Advertised Discounts: Where Is the Line Between Marketing Strategy and Legal Violation?

A Legal Risk Not to Be Overlooked

The use of “false ordinary selling price” or “false urgency cues” may constitute a deceptive marketing practices and an offence under the Competition Act. The Competition Bureau pays close attention to these types of practices, as they can mislead consumers. Consumers themselves are also increasingly vigilant and do not hesitate to file complaints. In fact, according to a recent statement by the Competition Bureau, the number of complaints on this issue appears to have reached new highs in 2025.

Moreover, class actions relating to “false discounts” have also been initiated in Canada. By way of example, Old Navy and GAP are facing a proposed class action alleging the use of such marketing tactics. This is therefore a very real risk that businesses must manage proactively.

What Is a False Ordinary Selling Price?

This practice involves displaying a product or service at a higher price, one at which it has never been and/or will never be offered, in order to make the discount appear more attractive. For example, advertising a product at $25 while indicating that it was previously priced at $40, when in fact it never reached that price.

What Businesses Should Know When Advertising Discounts

During a promotional event, the regular price must be the price at which the item has genuinely been and/or will be sold or advertised. The Competition Bureau sets out criteria that must be met to avoid potentially misleading representations:

1. Volume Test: A substantial volume of the product (i.e. 50% or more) was sold at that price or at a higher price during a substantial period before or after the promotion. While a “substantial period” is not specifically defined, the Bureau indicates that it is generally in the past year.
2. Time test: The product or service was offered in good faith at the regular price or a higher price for a substantial period of time (i.e. more than 50% of the relevant 6-month period) immediately before or after the promotion. The Bureau defines good faith as the retailer’s sincere belief that the price is fair and that customers are expected to pay that price.

Businesses must also avoid any vague or ambiguous promotional claims that could create the general impression of a greater discount than what is actually being offered.

The Prohibited Concept of “False Urgency Cues”

This concept refers to marketing tactics designed to encourage consumers to make immediate purchases in order not to “miss out” on a bargain or opportunity. Examples include limited time offers where the discounted price remains available for a longer period or low stock claims (also referred to as “fake scarcity cues”).

If a business uses such marketing claims more often than not, the Competition Bureau may question their accuracy. Among other things, it will examine whether the promotion is renewed after the stated deadline, whether inventory remains available over time, and whether the available quantity decreases or remains unchanged.

It is essential to ensure that consumers are not misled by false or deceptive representations. Innovation and creativity are strongly encouraged, but they must always be true and not misleading.

How Our Team Can Assist You

Our competition law team can help you develop best practices in this area, including implementing compliance programs and internal policies, providing training, and representing and advising you in the context of disputes or investigations.