There are a number of significant changes, including the
There are now definitions for the terms "advertiser",
"entity", "material connection", and
Advertisements that include any type of discrimination based on
ethnic origin, gender identity, sexual orientation or disability
are now expressly prohibited.
The Competition Bureau (and/or other regulatory authorities)
may now be notified of an "advertiser's" failure to
comply with the Consumer Complaints Procedure (including a
decision of the Standards Council).
The following messages are now excluded from the purview of the
Code: A message from an "entity" that has no
"material connection" to the "entity" that
makes, distributes, markets or advertises the product or service
featured in the message. For example, a member of the public can
post a positive online review of a product without having to worry
about complying with the Code, provided no such "material
There is a new Interpretation Guideline to Clause 7
(Testimonials, Endorsement, Reviews), which provides that any
"material connection" between the endorser and the
"entity" providing the endorsed product/service must be
clearly and prominently disclosed in close proximity to the
endorsement. However, no such disclosure is required when the
"material connection" is one that consumers would
reasonably expect to exist (e.g. certain endorsements by
This last change is part of a broader push in the industry to
help advertisers avoid what might otherwise constitute misleading
representations. As we noted in an earlier article entitled
First issue(s) of the Deceptive Marketing Practices
Digest, the Competition Bureau has recently advised of
this disclosure requirement in the context of
"astroturfing." Further, in the U.S., the FTC has
published comprehensive guides relating to
the use of endorsements and testimonials. The primary rationale
for the requirement is to provide members of the public with
important information that could affect their evaluation of the
importance of these endorsements. On this point, the Code defines a
"material connection" as:
Any connection between an entity
providing a product or service and an endorser, reviewer,
influencer or person making representation that may affect the
weight or credibility of the representation, and includes: benefits
and incentives, such as monetary or other compensation, free
products with or without any conditions attached, discounts, gifts,
contest and sweepstakes entries, and any employment relationship,
but excludes nominal consideration for the legal right to identify
publicly the person making the representation."
Finally, it is important to note that this matter is far from
academic — both regulatory bodies have recently undertaken
enforcement activities to ensure advertisers comply with their
"material connection" disclosure requirements.
Accordingly, we hope that you will keep abreast of, and take the
necessary measures to comply with, this rapidly developing area of
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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