The Canadian Competition Bureau ensures that businesses and consumers prosper in an innovative and competitive marketplace through an independent law enforcement agency. They recently reached an agreement with Enterprise Rent-A-Car Canada Company (Enterprise) to rectify misleading prices in advertisements. As a result, Enterprise will review its company practices to guarantee that advertisements comply and align with the law, and will pay a penalty of $1 million.
Enterprise ran advertisements online, via email and mobile apps, which promised impossibly low rental rates for Canadian customers. During the booking process, mandatory fees were charged onto the reservation, making the advertised prices unavailable. These changes from the real price of the service or products, along with additional, hidden fees that are added to the purchase, and are higher than advertised are known as “drip pricing,” which is a key focus of the Bureau’s efforts.
This consent agreement is the third of its kind in as many years, with similar penalties imposed on other car rental companies in 2016 and 2017. In 2016, Aviscar Inc. and Budgetcar Inc. were charged a $3 million penalty for similar misleading pricing practices. They were required to pay an additional $250,000 toward investigative costs for the Bureau. Hertz Canada Limited and Dollar Thrifty Automotive Group Canada, Inc. paid a combined penalty of $1.25 million in 2017. These companies were found to describe the mandatory fees as if they were surcharges imposed by various governments. In truth, the charges were imposed by the rental companies in an attempt to recoup part of their own business costs.
Each of these cases is part of the Bureau’s focus on ensuring truth in advertising in Canada. In the digital age, there has been much legislation created to protect consumers from advertising that is false or misleading. These deceptive claims are both unethical and illegal.
In any society, it is ethically wrong to make false claims to customers. Companies have a duty to be transparent in business practices that affect consumers. The Federal Trade Commission in the United States of America and Canada’s Competition Act, are examples of legal actions that enact consumer protection legislation. These agencies prohibit people and businesses from making representations to the public that are false or misleading.
It is important to a healthy economy that competition exists between businesses. A competitive marketplace is about service, selection, and price. This promotes low prices while guaranteeing a high quality of services and goods.