the case. In particular, urgency cues such as “limited time offers” and “countdown clocks” were used by the Group, even where a promotion was to be extended or replaced with another. Notably, this can lead consumers to believe they must rush into buying a product before the promotion ends. In this case, the Bureau found that the use of these urgency cues by the Group was contrary to the general deceptive marketing provisions of the Act.
The $3.25 million fine sends a clear message that the Bureau takes deceptive marketing practices seriously and is committed to holding companies accountable for misleading advertising claims. The Group has also been asked to pay $100,000 towards the Competition Bureau’s costs. The Group’s settlement (which is contained in a consent agreement) also requires commitments from the Group to revise its marketing practices to align with the Act, and a commitment to “establish and maintain a corporate compliance program to promote compliance with the law.”
If you have questions about deceptive marketing compliance, you can reach out to any member of Fasken’s Competition, Marketing & Foreign Investment group. Our group has significant experience advising clients on all aspects of Canadian competition law.
The information and guidance provided in this blog post does not constitute legal advice and should not be relied on as such. If legal advice is required, please contact a member Fasken’s Competition, Marketing & Foreign Investment group.