The Competition Bureau is doing its job and should continue requiring firms to clearly state their prices.Getty Images
Attention, shoppers: A federal watchdog is trying harder to protect you from hidden costs lurking in the fine print of advertising.
Last week, Canada's Competition Bureau slapped Bell Canada with a $10-million penalty for "misleading representations" about prices, sending a sharp message to businesses that play games with consumers over pricing.
Some businesses won't like it, but this intervention is actually in their best interests.
For Bell, the offending practices included ads for basic phone service in Ontario. Bell's website displayed a price of $14.95 "for the first 6 months in the Bell Bundle" - but that included a $5 "bundling discount" that only came with the purchase of another service, such as the Internet. It also omitted fees of $2.80 for Touch-Tone and $0.17 for 911. Bell buried those two mandatory "extras" on another web page.
So for local phone service, the $14.95 package actually cost at least $22.92.
A Bell spokesman defended its approach, saying that "disclaimers in advertising have been common practice in the communications marketplace and many other industries in Canada."
That's hardly an inspiring statement of business leadership, but he does have a point. Other firms also commit this sin of omission.
Consider airlines. In Quebec, Air Canada is facing complaints from the provincial Office of Consumer Protection over its advertised airfares.
For example, Air Canada's website recently listed a Toronto-Montreal flight for $49, but then the payment screen added $63.01 in "taxes, fees, charges and surcharges." It's not easy to find out what that includes. Apparently, $12.89 was for sales tax. The rest was a $3 insurance surcharge, a $7.12 air traveller security charge, a $15 NAV Canada fee, and a $25 airport improvement fee. So the real cost before sales tax was $99.12 - double the originally displayed price.
Air Canada might have thanked the Quebec agency for pointing out the confusion this could cause customers. Instead, it says that, as a federally regulated airline, it's exempt from Quebec's rules.
The airline's legalistic stand misses the point. Laws only prescribe limits on what businesses can or can't do (the minimums and maximums). They don't tell businesses how to delight their customers (the optimums). A company that merely complies with the law is merely offering the lowest quality it can get away with.
That minimalism may save money in the short run, but relying on trick pricing for revenue is a lazy business strategy in the long run. It's like relying on a weak currency to keep costs low, as some Canadian manufacturers have belatedly realized.
To be fair, managers do face a dilemma. They should be making their services easy for consumers to understand. But if one firm omits certain fees from its ads, then competitors will feel compelled to do the same since their products will seem too expensive.
This is a case where a little regulation goes a long way. Laws that require "all-inclusive" prices not only help Canadian consumers, they also place businesses on a level playing field so they can focus on more important issues.
The Competition Bureau is doing its job and should continue requiring firms to clearly state their prices. Bell has already altered its site to include the Touch-Tone and 911 fees. It obviously wasn't difficult; it just took some encouragement.
As well, other provinces should follow Quebec by mandating clear pricing for businesses within their jurisdictions. Ontario, for example, currently requires all-inclusive pricing for travel agents but not airlines, and for car dealers but not auto manufacturers.
The Competition Bureau has sent a clear message on behalf of consumers. Let's hope businesses are listening.
Michael Armstrong teaches quality management in the Faculty of Business at Brock University.