1 June 2018
A bargain or a technical problem? Pricing errors in Canada’s e-commerce
Every year, on the Internet, companies mistakenly advertise products for sale at less than market value. When they realize their mistake, most companies simply cancel any orders that have been placed – only sometimes offering consumers compensation. This choice is easy to understand. On the Internet, it only takes a few minutes for thousands of consumers to order a product at the wrong price, and this can result in very significant losses for the merchant.
But is it legal? When can merchants justifiably invoke the principle of error for not respecting their commitments? In Canada, one province – Québec – has established rules that seem to adequately address the issue of online pricing errors. In fact, the Consumer Protection Act and the Civil Code of Québec provide that any consumer who purchases a good at an erroneous price is entitled to keep it.
It is in the interest of the other provinces to legislate quickly. Erroneous prices posted on the Internet affect a significant number of consumers – 24% of the 1000 respondents in our survey had already bought a product online for which the advertised price was wrong. And as online retail activity continues to grow, the number of pricing errors grows with it. In 2017 alone, we recorded a dozen such cases.
In reaction to this situation, companies have introduced restrictive conditions of sale. We studied the websites of 50 companies visited by Canadians and came across a number of disturbing clauses. One merchant refused to be bound by the representations made on its website. Another gave itself the right to demand a higher price than the one advertised. Yet another offered consumers only very limited recourse. Clauses such as these represent significant impediments to access to justice.
In the search for solutions, an attempt must be made to reconcile the rights of consumers and the needs of electronic merchants. The consumers in our focus groups were more conciliatory toward small enterprises and those who react quickly, apologize, and offer compensation. They also showed some openness in cases when the difference between the wrong price and the market value of a product was significant and the
error was obvious.
Option consommateurs recommends that provincial legislators amend their respective laws in order to specify that it is forbidden to sell a good at a higher price than the advertised price and that the contract is concluded the moment consumers submit their order online. It also recommends that Canadian jurisdictions adopt a Price Accuracy Policy 2.0 that specifies a price threshold at which an order should be honoured or refused. We also recommend to the federal legislator that the Canadian Code of Practice for Consumer Protection in Electronic Commerce be updated in order to clarify the procedures for dealing with pricing errors.
These changes seem necessary to ensure that cases involving errors in advertised prices are handled in a fair and transparent manner, both for consumers and for businesses wishing to conduct electronic commerce in Canada.