On August 1, numerous provisions of An Act mainly to modernize rules relating to consumer credit and to regulate debt settlement service contracts, high-cost credit contracts and loyalty programs (the "Act") came into effect in Québec. The Act made substantial amendments to Québec's Consumer Protection Act (the "CPA") and its regulation. One industry affected significantly by these amendments is the automotive advertising industry. Below are the most consequential changes affecting automotive advertising in the province.
Lease advertising - Disclosure of retail value of vehicle
The first change of note is a major new requirement applicable to lease advertising. The Act prohibits disclosing the amount of the installment payments to be made for the lease of goods (such as the biweekly or monthly payments to be made by the consumer leasing an automobile) without also disclosing, and laying greater emphasis on, the retail value of the goods. This requirement previously existed with regard to finance advertising, but until now, lease advertising has been exempt.
Some uncertainty remains, however, with respect to which value specifically is to be disclosed as the "retail value" of a vehicle. The Act provides no guidance on whether the value to be provided is, for example, the MSRP, or rather the value used for the calculation of the advertised lease payments, or the price of the vehicle if a consumer were to purchase it in cash, deduction made of any applicable incentives, or some other value altogether. As of now, the Office de la Protection du Consommateur (the "Office"), the regulatory body tasked with ensuring compliance with the Act, has not provided clear guidelines with regard to what is required.
Another source of confusion for advertisers arises on the question of what exactly "laying greater emphasis on" requires; once again, the Act is silent on this issue. In print advertisements, the matter is fairly clear: the visual features of the advertisement must be such that – be it through font size, colour, placement or some other means – the retail value will grab a consumer's eye before the payment amount does. In the case of advertisements appearing in other mediums, however, the situation is less clear: how does an advertiser ensure, in a radio advertisement, for example, that one price receives more emphasis than another?
Use of images - Accurate representation
A second significant change is a prohibition on showing, in an advertisement stating the price of goods, a picture of the goods "that is not an accurate representation of them." It is therefore now illegal to advertise the price for the base model of a vehicle, yet show an image of a higher trim, or a vehicle equipped with optional features available at additional cost.
Advertisers cannot circumvent this requirement by using phrases such as "model shown for illustrative purposes only" or "European model shown". Indeed, the law requires that the vehicle shown must be the one a consumer will be able to obtain at the price advertised.
The law does not set a specific rule on what illustration must accompany a "starting at" offer. Common sense dictates, however, that the vehicle shown should be one that is available at the starting price. Also, the law is not clear as to what must be illustrated if there are several offers in an advertisement.
Next, the Act prohibits, in an advertising concerning credit, referring to a credit rate without disclosing that rate. Concretely, this means that an advertisement may no longer make reference to, for example, "great rates" without disclosing these rates.
Lastly, and more generally, the Act requires that all advertisements concerning goods or services be presented clearly, legibly, and understandably. This appears to simply be an explicit statement of the general principle by which an advertisement may not be false or misleading. It goes without saying that any consumer looking at an advertisement should be able to understand the offer being presented.
As mentioned above, uncertainty remains with respect to the interpretation and concrete application of several of the new requirements of the Act. These requirements will certainly be delineated over time. As of now, there does not appear to have been any enforcement actions by the regulator and there are no Courts decision to interpret the provisions. The Gowling WLG team will continue to monitor these developments and provide further updates as they become available.