As you surf the net, you see a huge special about a product you’ve been coveting for a long time. You add it to your cart and immediately move on to the next step in order to take advantage of this deal before it’s too late.
However, as you prepare to pay, you realize that the price now charged at the checkout has almost doubled as a result of many administration and handling fees that have been added. You are surprised and disappointed to realize that the initial price was definitely not realistic considering all these additional non-optional fees, but you still resign yourself to buying the whole thing.
As you enter your banking information, you ask yourself, “Did this merchant have the right to hide the actual price behind all these hidden fees?”
This capsule will attempt to demystify the law applicable in this case.
Legal sources
The Consumer Protection Act (hereinafter L.P.C.) has always sought to keep in check large companies that would like to use dishonest techniques in order to increase their sales.
The legislature has long provided for in section 224 of the C.P.A. that:
No merchant, manufacturer or advertiser may, by any means whatsoever:
(c) charge a higher price for a good or service than advertised. »
However, despite this article, some companies had developed the practice of displaying products at a ridiculous price in order to attract the consumer, but when one wanted to go to the checkout, huge hidden fees were added. This practice was so abusive that these fees could quadruple or even quintuple the price that actually had to be paid in certain types of transactions, such as the purchase of airline tickets.
On June 30, 2010, the C.P.A. was therefore amended by Parliament and these amendments included the addition of a second paragraph to section 224 which now provides as follows:
For the purposes of subparagraph c of the first paragraph, the advertised price must include the total amounts that the consumer will have to pay to obtain the good or service. However, this price may not include the Quebec sales tax or the Canadian goods and services tax. The advertised price must stand out more obviously than the sums of which it is composed.
In order to understand the scope and purpose of this addition, it is interesting to read an excerpt from this file of the Court of Appeal that particularly marked the law surrounding this section:
The purpose is clear and parliamentary debates also indicate that it is the practice of decomposing the price that we want to counter, by forcing the merchant to announce the right price from the outset and to put an end to the practice of adding fees, often indicated in fine print, at the time of checkout. The goal is to allow the consumer to properly compare the price of the goods he buys.
It is important to note that the notion of advertised price provided for in this article is very broad, and therefore includes both what is on the transactional site of the companies, online or paper advertisements, as well as any other price displayed through many other advertising techniques.
It is also interesting to look at concrete examples to see the scope of this prohibition. For example, we are told by legal literature that this article ensures that:
in automobile advertisements, the prices shown must therefore include freight and preparation costs, air conditioning excise tax, tire duties and other administration costs.
On the case law side, Airbnb has already agreed to reimburse part of the administration fees that were added to the end of a transaction on their site. Although Airbnb denies breaking the law, it is obvious that the practice of including such fees at the end of a transaction is heavily criticized by Quebec lawyers and now appears to be considered illegal.
Finally, Union des consommateurs v. Air Canada, already mentioned earlier, deserves further study. In this case, a class action was brought against Air Canada because it regularly added hidden fees that greatly increased bills.
For example, the representative’s appeal was based on the fact that to the purchase of two airline tickets for a total of $298.00 were added $124.46 of “Taxes, fees, charges and surcharges”. Not only is this case striking, since it is a blatant example of what the legislature wanted to make illegal, but the Court also clarifies the applicable law.
Indeed, the Court of Appeal recalled that even if Air Canada did not mislead the consumer, this could not prevent the prosecution, because the assessment of section 224 (c) C.P.A. is objective and it is not necessary to consider whether the consumer has been cheated.
Air Canada posted the following warning on its website:
All fares displayed on this page are in Canadian dollars, per person for each way of travel, and do not include taxes, fees or some other charges. Learn more…
However, despite these warnings, the Court gave leave for the appeal to continue, since it is not the misrepresentation that is the source of the appeal, but the price fragmentation itself. Thus, from the first step, a company must display the total price including everything that must be paid, despite any warning that may be posted beforehand.
Finally, in the Gagnon v. Bérard Autos Choix inc., the Court recognized the liability of a dealer who required additional costs in order to be able to pay on credit. This practice was recognized as the addition of hidden fees by the Court, and it is important to note that this was the case even though Bérard Autos Choix Inc. did not benefit in any way from the added prices, since it was the credit companies that received the additional money required. Thus, the Court confirms that even if the additional costs arise from a third-party company, this is not an adequate defence and the company that posted the initial price will therefore be held liable.
Possible defenses
Although the protective regime provided for in section 224(c) C.P.A. may seem very extensive, it is important to note that there are still some limitations to its scope. First, in order for the C.P.A. to apply, the contract must bind a consumer and a merchant in the course of his business.
In this definition, a consumer is a natural person who is not a merchant and who obtains a good or service. Thus, anyone who obtains a good or service on their own account from a company has a very good chance of falling within the definition of the C.P.A.. However, if you are a business, the hidden fee protection of the C.P.A. will not apply.
Another legislative limitation is that some fees are exceptions and do not need to be posted before checkout. This is the case for taxes and duties payable under an Act of Parliament or a province where, under that Act, those duties must be collected directly from the consumer in order to be remitted to a public authority, all in accordance with section 91.8 of the Regulation respecting the application of the Consumer Protection Act.
Another possible defence is that the additional charges were not hidden, since they result from an additional service that does not concern the first price displayed. This is a controversial defence.
This defense was presented, for example, in a 2015 case, in which a company argued that it was legal for it to charge a fee of $0.75 for the use of a credit card, since it was a separate service. However, the judge concluded that this defence did not apply in this case, since an alternative method of payment such as a credit card is not a separate service. However, although this defence has had little success in the case law, we would like to point out that if the additional fees displayed are optional, it is quite possible that this will defeat your remedy.
Finally, although the scope of due diligence is unclear in the application of section 224(c) C.P.A., this defence remains applicable in this type of prosecution. Indeed, in a certain case, a travel agency was using a third-party booking site that was subject to unpredictable price fluctuations, due to the changing availability of different types of tickets.
In this case, the Court concluded that although these price changes did indeed violate section 224 (c) C.P.A., the agency’s liability could not be incurred, since the travel firm had taken all reasonable precautions to warn the consumer that it had no control over the platform and that it could not make changes in order to comply with the law.
In conclusion, section 224(c) of the C.P.A. and the new 2010 amendment to that Act have greatly increased consumer protections against additional charges not provided for in a price originally posted.
If you believe that your rights are not being respected, chances are you are not alone in your situation. Do not hesitate to contact us to know your options.
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