Changes to the federal Competition Act now explicitly label undisclosed fees and surcharges a "harmful business practice," leading to lawsuits against online retailers, movie theatres and even Canada Post. The Canada Post logo is seen outside the company's Pacific Processing Centre, in Richmond, B.C., on June 1, 2017. THE CANADIAN PRESS/Darryl Dyck
VANCOUVER – If you shop online you’re likely familiar with the experience – you agree to buy for a certain price, but by the time you check out, the cost has ballooned with fees and surcharges.
Place a shipping order with Canada Post and you might be hit with a “fuel surcharge” of almost 25 per cent. Buy movie tickets, flowers, make travel plans – all could be subject to hidden fees that are subsequently added to the originally quoted cost.
Critics call it drip pricing, a strategy that has been deemed unlawful. Consumers now have the power to fight back, with multiple class-action lawsuits filed in British Columbia targeting the practice.
Vancouver lawyer Saro Turner, who is involved in some of the drip-pricing lawsuits, says more are likely on the way.
“The average consumer is not a mathematician,” he said in an interview. “Companies that have a significant volume of commerce have to show the price in a meaningful way, not in a deceptive and misleading way.”
Turner said the path to the lawsuits was paved by June 2022 changes to the federal Competition Act, that now explicitly labels undisclosed fees and surcharges that make advertised prices “unattainable” as a “harmful business practice.”
The amendments mean Canadians can now launch class actions against companies that advertise unattainable prices, then tack on mandatory fees as consumers click through to buy products or services.
Turner’s firm has drip-pricing cases pending against online florist Bloomex, travel site Omio, and Cineplex.
“I think there probably wasn’t an awareness just about how pervasive (drip pricing) was,” he said. “People are upset about it.”
In another lawsuit filed in Vancouver in Federal Court, customers accuse Canada Post of violating the Competition Act’s anti-drip-pricing provision with the fuel surcharge it adds to shipping charges.
On its website, Canada Post offers three price options for regular, express or priority deliveries. For example, posting a three-kilogram package within Vancouver is listed as costing $14.11 for regular, $17.91 for express and $27.47 for priority shipping, before tax.
But no matter which option is selected, Canada Post then adds a 24.5 per cent fuel surcharge.
The before-tax prices increase to $17.57, $22.30 and $34.20.
Canada’s Competition Bureau has already taken a number of firms and industries to task over drip pricing, for example, penalizing vehicle rental companies millions in 2017 and 2018.
In November 2023, the bureau announced an $825,000 fine against ticket reseller Ticket Nation for drip pricing, finding that the company misleadingly advertised prices that were inflated up to 53 per cent by undisclosed fees.
Ticketmaster was penalized $4 million in 2019, and reseller StubHub was fined $1.3 million for similar conduct in 2020.
Last year, the Commissioner of Competition Matthew Boswell took Cineplex to the Competition Tribunal over online ticket sales that include a mandatory “online booking fee,” though Cineplex has denied wrongdoing.
“Consumers expect to pay the advertised price. We’re taking action against Cineplex because misleading tactics like drip pricing only serve to deceive and harm consumers,” Boswell said in a news release at the time.
“For years, we have urged businesses, including ticket vendors, to display the full price of their products upfront.”
In the case filed against Bloomex in March, the class represented by Turner’s firm alleges the florist wrongfully adds a $1.99 surcharge to customers’ orders. The lawsuit says the fee is described as being “used to offset rising costs of product, handling, and delivery.”
Advertising a lower price before adding the charge is “false and misleading” of Bloomex, the lawsuit says.
The case was filed in Federal Court in Vancouver days after Bloomex was fined $894,000 by the Australian Competition and Consumer Commission for misleading consumers with such pricing, among other things.
Another proposed class action, also filed last month in Vancouver, alleges Omio wrongfully advertises lower prices before adding a “service fee” to final prices.
It cites an example of a plane ticket from Vancouver to Toronto advertised initially on Omio’s website for $281, before applying the service fee that boosts the cost to $300.75.
Canada Post, Omio and Bloomex did not respond to requests for comment on the lawsuits. The lead plaintiff in the Canada Post case declined to comment, and their lawyer did not respond to requests for comment.
Canada’s Competition Bureau declined an interview request.
More changes to the Competition Act are winding their way through parliament, and Turner said they will allow consumers to seek damages from companies that abuse their “market dominance” and firms that make fake claims of environmental benefits of their products or services, known as “greenwashing.”
He said public officials can’t necessarily prosecute every case due to limited resources, but the competition law changes allow private law firms and consumers to go after companies directly.
“Where you’re a small consumer, you lose $1.50 or three bucks or whatever, some small amount up against a mega corporation, how do you enforce that?” he said. “Class actions come in and they incentivize lawyers “¦ to gather together a bunch of people who have a small loss, jumble them into one group and start a lawsuit. Now, all of a sudden, the economics work.”
“You’re the victim. You can get your buck fifty, whereas before you could not.”
This report by The Canadian Press was first published April 7, 2024.
