In today’s increasingly saturated marketplace, companies face constant pressure to capture consumers’ attention through exciting promotions, limited time offers and targeted marketing. With the use of digital strategies such as algorithms, dynamic pricing, data insights, and ever-slicker online tools, pricing is now a compliance minefield with high stakes.
The race to get an edge over the competition can push creative boundaries, but there’s a line between innovation and deception. When pricing practices mislead in a material respect, they can expose organizations to civil and criminal liability under the Competition Act, including costly penalties of up to $10 million or 3% of a corporation’s worldwide gross revenue for civil offences, and uncapped financial liability for criminal convictions.
Below are examples of clever or “innovative” pricing and advertising strategies that the Competition Bureau or private plaintiffs might call deceptive or even evidence of a criminal conspiracy to collude on prices.
The Price is (Not Quite) Right: Navigating Ordinary Selling Price Provisions
A 25% discount on a new phone may seem a great deal, but not so much when the “discount” is applied to a deceptively high price that the supplier may never have actually charged. Under the amended Competition Act, suppliers are now required to prove that discounts from their “ordinary” prices are genuine having regard to prior sales volumes over a minimum period.
This change reinforces the need for suppliers to ensure ordinary price representations can be supported under the applicable legal tests and maintain pricing records to prove that advertised discounts are authentic.
Drip Pricing and Junk Fees: What You See vs. What You Get
Ever added something to your digital shopping cart that somehow cost a whole lot more by the time you got to checkout? That could be drip pricing: disclosing only part of the true price upfront and revealing the business’s “mandatory” fees only when it comes time to pay. Regulators are cracking down on this practice (to the tune of multi-million dollar fines, like the $39 million one imposed on Cineplex for “online booking fees”).
These hidden extras don’t just annoy customers but can also distort competition when a business promotes unattainably low prices that makes honest rivals look overpriced by comparison. Transparency is the best defense here, ensuring that all mandatory fees are disclosed upfront and prominently.
Fake Urgency, Real Deception
Also in the enforcement crosshairs are “dark patterns”. These are pricing strategies or user interface designs that manipulate consumers in various ways. In some instances, they induce buyers into spending more money than they intend, often by hiding costs, making it difficult to find the lowest price or nudging them toward higher-priced options or falsely conveying urgency (including through countdown timers, low stock alerts, and limited-time offers). Businesses should audit their current online marketing strategies to identify any dark patterns that might unreasonably manipulate consumers against their interests.
Algorithms and Surveillance Pricing
Dynamic or algorithmic pricing can drive efficiency, but when algorithms facilitate the exchange of competitively sensitive information between competitors, they can also enable intentional or tacit coordination. Similarly, surveillance pricing based on consumer tracking can edge into discriminatory or exploitative territory if not carefully managed. Businesses should review pricing tools and strategies, understand how data informs price-setting, and keep visibility into any automated systems.
The Bottom Line
Pricing innovation isn’t a problem, but deceptive tactics and manipulation are. In an era of “smart” pricing, human judgment and oversight still matter and will help reduce your compliance risk. Be sure to check out the Competition Bureau’s guidance on False or Misleading Representations and Deceptive Marketing Practices for additional background and handy “Dos and Don'ts” that will help your business comply with the Competition Act.