In determining whether advertising is misleading, many provincial consumer protection statutes, as well as the federal Competition Act apply a “general impression” test. In Richard v. Time Inc. and Time Consumer Marketing Inc. (released on February 28, 2012), the Supreme Court of Canada set a fairly low threshold by finding that the general impression of a representation is to be considered from the perspective of the “ordinary hurried purchaser” who must be viewed as “credulous and inexperienced”. While brought under the Quebec Consumer Protection Act, this decision will likely significantly influence the way courts and regulators approach the “general impression” test in misleading advertising cases generally, including under the Competition Act.  

Background

Mr. Richard received a personally addressed letter advising him in bold uppercase letters that he had won a significant cash prize. The qualifying language was in much smaller print and characterized by the Supreme Court as “inconspicuous”.

Mr. Richard reviewed the document carefully and then took it  to an executive at his employer, whose first language was English, to confirm that he had won the grand prize. Convinced that he had won, Mr. Richard returned the reply coupon and also subscribed to Time magazine for two years. While his Time magazine arrived in the mail, his prize cheque did not. When Mr. Richard called Time Inc. to enquire as to the status of his prize, he was informed that he had not won the contest and that the letter addressed to him had merely been an invitation to enter into a sweepstakes. In response, Mr. Richard sued Time.

At trial, the Quebec Superior Court held that the letter gave the general impression that Mr. Richard had won the grand prize and that the general design of the document constituted a false or misleading representation and awarded $1,000 for “moral injuries” and $100,000 in punitive damages.

The Quebec Court of Appeal overturned the trial decision based on its view that a careful reading of the letter was sufficient to dispel Mr. Richard’s impression that he had won the grand prize.

Supreme Court Decision The Supreme Court disagreed with the Court of Appeal and made the following statements regarding the application of the general impression test in misleading advertising cases:  

  1. The general impression test is one of “first impression”, meaning that the general impression is the one a person has after their initial reading of the advertisement;
  2. Considerable importance will be given to the entire context of the advertising in question, including the way the text is displayed to the consumer (e.g. size, positioning, etc.);
  3. The perspective used to assess the general impression of an advertisement is that of “ordinary hurried purchasers”, who are typically assumed to be relatively unsophisticated and “not particularly experienced at detecting the falsehoods or subtleties found in commercial representations”;
  4. The average purchaser cannot be assumed to possess an average level of intelligence or prudence;

Applying these factors to the case at hand, the Supreme Court concluded that Time had engaged in misleading advertising in that the general impression conveyed by the letter in question was that Mr. Richard had won the sweepstakes. While noting that nothing in the letter was false, the Court took the position that the “strange collection of affirmations and restrictions is not clear or intelligible enough to dispel the general impression conveyed by the most prominent sentences”.

Accordingly, the Court reversed the appellate decision and awarded Mr. Richard $1,000 in compensatory damages, $15,000 in punitive damages and his costs.

Practical Implications

  1. Consumers are viewed as unsophisticated and vulnerable - the general impression test is based on the likely reaction of a relatively unsophisticated consumer  and a level of knowledge or diligence cannot be assumed;
  2. First impressions count – as in life, you only get one chance to make a general impression;
  3. Size and layout matter – disclaimers or conditions will be ineffective if they are not sufficiently prominent.

While based on Quebec consumer protection law, this case is likely to inform how provincial courts and regulators such as the Competition Bureau  apply the general impression test in misleading advertising cases. The impact of this decision should also be considered in the context of the Competition Bureau’s recent aggressive enforcement of both the civil and criminal misleading advertising provisions of the Competition Act.

Accordingly, companies should carefully consider their approach to advertising to ensure that it does not inadvertently convey a general impression that could prompt regulatory enforcement or private damages actions.

For a copy of the Supreme Court’s decision (which includes pictures of the advertising at issue), please click here.

For a copy of our previous e-lert discussing recent misleading advertising enforcement actions, please click here.