Sofa and appliances seller Leon’s Furniture Ltd. is refuting a lawsuit filed by the federal competition watchdog alleging the chain uses “deceptive” sales tactics through the company’s so-called ‘buy now, pay later’ promotions.
“The deferred payment plans offered by Leon’s and The Brick benefit consumers,” the Toronto company, which also owns one-time rival The Brick, said in a release Wednesday. “Leon’s and The Brick deny the commissioner’s allegations and will vigorously defend their position in the court.”
The company didn’t elaborate on how the promotions help shoppers.
“As the matter is before the court, Leon’s and The Brick will not comment further at this time,” the release said.
In a suit filed a day earlier, the Competition Bureau alleges the iconic retailer’s ‘buy now, pay later’ promotions pile on “hidden fees” to unwitting customers that inflate prices.
The Competition Bureau said the suit, which was filed with the Ontario Superior Court of Justice, is seeking a halt to the “deceptive” practice, which involves advertising payment options where buyers are told they can defer payment until a later date but are then confronted with certain upfront fees.
“In this case, the retailers buried details of the additional up-front fees in fine print, which led to the final price of a product being higher than the advertised price,” a statement from the federal bureau said.
Leon’s, which has used the well-known holiday slogan of ‘ho-ho-hold the payments’ in its Christmas marketing for years, is in the process of acquiring The Brick, a merger the Competition Bureau cleared earlier this year.
But the body is sending a clear message that the combined chain will have to alter its selling methods. In the suit, it demands an end to “this type of deceptive advertising,” as well as refunds for customers who paid so-called administration or processing fees.
The bureau is also seeking administrative monetary penalties from the companies.
The suit says the company’s disclaimers in the fine print of contracts with its customers are ineffective and appear designed to confuse the buyer.
“When a price is offered to consumers for a product, it must be both clear and accurate,” Lisa Campbell, the deputy commissioner for the bureau’s Fair Business Practices Branch, said.
“For example, depending on applicable fees due at the time of purchase [which may include processing or administrative fees, delivery fees and taxes], a customer wanting to defer payment on a $1,500 sofa could end up paying more than $350 at the time of purchase, even though the advertisements clearly state that no payment is required at the time of purchase,” the release said.
The allegations have not been proven.