Canada: Misleading Advertising

Last Updated: May 12 2015
Article by John McKeown

Below is an excerpt from John McKeown's May 2015 Mailer where he discusses misleading advertising and more.

Having made an investment in bad weather in April we look forward to better returns in May. Product advertising and its protection is frequently linked to misleading advertising.

From the consumer's point of view a brand must deliver the image and the values it symbolizes. The brand is the brand owner's promise to deliver its wares or services in a consistent fashion at the appropriate level of quality. A brand owner should not make promises that it cannot keep. If advertising appropriately communicates information relating to the brand, misleading advertising should not be a concern. However, for those cases where there are problems, it is helpful to understand the rules concerning misleading advertising. In addition, knowledge of the rules is useful in considering the activities of competitors.

Misleading Advertising

Generally, advertising law in Canada is governed by the Federal Competition Act. The purpose of the Act is to maintain and encourage competition in Canada so as to promote the efficiency and adaptability of the Canadian economy. The provisions of the Act directed at misleading representations aim to improve the quality and accuracy of marketplace information and discourage deceptive marketing practices.

Provisions relating to misleading advertising can also be found in other Federal Acts such as those dealing with packaging and labeling and food and drugs. In addition, each of the provinces typically have their own consumer protection and business practices laws.

The misleading advertising provisions of the Competition Act are administered and enforced by the Commissioner of Competition (the "Commissioner") through the Competition Bureau ("the Bureau"). Most inquiries under the Act are initiated by the Bureau on the basis of complaints made by individuals, government employees, businesses or competitors. Complaints by competitors are given more weight. The Bureau publishes guidelines which outline the relevant policies which apply to violations of the Act.

Criminal Offences

Under the Act, it is a criminal offence to

(a) knowingly or recklessly make a representation to the public that is false or misleading in a material respect, or

(b) knowingly or recklessly

(i) send or cause to be sent a false or misleading representation in the sender information or subject matter information of an electronic message,

(ii) send or cause to be sent in an electronic message a representation that is false or misleading in a material respect,or

(iii) make or cause to be made a false or misleading representation in a locator. ("locator" means a name or information used to identify a source of data on a computer system, and includes a URL);

(c) to send or cause to be sent by electronic or regular mail a deceptive notice of winning a prize, if the notice gives the general impression that the recipient has won, will win or will on doing a particular act win, a prize or other benefit and if the recipient is asked or given the option to pay money, incur a cost or do anything that will incur a cost, or

(d) to engage in deceptive telemarketing including failing to make required disclosure or making a representation to the public that is false or misleading in a material respect.

Reviewable Matters

The activities which may be reviewed by the Completion Tribunal or a court rather than prosecuted criminally include:

(i) the making of false or misleading representations to the public;

(ii)  the making of claims relating to performance, efficacy or length of life of a product that are not based on adequate and proper tests;

(iii) the making of false or misleading warranty or guarantee claims;

(iv) the making of misleading claims relating to a "regular" price;

(v)    the making of false or misleading representations relating to performance tests or product testimonials;

(vi)   bait and switch selling;

(vii)  sale above advertised price; and

(viii) carrying on a promotional contest in a prohibited manner.

(ix)   sending or causing to be sent a false or misleading representation in the sender informationor subject matter information of an electronic message,

(x)    sending or causing to be sent in an electronic messagea representation that is false or misleading in a material respect, or

(xi)   making or causing to be made a false or misleading representation in a locator.

Only the Commissioner can bring an application to the Competition Tribunal, the Federal Court or the superior court of a province to have particular reviewable conduct prohibited. Such proceedings are subject to the civil burden of proof. Unlike criminal proceedings, the respondent will have an obligation to advance a defence and adverse inferences may be drawn against the respondent who fails to do so. 

Click here to read the entire mailer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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John McKeown
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