Saturday, February 25, 2012

Rogers Claims that False Advertising is Free Speech

Some of you may have heard that Rogers Telecom was accused of engaging in misleading advertising in 2010 when they claimed that they had more network reliability and fewer dropped calls than upstart wireless carrier Wind Mobile. Their defense is as astounding as it is a symbol of the growing incommensurability of business interests and those of society. Rogers is arguing that the truth-in-advertising rules that would prohibit this type of behaviour are a violation of its right to freedom of expression.

More particularly, Rogers is arguing that it is a violation of the freedom of expression under the Charter of Rights and Freedoms to force them to test its products before making claims about them. The Competition Bureau has charged Rogers with misleading advertising given that there is no evidence that users experience fewer dropped calls.

Rogers’ response is fascinating:

The testing rule "prohibits and penalizes entirely truthful claims, including claims made on a reasonably held belief that such claims are entirely accurate and claims that are proven to be entirely accurate through post-claim testing. Not only are these types of claims entirely harmless, but they play an important role in consumer choice and may have a significant positive impact on prices and product innovation.”

It’s important to consider the broader implications of what Rogers is saying here. In essence, they are suggesting that companies should be allowed to over-promise certain features of a product or service so long as they have a “reasonably held belief that such claims are entirely accurate”. Is this argument really about the freedom of expression? There is no doubt that companies are eager to improve the image of their brand in the eyes of the consumer to capture market share. Because price is relatively uniform in an oligopolistic environment, firms can only create value by creating perceptions in the minds of consumers that there is some additional value to be had out there (e.g. fewer dropped calls and better service).

The ironic thing about all this is that Rogers is leveraging the Charter of Rights and Freedom to justify their misleading claims to consumers. When large oligopolistic companies like Rogers, put forth these sorts of claims they are in fact compromising the ability of consumers to make informed decisions. If Rogers succeeds in their argument, what’s next? Is Coca-Cola permitted to claim that drinking their beverages are healthy just because they have a “reasonably held belief that they are accurate”? Do banks have the right to claim that taking on another credit card is going to improve your satisfaction in life because they also have this reasonably held belief? Do oil and gas companies have the right to claim that climate change is a hoax because they have a reasonably held belief?

The impact that companies have on society is profound. Like any other social actor, they shape norms, beliefs, and behaviours of wider society. Companies have a vested interest to create value by increasing the willingness of consumers to pay for their products and services. But this is ultimately a transfer of value rather than the creation of new value. Informed decisions and truth are highly valued in society. All Rogers is doing is appropriating that value; that is, they are transferring value from society to its own margins by fabricating their messages and to influence the beliefs of its consumers.

1 comment:

  1. Although your use of the latest hot marketing and sales strategies may improve the bottom line of your business, you may get into hot "legal waters" if you do not exercise the proper restraints.