Leon's, The Brick under investigation for alleged 'deceptive marketing'

CTV National News: Leon's, The Brick investigation The Brick and Leon's have been accused of committing alleged improper marketing practices - Paul Hollingsworth has more.

Popular furniture and appliance retailers Leon's Furniture Limited and its subsidiary, The Brick Warehouse LP, are under investigation for alleged "deceptive marketing."

Canada's Competition Bureau will try to determine whether those companies misled customers by inflating regular prices while making savings claims, promoting false "urgency cue claims," and making sale claims with no specification as to the amount of the discount.

"The Bureau is looking to determine if Leon's and The Brick's marketing practices raise concerns under the deceptive marketing provisions of the Competition Act," reads a news release.

"There is no conclusion of wrongdoing at this time."

In a statement provided to CTV News, the two retailers acknowledged the inquiry and confirmed they are "committed" to cooperate with the bureau.

"Both companies offer consumers great products at great prices, providing excellent value," reads a quote from spokesperson Audey Hyams Romoff. "Both Leon's and The Brick have established longstanding protocols to meet advertising standards."

What are 'urgency cues?'

Urgency cues signal to shoppers that there is a limited supply of a given product.

Vendors may tell customers that there are only a few items left in stock, or that other people are also looking at the product, encouraging the shopper to act quickly and buy it.

"The sense of urgency is compounded when a consumer believes a product is both scarce and in high demand," reads a page on the bureau's website describing the tactic.

"When untrue, they can mislead consumers into making purchases they might not have otherwise made."

How much is a sale worth?

Canada's Competition Act requires companies to display a market price, or their original price, next to the marked-down price when advertising a sale.

The regular, non-reduced price needs to be validated by one of two tests, according to the act. The first, called the "volume test," requires that a substantial volume of the product be sold at that cost or higher within a reasonable period of time. The second, called a "time test," requires that the product be sold at a higher price, in good faith, for a substantial time period.

Corporations face penalties including $10 million for a first offence and $15 million for each subsequent offence.

More details to come.