Competition Bureau investigating Leon’s, The Brick for alleged deceptive marketing

The Competition Bureau has obtained a court order in an investigation centering around whether Leon’s Furniture Ltd. and its subsidiary The Brick deceptively marketed their products.

The competition watchdog said Wednesday that the ongoing investigation into the Canadian furniture retailers looks at three kinds of marketing practices.

The first is sales claims made without specifying the discount amount or using distinct font colours to mislead customers into thinking they are benefiting from a sale.

The second is potentially inflating regular prices when making deal claims and the third is related to urgency cues, which often take the form of countdown clocks or “limited time only” marketing and can create false impressions about the nature of a promotion.

The bureau, which said it began its investigation on Aug. 6, has yet to conclude Leon’s or The Brick committed any wrongdoing.

The Federal Court order it obtained will get the watchdog access to new records and written information that are relevant to its investigation.

This kind of court order is “standard procedure for all inquiries of this nature,” Leon’s and The Brick said in a statement.

The companies maintained they are committed to complying with all regulatory requirements and are co-operating with the bureau’s investigation.

“Both companies offer consumers great products at great prices, providing excellent value,” said Audrey Hyams Romoff, a spokesperson for Leon’s and The Brick, in a statement.

“To further their compliance efforts, both Leon’s and The Brick have established long-standing protocols to meet advertising standards.”

Leon’s, which was founded in 1909 and operates 85 stores, and The Brick, which was established in 1971 and now has 209 locations, are both known for selling home furnishings, mattresses, electronics and appliances.

The companies were rivals until November 2012, when Leon’s paid $700 million to buy The Brick.

Less than a year later, the bureau investigated “buy now, pay later” promotions the companies ran, alleging the offers often resulted in customers paying more than advertised.

In 2018, the companies and the bureau reached a settlement with Leon’s and The Brick agreeing to adhere to guidance on the proper use of disclaimers in advertising and the disclosure of fees associated with their financing plans.

As part of the settlement, Leon’s and The Brick also promised to donate $750,000 worth of home furnishings over two years to charities to be approved by the regulator.

The Competition Bureau has made deceptive marketing cases a cornerstone of its work in the last few years.

It won a $38.9-million case against movie theatre giant Cineplex Inc., which it accused of misleading customers with online ticket fees, in September. Cineplex is now contesting the outcome.

The bureau has also taken action against several companies it alleged were engaged in drip pricing, including SiriusXM Canada, Discount Car & Truck Rentals Ltd. and TicketNetwork.

Drip pricing happens when customers are drawn into a purchase without full disclosure of the final cost, which often climbs when fees are added to the final checkout window

This report by The Canadian Press was first published Nov. 20, 2024.

Companies in this story: (TSX:LNF)

Tara Deschamps, The Canadian Press