Leon's and The Brick fire back at Competition Bureau, say ads are
TORONTO (10 September 2013) - Leon's Furniture and its newly acquired subsidiary The Brick, are firing back at the Canadian Competition Bureau, not only refuting allegations its advertising is misleading but maintaining the message is not only iconic but that all fees, taxes and other conditions are clearly spelled out to the consumer at time of purchase.
"Leon's has been offering and advertising deferred payment programs to Canadian consumers for more than 25 years. Its ‘Don't Pay a Cent Event' and ‘Ho Ho Hold the Payments' promotions are Canadian icons, which the (Competition) Commissioner now seeks to impugn," the publicly-held full-line furniture retailer said in its Statement of Defense filed with the Ontario Superior Court of Justice late last week.
"Deferred payment programs are, and have for many years been common among retailers of furniture, mattresses, electronics and appliances. Deferred payment programs are valued by consumers, for whom they are an inexpensive financing option for ‘big ticket' items, especially when compared to credit cards," the retail continued.
Leon's told the court Canadian consumers have come to expect these sorts of financing options when it comes to purchasing furniture, mattresses, major appliances and other big ticket home goods. Indeed, programs such as these have not only become the standard for all furniture retailers in Canada, but are also part of Leon's everyday consumer offering, whether it is attached to a particular promotion or not.
"Canadian consumers of furniture, mattresses, electronics and appliances expect deferred payment options," the statement reads. "The vast majority of retailers of those products offer and actively promote deferred payment plans, as do most retailers of other ‘big ticket' items. It is well recognized that outside the Province of Quebec, retailers who offer deferred payment programs generally charge processing fees for the provision of that service."
"At both Leon's and The Brick, deferred payment options are always available to consumers, whether or not they are advertised. In all cases, the consumer does not pay any part of the purchase price, nor does he/she pay any interest during the deferral period. Unlike many other retailers, Leon's and The Brick do not charge retroactive interest if the customer fails to pay for the product at the end of the deferral period. Rather, interest simply starts to run at the end of the deferral period."
The company also maintained that at both Leon's and The Brick, taxes and fees for additional services - such as those for delivery; government imposed fees for electronics disposal or recycling; or processing fees for financing - may be payable at either the beginning or the end of the deferral period, depending on the promotion.
"The amount and timing of all taxes and fees are in all cases disclosed to the customer before the customer purchases the product," the statement stressed.
"At both Leon's and The Brick, most customers do not pay any processing fees at the time of the transaction. Such fees, if payable at all, are most often paid at the end of the deferral period," it added.
The Statement of Defense also notes it is industry practice - not only for furniture, mattress and major appliance merchants but for those in other product sectors as well - to advertise prices which do not includes taxes or fees for additional services, such as financing or delivery. "It is well known by consumers that such taxes and fees may be payable."
In July, the Canadian Competition Bureau has filed an action seeking an end to what it described as a ‘type of deceptive advertising" and seeking refunds for all customers who paid administration or processing fees from both Leon's and The Brick.
"Canadian consumers must receive clear and accurate information about what must be paid at the time of purchase, and what the actual cost of a particular item is if they use a deferred payment option," John Pecman, Commissioner of Competition John Pecman said at the time. "Retailers cannot hide details of additional fees in lengthy disclaimers."
The bureau accused both Leon's and The Brick of burying details of additional up-front fees in the purchase agreement's fine print, which led to the final price of the product sold being higher than the advertised price for those consumers using the deferred payment option.
Leon's maintains many of the examples cited in the Competition Bureau's Statement of Claim were taken out of context and were not properly presented to the court.
"Where Leon's or The Brick advertise a product for sale at a certain price, that is the price at which the product is sold," the company countered, adding, "That is not changed by the fact that the customer may have to pay applicable taxes and government imposed fees, or may be subject to additional fees for additional services chosen, such as for arranging financing. Those taxes and fees are not part of the ‘price' of the product."
Pointing out that both Leon's and The Brick have been advertising these types of promotions for more than 25 years, the company noted they have not been the subject of customer complaints, nor were they ever the subject of expressions of concern by the Competition Commissioner before October, 2012.
After being informed that the Competition Bureau was launching an investigation into these advertising programs, both Leon's and The Brick voluntarily provided the Commissioner with a significant amount of information, documents and data while seeking out his views on how their advertising - and that of others in the industry - could be improved.
"Notwithstanding efforts by (Leon's and The Brick) to obtain the Commissioner's views on how their advertising could be improved, the Commissioner declined to respond," the company told the court.
However, the company has made adjustments to their advertising of deferred payment programs to address what appear to be the Competition Bureau's concerns and now include specific references to taxes and fees in their advertising ‘tag lines'.
"Despite requests for confirmation of the Commissioner's position, the Commissioner has declined to indicate whether the changes made by Leon's and The Brick have addressed his concerns, or how they could be changed to further address those concerns," the statement concluded.
As of press time, no trial date has been set, although cases such as these often take years to wind their way through the justice system.