Keurig Canada is in hot water with the Competition Bureau as it relates to its false and misleading advertising claims that single use K-Cup pods can be recycled. This is in contravention of the Competition Act, which governs advertising practices in Canada. Incidentally, Keurig was also targeted in a class action suit in the US over the same issue.
What was the Issue?
In advertising its products, Keurig claimed that its single use K Cup pods were recyclable. Keurig included directions to its consumers on how to make the pod recyclable, by peeling off the metallic lid and emptying out the contents of the pods. However, upon investigation, the Competition Bureau determine that K Cup pods are not widely accepted in the recycling programs set up in Ontario or British Columbia. In addition, the instructions provided by Keurig was not sufficient to assist consumers to make the K Cup pods recyclable for those programs that would accept the pods. Therefore, the claim that the K Cup pods are recyclable is dubious in Canada.
What was the Penalty?
Keurig Canada voluntarily entered into an agreement with the Competition Bureau. The penalty issued against Keurig Canada is sizeable, totalling $3 million. In addition, it agreed to provide a $800,000 donation to an environmental charity and also to pay the Competition Bureau $85,000 to cover its expenses for the case. In addition, Keurig Canada was required to change its packaging, publish notices about the changes online and throughout the media and also to inform its consumers directly via email.
The Competition Bureau issued a statement denouncing Keurig Canada’s deceptive practices stating:
"Portraying products or services as having more environmental benefits than they truly have is an illegal practice in Canada. False or misleading claims by businesses to promote 'greener' products harm consumers who are unable to make informed purchasing decisions, as well as competition and businesses who actually offer products with a lower environmental impact."
What is the Take Away?
The deceptive marketing practices provisions of the Competition Act forbid companies from making false or misleading claims about a product or service to promote their business interests.
Advertising claims about your products and services need to be carefully crafted as they are tools that manipulate consumer behaviour. The elements used to consider whether an advertisement is misleading includes:
1. How was the advertisement presented? Was it posted online, or printed?
2. Was the advertisement made public?
3. Did the advertisement promote a product or business/business interest?
4. Was the advertisement misleading or false?
5. Is the material on the advertisement false? such as the pricing or performance claims.
Of particular application to this case, in 2017 the Competition Bureau issued a warning against businesses of “greenwashing” their products/services, which resulted in misleading environmental claims.
If you would like assistance to ensure that your advertising claims are onside with the Competition Act, we’d be happy to help.