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Should it be illegal for a store to lure you in the door by advertising a deal that's not quite as good as it first seems – even if it reveals the true cost before you fork over any of your money? The Competition Bureau thinks so, based on the civil claim it filed in an Ontario court Tuesday.
The Bureau says ads for Leon's and The Brick promise that consumers don't have to pay for goods until many months after the purchase date. In the regulator's eyes, that's misleading because those deals actually come with up-front costs.
But if a prospective couch-buyer signs an agreement that makes it clear they will not be leaving the store with said couch until they fork over various fees, can it really be said that they are being hoodwinked? Probably not. When the additional costs have to be paid up front, it's hard to argue that anyone is being tricked out of their money.
The Bureau's complaint relies on the impact of what it calls "drip pricing," or presenting a number of incremental costs throughout the purchase process. Drip pricing, the Bureau alleges, triggers a harmful pattern described in the world of behavioural economics. Most notably, the no-money-down offer in the ad prompts the reader to decide to buy the item; once they have made the purchase in their mind, they're less likely to terminate it when new fees are introduced.
Maybe so, but consumers have to take some responsibility for their own behavior. If you get up to the counter at a store that is having a sale, and a clerk tells you there will be a $200 charge for taking advantage of that sale, you still have the option of handing the product back to the cashier and walking away.
If the Bureau wants to crack down on advertising that doesn't tell the entire truth, it will be a very busy agency. You probably think of yourself as being too sophisticated to fall for the alleged practices that the Competition Bureau has accused Leon's and The Brick of using, such as the pitch that customers would pay "absolutely nothing for 21 months," when in fact the companies impose charges for "administrative," "processing" or "membership" fees before you can actually walk away with your big screen TV. But such offers are common in areas like the auto industry, where financing is frequently offered at no cost for the entire life of a five or six year loan. Of course, it's usually cheaper to pay for the car in cash, regardless of the financing options, but they don't tell you that in the ads. I'm sure you knew all this when you bought your last car, right?
Nobody likes the idea of being misled, but if a seller makes all the information available before the transaction takes place, the buyer's decision cannot be anything but fair. Caveat emptor.
Dave Morris is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Dave on Twitter at @morrisdave.