When a consumer chooses to make a purchase based on a price displayed, they should be able to trust that price is accurate. Unfortunately, it is all too common for a shopper to be bombarded by surprise fees which are tacked on just before or even after credit card information has been entered. These fees can go by many names; common ones include processing fees, booking fees, cleaning fees, or administrative fees.
However, regardless of the name a company chooses to call their fees, they are all examples of a practice called "drip pricing." Drip pricing is when a business offers a lower price to attract customers, but then includes a mandatory fee at payment making the price unattainable. These additional charges are unlawful, unless they are imposed by the government, such as sales tax.
Are hidden fees illegal in Canada?
While drip pricing has been prohibited in the Competition Act for some time, in June 2022, the Federal Government took further legislative action by amending the Competition Act to explicitly state this type of behaviour can be prosecuted as a criminal offence as well as a civil deceptive marketing practice. Despite these updates to the legislation, businesses are still rampant in their contravention of the Act. Since the amendments, the Competition Bureau has become increasingly active in prosecuting such practices.
Competition Bureau investigates concerns over SiriusXM's misrepresentation of prices
Recently, the Competition Bureau imposed a $3.3 million fine against the radio subscription provider SiriusXM. SiriusXM consented to an agreement to pay the fine and halt its misrepresentation of prices which are unattainable, due to a Mandatory Royalty and Administrative Fee ("MRF") attached to its subscriptions. The MRF is not disclosed with the advertised price upfront and can be up to 20.07% of the advertised price, a significant increase.
This is not the first time SiriusXM has come under fire for this issue. Three class actions have also been filed in various US jurisdictions for charging an equivalent fee called the "U.S. Music and Royalty Fee." These actions seek to recover amounts consumers would not have otherwise paid if not for SiriusXM's misrepresentations.
Class action for Canadian SiriusXM subscribers
Siskinds has commenced a proposed class action against SiriusXM Canada Inc. and SiriusXM Canada Holdings Inc, seeking to recover compensation for SiriusXM subscribers who paid the MRF as part of their subscription without the amount being disclosed upfront.
The class action is brought on behalf of all persons in Canada, excluding Québec, who purchased a SiriusXM subscription plan from March 1, 2010 (the date on which SiriusXM began charging a MRF fee in Canada) to July 18, 2024 (the date on which SiriusXM is required as part of a consent agreement with the Commission of Competition to amend its pricing practices). Québec is excluded from the proposed class because the MRF fee was included in the advertised price in Québec.
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