Option consommateurs, a Quebec nonprofit organization whose mission is to promote and defend consumer interests filed a class action lawsuit against furniture retailers who advertise “buy now, pay later” financing plans.
The Furniture Retailer Credit Class Action Lawsuit was filed in the Superior Court of Québec against Quebec’s leading furniture retailers, including Léon, Brick Warehouse and Brault et Martineau, among others.
Class Members included in the Furniture Retailer Credit Class Action covers individuals who purchased appliances, furniture, electronics and home accessories from the defendants on or after February 27, 2017 which were paid through a “buy now, pay later” program.
The class action lawsuit seeks $85 in punitive damages for each purchase made via the “buy now, pay later” scheme from defendant retailers during the indicated dates.
The crux of the proposed class action settles on Quebec consumer protection law which prohibits advertising buying with credit that urges “consumers to obtain goods or services on credit or illustrate goods or services.”
The Furniture Retailer Credit Class Action highlights that the defendants’ “message is working… A large portion of the Defendants’ sales are made through ‘buy now, pay later’ financing plans available in stores and online.”
Option consommateurs’ key accusation against the named defendants is that their advertising strategies contravene sections of the Consumer Protection Act aimed at preventing consumer debt.
Importantly, the Quebec Consumer Protection Act is a law of public order, which means that businesses must comply with it in the course of business activities.
In November 2017, the Consumer Protection Act was amended to modernize rules relating to consumer credit. One of the major amendments to the Act regards credit contracts, the issue of this class action. Credit contracts also include instalment sale contracts where a business retains the right of ownership in a product, such as furniture, until full payment is made, or where payments are to be made in scheduled instalments over time, such as financing programs. The amendments provide stricter rules on consumer credit contracts.
“When we advertise goods or services, we are not allowed to advertise credit except in a very restricted manner,” says Élise Thériault, legal advisor at Option consommateurs. According to her, many other retailers also promote financing plans, which, if not advertised properly, also infringe the Consumer Protection Act. Option consommateurs does not rule out the possibility of targeting these businesses in future class actions.
According to Option consommateurs, the Furniture Retailer Credit Class Action Lawsuit could involve tens of thousands of consumers. In response to the class action proposal, the vice-president and general manager of one of the defendants, Jacques Tanguay, replied that this form of advertising has existed for over 25 years. Jacques highlights that the advertised financing plans do not contribute to consumer debt because, in this case, consumers must respect their payments.
“This form of advertising has always been used in a way that respects regulations,” according to Jacques. “This advertising is used in several sectors, particularly in the automobile industry,” he concludes.
New Consumer Protection Advertising Rules
To ensure they don’t find themselves in the same predicament as the defendants in the Furniture Retailer Credit Class Action Lawsuit, businesses in Quebec should be aware of the advertising amendments to the Consumer Protection Act, namely:
- In advertisements regarding goods or services, businesses must present the information in a clear, legible and comprehensible manner;
- Businesses cannot use the expression “cost price” or any similar expression, unless it refers to the price actually paid by the merchant to purchase the goods;
- Businesses cannot solely disclose the amount of the instalments to be paid for the purchase or lease of the product, but must also disclose the total price of the product in an advertisement;
- Businesses cannot present a picture of the goods or services that does not constitute an accurate depiction of the goods or services in an advertisement; and
- The Act imposes stricter rules on advertising the availability of credit, specifically with respect to the impact that the credit contract may have on consumers’ financial situation or debt.
Did you buy home appliances or furniture through a “buy now, pay later” financing program? What do you think about such advertising practices? Tell us your thoughts in the comment section below!
The lead plaintiff and proposed Class Members are represented by Maxime Nasr, Josée Cavalancia and Melissa Bazin.
The Furniture Retailer Credit Class Action Lawsuit is Option Consommateurs v. Meubles Léon Ltée, et al., in the Superior Court of Québec, District of Montreal, Canada.
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2 thoughts onFurniture Retailers Hit Hard with Credit Class Action Lawsuit
This is why it ended up costing more than the advertised price!
That explains a lot…please include me.
It’s the most sneakiest way of doing business. They make is sound so easy. Buy now pay later. They don’t tell you if you don’t pay it off before the due date the interest starts adding up. They want the sale and don’t care about the customers.