May 27, 2018
Testimonials and endorsements (i.e., where a brand uses an expert, celebrity or other person to endorse their product) are both increasingly popular and increasingly being scrutinized by regulators, including the Canadian Competition Bureau (Bureau) and U.S. Federal Trade Commission (FTC). While the Competition Act, which is the primary legislation governing misleading advertising in Canada, does not contain any specific provisions relating to, for example, the disclosure of material connections, testimonials/endorsements that are false or misleading can nonetheless violate the Act.
This is because the general misleading advertising provisions of the Competition Act are broad enough to catch testimonials/endorsements that are either literally false (e.g., where the person endorsing a product has not used the product) or misleading (e.g., the endorser has been paid, has received free product or has otherwise been compensated and this is not clearly disclosed).
False testimonials/endorsements have been one of the Bureau’s key advertising-related priorities over the past several years, with the Bureau both taking enforcement action (e.g., where online testimonials did not disclose that the people endorsing the product were employees) and issuing compliance guidance for companies.
In addition to the Competition Act, other laws and rules can apply to false or misleading testimonials/endorsements, including the U.S. FTC Act, which is enforced by the FTC, and Advertising Standards Canada’s Canadian Code of Advertising Standards.
The following are some of the key Canadian testimonial/endorsement laws and guidelines and some compliance tips.
Key Canadian Testimonial/Endorsement Laws and Guidelines
1. False or misleading testimonials/endorsements: In Canada, testimonials can be challenged under the general civil or criminal misleading advertising provisions of the Competition Act (sections 52 and 74.01) where they are either literally false or misleading. A testimonial/endorsement may be false or misleading where, for example, the person giving the testimonial is not real, has not used the product or has not disclosed a material connection (e.g., they are being paid, are an employee or have received free product for giving the testimonial/endorsement).
2. Performance claims: In addition to the general misleading advertising provisions, the Competition Act also includes specific provisions that require that performance claims be substantiated prior to being made (i.e., that performance claims be supported by “adequate and proper testing”).
3. Standalone testimonials provisions: The Competition Act also includes a standalone testimonials provision (section 74.02), which prohibits using testimonials unless the person publishing the testimonial can show that it was previously made or published or approved and permission to make/publish it was given in writing. Any testimonial must also generally accord with what has been actually said.
4. Canadian Code of Advertising Standards: Advertising Standards Canada’s Code of Advertising Standards includes a testimonials rule, which provides that testimonials, endorsements or other representations of opinion or preference must comply with all of the following: reflect the genuine, reasonably current opinion of the individual(s), group or organization making the representation; be based on adequate information about or experience with the identified product or service; and not be deceptive. The ASC has also issued a specific Interpretation Guideline for testimonials and endorsements (Interpretation Guideline #5 – Testimonials, Endorsements, Reviews), which imposes specific disclosure requirements. These include requiring the disclosure of any material connection between an endorser, reviewer, influencer or person making the claim and the entity that makes the product available to the endorser; clear and prominent disclosure of any material connection; and for disclosures to be in close proximity to the claim about the product or service.
5. U.S. Federal Trade Commission: The U.S. FTC is the leading enforcement agency in relation to false or misleading testimonials/endorsements. The FTC has issued guidance on misleading endorsements in its Endorsement Guides (Guides Concerning the Use of Endorsements and Testimonials in Advertising) and Endorsement Guides FAQs (Endorsement Guides: What People Are Asking). The FTC’s guidance is both important to advertisers that are making marketing claims to U.S. consumers and also as a resource for testimonials/endorsements made to Canadian consumers, given that the principles underlying false/misleading endorsements are largely the same in both Canada and the United States.
Tips For Testimonials/Endorsements
Several tips for using testimonials/endorsements in Canada include:
1. Do ensure that any material connection is disclosed (e.g., where an endorser has been paid or has received free product).
2. Do ensure that any material connection is prominently disclosed (e.g., top left and “above the break” online, at the beginning of videos, clearly in graphics, with a readily understandable hashtag, etc.).
3. Don’t use testimonials from people who haven’t used the product.
4. Don’t make claims that look like testimonials when there is no customer/user – i.e., fictional “customers” endorsing a product.
5. Don’t use the results of product performance tests and/or testimonials in advertising unless authorized to use them.
6. If authorized to use a product performance test, don’t distort user statements or test results and also ensure they’re relevant to the product.
7. Ensure that any performance claim made in connection with a testimonials/endorsement can be supported by adequate and proper testing before the claim is made.
8. If in doubt, get some advice – false and misleading testimonials/endorsements are an enforcement priority for both the Canadian Competition Bureau and Federal Trade Commission.
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