The Competition Bureau warns businesses that it’s illegal to advertise fake discounts by promoting a made-up “regular price”. This type of tactic often pops up during major sale events, like Black Friday.
When advertising, businesses cannot invent a higher regular price to make a sale look like a bargain when it’s not. For example, businesses can’t advertise an item as “$100, now $50”, if it never actually sold at $100.
Also known as fake ordinary selling price, this practice can mislead consumers and violates the Competition Act.
What businesses should know:
When promoting a sale, the regular price must be a price the item is genuinely sold at, and businesses must be able to prove it. To prove that a regular price is valid, it must meet one of two legal tests:
- Volume test: More than 50% of sales of the product were at that price or higher within a reasonable period (usually within a year) before or after the promotion; or
- Time test: The product was offered for sale, in good faith, at that price or higher for a substantial period of time (usually within a year) immediately before or after the promotion. In good faith means the retailer honestly believes the price is fair and expects that customers will actually pay it.
If the regular price does not meet either test, discount claims can be considered misleading under the law.
Businesses must be honest and transparent in their marketing so Canadians can make informed shopping decisions.
To stay on the right side of the law, the Competition Bureau recommends that businesses:
- Only advertise a “regular price” if it is genuine and the product was offered at that price for a long enough time, or if many products were sold at that price within a reasonable time.
- Keep detailed records of promotions, including dates, discounts and regular prices, and any other offers or savings claims. For example: buy one get one free.
- Avoid making ambiguous and unverifiable savings claims even if a promotion doesn’t directly state the regular price. For example: 20% off our regular price!
- Educate your employees about deceptive sales and discounts practices.
- Regularly review your marketing practices to ensure they don’t mislead consumers or violate the deceptive marketing provisions of the law.
The Competition Bureau investigates deceptive marketing practices. If a business or consumer believes they have come across fake sales, they should report them to the Competition Bureau.
