July 7, 2021
The Competition Bureau (Bureau) recently began posting new Compliance Bootcamp compliance videos. In this regard, on July 7, 2021 the Bureau posted its Avoiding Deceptive Marketing Compliance Bootcamp video.
This compliance video sets out guidance to avoid engaging in deceptive marketing practices, including making false or misleading marketing claims under sections 52 and 74.01 of the Competition Act. In general, the Bureau reminds advertisers that the deceptive marketing provisions of the Competition Act apply regardless of medium, including to web banners, landing pages, text-based hyperlinks, e-mails, text messages, newsletters, blog posts, online ads and social media content.
The general civil misleading advertising provision of the Competition Act (section 74.01(1)(a)) prohibits representations to the public, to promote a product or any business interest, that is false or misleading in a material respect. Section 52 of the Competition Act, which is the criminal misleading advertising provision, is substantially similar but also requires that false or misleading claims be made intentionally. Advertisers should also be aware that the “general impression” in addition to whether an advertising claim is literally true is also relevant in assessing whether the claim is false or misleading in a material respect.
In its compliance video, the Bureau provides recommendations to avoid general impressions that may be false or misleading, including: (i) avoiding fine-print disclaimers that restrict or contradict the main message of a marketing claims; (ii) using clear, easily understood language in marketing copy; and (iii) fully and clearly disclosing all related and important information. The Bureau also reminds advertisers that under both the civil and criminal general misleading advertising provisions, it is not necessary to prove that any person was actually deceived or misled to establish liability.
In its compliance video, the Bureau also sets out guidelines on performance claims (section 74.01(1)(b) of the Competition Act) and influencer claims (testimonials/endorsements).
With respect to performance claims, the Bureau reminds advertisers that the onus, if challenged, is on the person making the claim to show that the performance claim is based on an adequate and proper test. Some of the types of performance claims that may fall under this provision include claims relating to the performance of a product (e.g., speed, reliability, sales performance, etc.), comparative advertising (e.g., where one firm’s product’s performance is being compared to a competitor) and claims relating to preferences or perceptions.
To avoid false or misleading performance claims, the Bureau recommends that: (i) testing has been conducted before the claim is made; (ii) testing on which claims are based is performed under controlled circumstances; (iii) marketing claims reflect actual test results; (iv) broad claims based on testing are entirely, not partially, relevant; and (v) marketing claims are based on test results that are neither insignificant nor based on mere chance or one-time effect.
To avoid false or misleading testimonials/endorsements by influencers (sections 74.01 and 74.02 of the Competition Act), the Bureau recommends: (i) clearly disclosing relevant information related to marketing claims disclosures; (ii) disclosing to the public whether the influencer has a material connection, including a friend or family connection, or receives any benefit in exchange for promoting a business, product or service, including any discount, fee, service or product; and (iii) ensuring that any reviews and testimonials are authentic experiences and opinions of impartial consumers.
The Bureau also provides guidance in its compliance video on ordinary selling price claims (OSP claims) (section 74.01(2)-(3) of the Competition Act) and “drip pricing” (i.e., offering attractive headline prices and then adding additional mandatory fees later in a transaction).
With respect to OSP claims, the Bureau reminds advertisers that in order to make claims regarding the “ordinary” or “regular” price of a product (or similar types of comparison claims to either the regular price of the advertiser’s own product or suppliers generally), they must validate the regular price by meeting either the “volume test” or “time test” set out in sections 74.01(2)-(3) of the Competition Act. The underlying purpose of the OSP sections of the Act are to ensure that advertisers do not falsely inflate the “regular” price advertised.
In addition, to avoid making deceptive claims about prices, the Bureau recommends avoiding: (i) using the words “sale” or “special” in marketing collateral unless a true price reduction has occurred; (ii) running a “sale” for a long time or repeating it every week; (iii) luring customers with a bargain product that isn’t available and then offer a similar alternative at a higher price (e.g., by having insufficient quantities of the product advertised at a bargain price before promoting a sale); (iv) selling a product above the advertised price; or (v) charging the higher price if two prices appear on a product or service.
With respect to drip pricing, the Bureau’s position is that the upfront price advertised for a product or service must be the price that the buyer ultimately pays free of any mandatory and undisclosed fees.
Overall, the Bureau’s new Avoiding Deceptive Marketing compliance video is a useful summary of its current misleading advertising related enforcement priorities. The compliance video also provides useful guidance for complying with the general misleading advertising provisions of the Competition Act, as well as those relating to performance claims, testimonials/endorsements and OSP claims.
For the Bureau’s full compliance video, see: Avoiding Deceptive Marketing.
For more information about general misleading advertising and specific types of advertising claims under the Competition Act, see: Advertising FAQs, Made in Canada Claims, Misleading Advertising, OSP Claims, Performance Claims, Telemarketing and Testimonials.
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