The Competition Bureau (the "Bureau") believes the purchase of positive feedback is no laughing matter, and reminds us that representations that a product or service is free cannot be false or misleading. Indeed, the Bureau sent a strong message in its most recent consent agreement with Montreal-based Amp Me Inc, which provides a mobile application that synchronizes multiple devices to amplify the sound of music2, calling Amp Me Inc's actions "planned popular misinformation", or astroturfing3.
The Bureau is accusing Amp Me Inc of two reprehensible behaviors under the Competition Act4. First, the company bought false positive reviews for nearly three years, positively affecting the ranking and overall rating of its Amp Me application in the Apple App Store5. Indeed, given that these reviews were not written by consumers who had used the application, they were not considered genuine by the Commissioner of Competition. Purchased positive reviews are considered false or misleading, given the general impression left on the consumer6, or even "planned popular disinformation"7. However, this is not the first time a Canadian company has been found at fault by the Bureau for false or misleading reviews. Bell Canada and FlightHub Group Inc. were fined $1.25 million and $5.8 million respectively in 2015 and 2019 for similar offences8.
Amp Me Inc. also advertised the fact that its application was free through ads and videos on social networks. These ads featured the words "it's free", "it's completely free" or "free app". However, the app's free access was limited to a three-day period, and conditional on a user providing payment information and accepting automatic renewal of a $10.99 monthly subscription9. Even though Amp Me included disclaimers in its application, the Bureau considered that the advertising representations gave the erroneous general impression that the application was completely free.
The Bureau's investigation into Amp Me Inc.'s advertising practices resulted in an agreement whereby Amp Me Inc. undertook, among other things, to maintain commercial practices in compliance with the Competition Act, and to pay a partial penalty of $310,000, as opposed to the $1,500,000 initially imposed by the Bureau10.
Key learnings from the Amp Me Inc. consent agreement
Product or service reviews, if not genuine, may be considered false or misleading representations punishable under the Competition Act. On the other hand, a company can always ask its customers to provide genuine reviews. In any case, and although this was not addressed in this case, bear in mind that this type of practice is also governed by other provisions, such as the Canadian Code of Advertising Standards11 and the Consumer Protection Act12.
Finally, companies offering free trials may not make representations implying that the free service goes beyond the trials. The Bureau uses the criterion of the general impression left on the consumer by the representation and turns, if necessary, to the literal meaning of the terms used in the representation. Again, remember that in addition to the provisions of the Competition Act, other frameworks apply to free trial periods, notably under the Consumer Protection Act, which contains specific rules on false or misleading claims, promotional offers and automatic renewals13. Caution should therefore be exercised when a company makes a representation that a product or service is free.
Footnotes
1. Caroline Jonnaert is a Lawyer, Trademark Agent and Partner, and Jason Moscovici is a Lawyer, biochemist and partner at ROBIC, L.L.P., a multidisciplinary firm of Lawyers and Patent and Trademark Agents. They would like to thank Charles-Étienne Ostiguy for his contribution to the writing of this article.
2. Competition Bureau, « Amp Me to pay penalty to address Competition Bureau concerns over misleading advertising », (December 5th, 2023), online: ( https://www.canada.ca/en/competition-bureau/news/2023/12/amp-me-to-pay-penalty-to-address-competition-bureau-concerns-over-misleading-advertising.html).
3. Competition Tribunal, Consentement enregistré Amp Me Inc., CT-2023-011, online : (https://decisions.ct-tc.gc.ca/ct-tc/cdo/fr/item/521236/index.do), p. 2.
4. Id., pp. 2 et 3
5. Id., p. 2.
6. Id., p. 3; Competition Act, R.S.C. 1985, c. C-34, s. 74.01(1)a).
7. Id., p. 2.
8. Competition Bureau, « Investigation of FlightHub ends with $5.8M in total penalties for company and directors », February 24th 2021, online: (https://www.canada.ca/en/competition-bureau/news/2021/02/investigation-of-flighthub-ends-with-58m-in-total-penalties-for-company-and-directors.html> ; Competition Bureau, « Bell Canada reaches agreement with Competition Bureau over online reviews », October 14th 2015, online: ( https://ised-isde.canada.ca/site/competition-bureau-canada/en/how-we-foster-competition/education-and-outreach/news-releases/bell-canada-reaches-agreement-competition-bureau-over-online-reviews> See : Caroline JONNAERT, Élisabeth LESAGE-BIGRAS, « Fausses évaluations en ligne : comment les détecter et les contrer ? », March 8th 2023 (in French), online: (https://www.robic.ca/publications/fausses-evaluations-en-ligne-comment-les-detecter-et-les-contrer/>.
9. Competition Tribunal, supra note 3, p. 2 and 3.
10. Competition Bureau, supra note 2.
11. Canadian Advertising Standards, « Canadian Code of Advertising Standards », (2023), online: (https://adstandards.ca/code/the-code-online/>.
12. See: Consumer Protection Act, CQLR, c. P-40.1, art. 219.
13. Consumer Protection Act, CQLR, c. P-40.1, art. 214.3, 219, 230 ; Benabu c. Vidéotron, 2018 QCCS 2207, conf. par 2019 QCCA 2174.
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