In recent years, advertisers have increasingly established commercial relationships with online personalities or "influencers", who market their products through various digital platforms and social media. The prevalence of "influencer marketing" has become an emerging frontier for the regulation of deceptive marketing in Canada and abroad.
Digital Marketing in Canada
In Canada, issues regarding misleading representations and deceptive marketing are covered under the Competition Act. If a representation may influence a consumer to buy or use the product or service advertised, it is considered material under the Act. While the Competition Act does not include any provision that expressly references digital marketing, the Competition Bureau has explicitly stated that its jurisdiction includes the regulation of influencer marketing.
The standard for what is considered "deceptive marketing" may be drawn from Ad Standard's Canadian Code of Advertising Standards. The Code specifically prohibits deceptive testimonials and endorsements and includes an obligation for advertisers to disclose any "material connection" between the influencer or person making the representation and the entity that makes the product or service available to the influencer or person making the representation.
The increasing focus of regulatory authorities on influencer marketing has been reflected by an increase in the frequency of action taken by regulatory authorities concerning influencers marketing both in Canada and abroad.
Is it a #ad?
In Canada, most litigation has been undertaken by complaints made to Ad Standards. In 2017, a UK blogger promoted Ottawa as an attractive travel destination in a Twitter posting and was found by Ad Standards as "disguised advertising" since the blogger failed to disclose that the tweet was sponsored. While the tweet was intentionally aimed at a UK audience, Ad Standards found the tweet to be applicable to Canadian standards since it was accessible to Canadians and the use of "#Canada" and "#Ottawa" highlighted matters of interest specific to Canadians. In 2018, a Canadian influencer narrowly avoided a finding by Ad Standards that her Instagram post, which described her experience with a facial product, was "disguised advertising". Prior to adjudication of the complaint, the advertiser, a cosmetic company, rectified the post by amending it to include "#ad". The influencer and advertiser were able to both avoid repercussions and were not identified in the complaint. This was similarly reflected in an Australian case regarding an Instagram post promoting a vehicle brand, whereby the Advertising Standards Bureau of Australia noted that the use of "#ad" would be sufficient to distinguish the post as an advertisement.
While legal concerns pertaining to "influencer marketing" have largely been kept to relatively small regulatory complaints, there are civil cases emerging, particularly in the US. For example, in 2018, the boxer Floyd Mayweather and musician DJ Khaled were both named in a multimillion dollar class action lawsuit brought by US investors who lost money investing in a fraudulent cryptocurrency venture. While the celebrity influencers were later dismissed from the lawsuit, the case raised important questions regarding "influencer marketing" since both celebrities promoted the brand without disclosing that they were compensated for their posts.
Guidance from Canadian Regulators
In reflecting on the increasing regulation of "influencer marketing", the Competition Bureau has stated that the broad consensus among consumer protection agencies around the world is the importance of clearly and effectively disclosing material connections between influencers and advertisers.
Canadian authorities are providing guidance to influencers and brands to assist them in minimizing risk of liability associated with "influencer marketing". Ad Standards has published the Influence Marketing Disclosure Guidelines, which serves as a guide to assist influencers and brands in complying with disclosure requirements. The Guidelines provide practical compliance advice, including the "dos" and "dont's" of disclosure. In addition, the Competition Bureau has recently published the Deceptive Marketing Practices Digest, which includes disclosure checklists for influencers and brands. There is no doubt, with the increasing breadth of social media and "influencer marketing", that these guidelines will serve as a helpful resource to influencers and brands.
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.