In recent years, competition authorities around the globe have indicated an increased interest in the video game industry. As noted in a 2019 perspective paper by the US FTC, video games have evolved from being static one-time purchases to functioning as a dynamic service where players can make further in-game purchase, or microtransactions, for in-game
This post has been prepared in collaboration with Chris Cole of Crowell & Moring law firm. Chris Cole is the Co-Chair of Crowell’s Advertising & Product Risk Management Group in Washington, D.C.
In less than three months, Canada will introduce a private right of action arising from false or misleading representations made in electronic messages. These provisions target false or misleading advertisements in, for example, email and social media and arguably capture website advertising based on the law’s broad definition of “electronic message.” Government-initiated enforcement of these provisions has already taken place through Canada’s Competition Bureau since 2014, which has led to Consent Agreements against Avis, Budget (following a contested application), Amazon, Hertz, and Dollar Thrifty. Even more concerning, the law applies statutory penalties to each violation. The closest United States analog to such a law would be the Telephone Consumer Protection Act, which carries penalties for violation of up to $1500 per violation.
The new private right of action is expected to give rise to significant class action litigation in Canada, including against US and global businesses that engage in digital advertising in Canada. It is also expected to be an attractive method of challenging a competitor’s representations regarding a product or service. Driving these incentives will be the law’s statutory penalties of $200 per occurrence (not to exceed $1 million per day).
The following outlines the nature of this private right of action and take-aways for businesses that advertise in Canada.…