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“When navigating the digital marketplace, consumers often rely on the opinions shared by influencers.  To make informed purchasing decisions, consumers must know if these opinions are independent or an advertisement.  Ensuring truth in advertising in Canada’s digital economy is a priority for the Competition Bureau.”

Commissioner of Competition

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Testimonials and endorsements (i.e., where a brand uses an expert, celebrity or other person to endorse their product on social or other media) 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 between a brand and endorser, testimonials/endorsements that are false or misleading can violate the Competition Act.

This is because the general criminal and civil misleading advertising provisions of the Competition Act broadly prohibit materially false or misleading claims.  In the context of influencer marketing, this can include, among other things, where an influencer has not actually used the product/service being promoted, product claims don’t reflect the influencer’s actual experience, unsubstantiated performance claims or, most importantly for enforcement agencies, where the material connection between a brand and the influencer is not adequately disclosed to consumers.

Importantly, both the Canadian Bureau and U.S. FTC have made it clear that potential liability rests not only with an endorser/influencer that makes false or misleading claims, but can lead to liability for a brand or agency that is involved in making the claim.

False testimonials/endorsements have been one of the Bureau’s key advertising-related enforcement priorities over the past several years, with the Bureau both taking enforcement action and issuing compliance guidance for companies.  Some of the guidance issued by the Bureau includes its influencer marketing guidelines and Deceptive Marketing Practices Digest.  For example, in one case the Bureau commenced enforcement against Bell Canada whose employees allegedly made misleading endorsements about one of their employer’s apps without disclosing that they were employees (see Bell Canada reaches agreement with Competition Bureau over online reviews).

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 key compliance tips for influencer marketing campaigns.

Key Canadian Testimonial/Endorsement
Laws and Guidelines

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 of the company/brand or have received free product for giving the testimonial/endorsement).

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”).  Claims made by influencers about the performance of a product or service that is not adequately substantiated can violate section 74.01(1)(b) of the Competition Act.

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.

Cannabis Act: Section 17 of the federal Canadian Cannabis Act specifically prohibits any person from, among other things, promoting cannabis through testimonials/endorsements in any media (“by means of a testimonial or endorsement, however displayed or communicated”). Section 17 applies to producers, distributors, providers of cannabis-related services and media organizations. Sections 26(b) and 27(b) of the Cannabis Act prohibit persons from selling cannabis or cannabis accessories in a package or with a label that sets out a testimonial or endorsement.

Canadian Code of Advertising Standards: Advertising Standards Canada’s Canadian Code of Advertising Standards also 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.

Potential Penalties

Some of the potential penalties for violating the civil deceptive marketing practices provisions under Part VII.1 of of the Competition Act include Competition Tribunal or court orders to stop the conduct, publish a corrective notice, pay restitution to consumers and administrative monetary penalties (AMPs).

Following 2022 amendments to the Competition Act, the maximum AMPs for civil deceptive marketing increased: (i) for individuals, up to the greater of $750,000 ($1 million for each subsequent order) and three times the value of the benefit derived from the deceptive conduct if that amount can be reasonably determined; and (ii) for corporations, up to the greater of $10 million ($15 million for each subsequent order), three times the value of the benefit derived from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues.

The potential penalties for violating the general criminal misleading advertising section of the Competition Act (section 52) include, on indictment, a fine in the discretion of the court and/or imprisonment for up to 14 years and, on summary conviction, a fine of up to $200,000 and/or imprisonment for up to one year.

Legal Tips For Testimonials/Endorsements

Some legal compliance tips for testimonials/endorsements in Canada, including in the context of influencer marketing, include:

1. Do ensure that any material connection is disclosed (e.g., where an influencer has been paid or has received free product).  For example: #ad, #[company name]sponsored, “I’ve partnered with [company name] to … or “[company X] gave me this [product] to try”.

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 U.S. FTC.

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