Advertising and Pricing Standards Flashcards

A travel agency places a print advertisement on Monday showing a Caribbean cruise package at '$1,149 per person.' On Wednesday—before any bookings are made—the cruise line announces a mandatory port fee increase raising the true cost to $1,219. The ad runs unchanged through Sunday. Which statement best describes the registrant's obligation under TICO advertising standards?

Answer: The registrant must immediately pull or correct the advertisement, as continuing to display a price the registrant knows cannot be honoured constitutes misleading advertising.

TICO's Code of Ethics and Ontario's Consumer Protection Act prohibit registrants from advertising prices they know cannot be honoured. Once the registrant becomes aware the advertised price is no longer accurate, the obligation to correct or withdraw the advertisement is immediate—regardless of who caused the price change or when the ad was originally placed. Blaming the supplier does not absolve the registrant of responsibility for their own advertising.

A Toronto agency's website promotes a Maldives package with the headline price displayed in large font as 'From $3,499.' In a footnote using font half the size, the ad discloses that mandatory resort fees ($420), return transfers ($180), and a fuel surcharge ($215) are additional. The total true cost is $4,314. Which element of TICO's advertising pricing standard is most directly violated?

Answer: The requirement that all mandatory, non-optional charges be included in the advertised price or disclosed with equal prominence to the base price.

TICO's advertising standards require that any mandatory charges the consumer cannot avoid—regardless of whether they are government taxes or supplier fees—must either be included in the headline price or disclosed with equal prominence. Burying $815 in mandatory fees in a footnote printed at half the size of the headline price creates a misleading impression of the true cost. The violation is about prominence and completeness of disclosure, not merely whether a footnote exists.

An Ontario registrant advertises a European rail-and-hotel package priced in Euros (€2,100) with no Canadian dollar equivalent stated anywhere in the advertisement. Under which narrow circumstance would TICO consider this advertisement compliant?

Answer: When the advertisement clearly and conspicuously states that the price is in a foreign currency and the applicable exchange rate or conversion method is disclosed.

TICO's advertising standards require that prices in advertisements be expressed in Canadian dollars, OR that any non-Canadian currency be clearly identified along with a disclosure of the exchange rate or conversion methodology so consumers can determine their actual Canadian dollar cost. Targeting certain demographics or client types does not exempt a registrant from currency disclosure obligations. Complete omission of Canadian dollar context is non-compliant.

A registrant's brochure compares its all-inclusive Mexico package at $2,200 to 'competitor prices of $2,800+.' The $2,800 figure was sourced from a competitor's brochure printed eight months ago during peak season; current competitor pricing is $2,350. Which of the following most accurately characterizes the regulatory problem?

Answer: The comparison is misleading because it uses an outdated competitor price, creating a false impression of the registrant's price advantage under Ontario's Consumer Protection Act.

Comparative advertising is permitted but must be accurate and fair at the time the comparison is made. Using an 8-month-old peak-season price when current competitor pricing is $2,350 creates a materially false impression of a $600 savings advantage when the actual difference is $150. This constitutes a misleading representation under Ontario's Consumer Protection Act—documentation of the old brochure does not validate an inaccurate current comparison, and the '+' suffix would not cure the underlying factual inaccuracy.

A cruise booking confirmation sent to a consumer describes port taxes as 'approximately $175, subject to adjustment by the cruise line prior to sailing.' When the final invoice is issued 10 weeks later, port taxes have increased to $263. The consumer objects. What is the registrant's most defensible position under TICO standards, assuming the original contract language was properly disclosed at booking?

Answer: The registrant may pass the increase to the consumer only if the contract disclosed that government-imposed taxes and third-party port fees are subject to change and outside the registrant's control, and the consumer was informed promptly upon the registrant learning of the increase.

TICO permits pass-through of genuinely variable third-party charges (port taxes, government fees) provided two conditions are met: (1) the contract clearly disclosed at the time of booking that such fees are variable and outside the registrant's control, and (2) the registrant notified the consumer promptly upon becoming aware of the change. When both conditions are satisfied, passing the increase to the consumer is permissible. The registrant cannot, however, absorb or pass along changes silently—timely communication is a compliance requirement, not optional courtesy.

A registrant's social media post features a customer testimonial: 'Best price I've ever seen for Cuba—saved $400 versus everywhere else I looked! — @TravellerJane.' The registrant knows that @TravellerJane received a $200 referral credit that reduced her effective price, and that her 'savings' comparison was made against full-price walk-in rates at a competitor during peak season. The registrant posts the testimonial without any disclosure. What is the primary compliance failure?

Answer: The registrant has published a misleading testimonial by omitting material facts—the consumer's incentivized price reduction and the non-comparable basis of the savings claim—that would affect a consumer's interpretation of the endorsement.

TICO's advertising standards, reinforced by Ontario's Consumer Protection Act, prohibit misleading representations—including those made through third-party testimonials. The registrant bears responsibility for ensuring testimonials they publish are accurate and not misleading. Here, two material facts are omitted: the $200 credit that artificially lowered Jane's price (making her 'savings' non-representative) and the unfair benchmark (peak walk-in vs. pre-booked discount). The combination creates a false impression of typical savings. Testimonials from incentivized customers are not categorically banned, but the incentive must be disclosed so consumers can properly weigh the endorsement.