Leon's Furniture defends itself against misleading ad claims
Michael J. Knell -- Furniture Today, September 24, 2013
TORONTO — Leon's Furniture and its subsidiary The Brick are firing back at the Canadian Competition Bureau, not only refuting allegations their advertising is misleading but maintaining that the message is not only iconic but that all fees, taxes and other conditions are clearly spelled out to the consumer at the time of purchase.
This country's largest full-line furniture retailer also said it reached out to the competition commissioner in an effort to meet his concerns, only to be rebuffed.
The Canadian Competition Bureau accused Leon's and The Brick of burying details of additional up-front fees in the purchase agreement's fine print, which led to the final price being higher than the one advertised price for those consumers using the deferred payment option.
The bureau has filed an action seeking an end to what it describes as a "type of deceptive advertising" and seeking refunds for all customers who paid administration or processing fees from Leon's and The Brick.
"Leon's has been offering and advertising deferred payment programs to Canadian consumers for more than 25 years. Its Don't Pay a Cent Event and Ho Ho Hold the Payments promotions are Canadian icons, which the (competition) commissioner now seeks to impugn," the publicly held retailer said in a Statement of Defense filed with the Ontario Superior Court of Justice.
"Deferred payment programs are and have for many years been common among retailers of furniture, mattresses, electronics and appliances. Deferred payment programs are valued by consumers, for whom they are an inexpensive financing option for ‘big ticket' items, especially when compared to credit cards," the retailer said.
Unlike their competitors, Leon's and The Brick don't charge retroactive interest if payment isn't made at the end of the deferral period, the company said. "Rather, interest simply starts to run at the end of the deferral period."
The company said taxes and fees - such as those for delivery, for electronics disposal or recycling, or processing fees for financing - may be payable at either the beginning or the end of the deferral period.
"The amount and timing of all taxes and fees are in all cases disclosed to the customer before the customer purchases the product," the statement said, adding that normal retail practice is to advertise prices before taxes and fees. "It is well known by consumers that such taxes and fees may be payable."
Both companies have been advertising these types of promotions for more than 25 years and have not been the subject of customer complaints. The Competition Commissioner didn't object to them before October, 2012, according to the retailer.
After learning of the investigation, both Leon's and The Brick sought the commissioner's views on how their advertising could be improved, officials said.
"The commissioner declined to respond," the company told the court.
However, the company has made adjustments to its advertising of deferred payment programs to address what appear to be the bureau's concerns.
As of press time, no trial date has been set, although cases such as these often take years to wind their way through the justice system.
Leon's acquired The Brick in March in a deal valued at approximately C$700 million. It operates The Brick as a separate entity. The company operates 76 corporate and franchise stores under the Leon's banner. The Brick has 230 corporate and franchise stores and operates under four different banners including The Brick, United Furniture Warehouse, The Brick Mattress Store and Urban Brick.