Accordingto Advertising Standards Canada (ASC), the term “no contracts” may beconsidered misleading when used in the context of a product or servicethat has binding terms and conditions associated with it.  

The recent advisory stems from a case in which a consumer alleged that an advertisement offering a service with “no contract” was misleading, as the provision of the service was in fact subject to a detailed set of terms and conditions. The advertiser maintained that the statement was intended to indicate that consumers were not required to enter into a fixed term contract, and were able to cancel the service without penalty on the provision of 30 days’ notice.

The Consumer Response Council found that binding terms of service do constitute a “contract,” rendering the claim “no contracts” inaccurate and in violation of the Canadian Code of Advertising Standards. ASC advises that a “no contract” claim may be acceptable where the meaning is clearly specified. For example, it would be acceptable to indicate that the offer included no cancellation charges, or that there was no fixed term contract, provided these claims were in fact true.

The full advisory from ASC is available online: http://www.adstandards.com/en/Standards/2010Advisory.pdf