June 5, 2018
The Competition Bureau (Bureau) has published the fourth volume of its Deceptive Marketing Practices Digest (Marketing Digest), which provides guidance from the Bureau on influencer marketing, “Made in Canada” claims and savings claims (see Bureau releases Deceptive Marketing Practices Digest Volume 4).
In general, the Bureau’s new Marketing Digest reflects several ongoing Bureau enforcement priorities in the misleading advertising area:
Testimonials/endorsements. False or misleading testimonials/endorsements can be challenged by the Bureau under the civil or criminal misleading advertising provisions of the Competition Act – sections 74.01 and 52. For more information, see Testimonials and Endorsements and Misleading Advertising.
Made in Canada claims. The Bureau has issued “Product of Canada” and “Made in Canada” Claims Enforcement Guidelines and Made in Canada claim FAQs (see “Product of Canada” and “Made in Canada” claims – Frequently asked questions).
Savings claims. Savings claims can be challenged under the “ordinary selling price” provisions of the Competition Act (sections 74.01(2) and (3)), which set out specific legal tests for making claims relating to savings for a company’s own product or comparisons to market prices more generally. False or misleading sale or savings claims can also be challenged under the civil or criminal general false or misleading advertising provisions of the Competition Act (sections 74.01 and 52).
Some of the guidance provided by the Bureau in its new Marketing Digest includes:
Influencer Marketing
The Bureau has published a new Influencer’s Checklist that recommends the following when posting reviews and opinions on social media:
1. Ensure that disclosures are as visible as possible. The Bureau recommends that influencers ask themselves: “will it be clear to readers who see this content for the first time that I have a material connection with the company who sells the product?”
2. Disclose material connections in each post (i.e., any relationship between an influencer and a company, such as payment, free product or discounts, that has the potential to affect how consumers evaluate an influencer’s independence).
3. Use clear and contextually appropriate words and images.
4. Ensure disclosures are inseparable from the content so they travel together when shared.
5. Base all reviews and opinions on actual experience.
6. Avoid ambiguous references and abbreviations, such as “Thank you Company X!”, “Ambassador”, “Partner”, “Company X”, “SP” and “Spon”.
The Bureau has also published a new Advertisers’ Checklist that recommends the following for advertisers when dealing with social media influencers:
1. Ensure that influencers clearly disclose material connections.
2. Disclose material connections in each post.
3. Ensure that the representations aren’t false or misleading.
4. Verify that influencers aren’t making performance claims on your behalf, unless based on adequate and proper testing.
Made in Canada Claims
In its new Marketing Digest, the Bureau reiterates its enforcement position on Made in Canada claims set out in its “Product of Canada” and “Made in Canada” Claims Enforcement Guidelines.
In particular, if advertising a product as “Made in Canada”, the last substantial transformation of the good should have occurred in Canada and a majority (more than 51%) of the total direct costs of producing/manufacturing the product should be Canadian.
The Bureau also re-states its enforcement position (and tests) for making “Made in Canada” and “Product of Canada” claims.
For a key case where the Bureau commenced enforcement action against allegedly false or misleading Made in Canada claims, see: Moose Knuckles Settles “Made in Canada” Advertising Case.
Savings Claims
In its new Marketing Digest, the Bureau reiterates its enforcement position on ordinary selling price claims as set out in its Enforcement Guidelines – Ordinary Price Claims.
The Bureau reminds advertisers that whether they reference their own regular price or a market price, the Competition Act requires that they validate the regular price by satisfying one of two tests: (i) volume test: a substantial volume of the product must have been sold at the regular price within a reasonable period of time before or after the representation; or (ii) time test: the product must have been offered at the regular price in good faith for a substantial period of time recently before or immediately after the representation.
The Bureau’s positions on what constitutes a “substantial volume” and “reasonable period of time” are set out in detail in its Ordinary Price Claims Enforcement Guidelines.
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