Cineplex raked in nearly $40 million from online booking fees, at the heart of allegations of deceptive marketing practices that the country’s competition commissioner has leveled against the cinema chain.
An agreed statement of facts filed in the case before the Competition Tribunal shows that Canada’s largest movie theater owner collected more than $11.6 million in the six months following the implementation of the fresh in June 2022.
He raked in an additional $27.3 million from fees in 2023.
Cineplex charges $1.50 on each ticket purchased online, but Scene+ members receive a discount and CinéClub members are waived the fee.
The question of whether the way Cineplex presents fees constitutes deceptive marketing and drip pricing — where a company posts a price to which it then adds fees — has been debated in recent weeks before the Tribunal competition in Ottawa.
Competition Commissioner Matthew Boswell says the fees are misleading because moviegoers don’t have access to the full price of a movie ticket on the very first page they see when they buy tickets at Cineplex .
Closing arguments filed by the commissioner on Monday assert that Cineplex is disclosing the existence and amount a customer will pay in online booking fees “below the fold” or off-screen for the vast majority of moviegoers, thereby misleading people about the final price they will pay.
The countdown in question
It added that Cineplex also uses a countdown timer displayed at each stage of the purchase process, which “increases pressure on consumers to focus on completing their purchase, rather than considering the details of the transaction and to think about it.
When such tactics are used, “consumers tend to underestimate the total purchase price” because they “pay less attention to additional charges than to basic pricing information.”
“The use of these pricing practices has been shown to increase consumer demand. In this case, Cineplex increased the demand for its tickets relative to the demand that would occur if it initially displayed a truthful price to a consumer,” the commissioner’s document reads.
He wants the court to order Cineplex to end countdown pricing, remove the countdown from its website and app, and pay a financial penalty equal to the amount Cineplex earned from a ” deceptive conduct.”
Cineplex maintains that Mr. Boswell’s claims are baseless and should be dismissed because moviegoers are made aware of the fees they could face early in the purchasing process.
Cineplex spokeswoman Michelle Saba said in an email to The Canadian Press that the company would not comment on the case during its court hearing.
The company’s findings had not yet been published on the court’s website as of Tuesday morning.
Develop online sales
However, the commissioner said the fees charged by Cineplex are the product of its efforts to expand its online ticket sales business, which dates back several years.
The document says the chain began using reserved seating in 2017 and expanded the practice to all theaters in June 2020, when the COVID-19 pandemic accelerated online shopping.
In 2021, the commissioner said about two-thirds of Cineplex’s tickets were sold online or on its website.
The commissioner said the online booking fees implemented in June 2022 were part of a directive from Cineplex’s chief operating officer to consider different revenue-generating ideas.
At that time, Cineplex was grappling with several health measures intended to stem the spread of COVID-19, including theater closures and social distancing protocols, which strained its finances, as well as failed sale to British cinema giant Cineworld.
The fees were implemented the same month Canadian laws were changed to deem drip prices false or misleading. Before these fees, tickets booked online were advertised by Cineplex as “no service fees,” the commissioner said.
“As Cineplex prepared to impose fees, it ordered the removal of any signage referring to the fact that Cineplex had no service fees,” he explained.
“She sought to do so in a way that would not arouse suspicion among theater staff about a change in policy.” »