January 24, 2020
In an interesting speech on January 22, 2020 by the Deputy Commissioner of Competition, Deceptive Marketing Practices Directorate, the Competition Bureau (Bureau) outlined its current digital marketing enforcement priorities (see: Honest Advertising in the Digital Age).
In general, the Deputy Commissioner’s remarks reflect an overall heightened focus on the digital economy under the new Commissioner of Competition, including in relation to Big Data and Big Tech market power concerns, privacy issues and misleading digital media marketing (see, for example: New Commissioner of Competition Increases Focus on the Digital Economy).
According to the Bureau, it continues to build its “digital intelligence expertise” and “active enforcement in the digital economy” is now one of its primary focuses. The Bureau is also currently working on 37 digital economy related cases.
Some key highlights of the Bureau’s recent speech are discussed below.
Price Claims and Drip Pricing.
In her speech, the Deputy Commissioner emphasized that false and misleading price claims, including drip-pricing, remains a top priority for the Bureau.
As in past cases, the key drip-pricing issue for the Bureau remains where the full price of a product is not adequately disclosed upfront to consumers (i.e., consumers are charged additional fees that are not disclosed upfront, such as at a later stage in an online check-out process).
In this area, the Bureau has commenced enforcement over the past several years in relation to online airfares and other online product price claims, including car rental prices and event ticket prices (see, for example: Ticketmaster Entities Agree to $4 Million Penalty to Settle Drip Pricing Advertising Case, $1.25 Million Settlement in Car Rental Drip Pricing Case and Ontario to Mandate “All-In” Prices For Travel Advertising, Reflects Larger Regulatory Push For Upfront Pricing).
Online Consumer Reviews and Influencer Marketing.
Also top current enforcement priorities for the Bureau are false or misleading online consumer reviews and influencer marketing.
In this respect, the Bureau recently sent letters to close to 100 brands and marketing agencies advising them to comply with the Competition Act and also issued new influencer marketing guidelines (see: Influencer Advertising: Competition Act Compliance Now a Material Concern For Brands and Agencies and Influencer Advertising: Competition Bureau Increases Pressure on Brands and Agencies to Comply with the Competition Act).
While ensuring that adequate disclosures are made for influencer marketing is quite fact-specific and can be nuanced depending on the medium and platform, the key issue that continues to be flagged by the Bureau and international agencies is that any material connection (e.g., money, commissions or free products provide by the brand to an influencer) must be accurately and clearly disclosed. This area also includes astroturfing (i.e., false or misleading online reviews, reviews by people that have never used a product, etc.). In this respect, the Bureau notes that it has “noticed an increase in organized efforts by companies to fraudulently boost their own ratings or lower the ratings of their competitors.”
Misleading Privacy Protection Claims
The Bureau also indicates that it is also looking at potential violations of the Competition Act where the use of personal information is not adequately disclosed to consumers.
In this respect, media have recently reported that the Bureau has commenced an investigation into three Canadian political parties for allegedly failing to fully divulge the scope and range of personal information collected from Canadians or how it is used (see Competition Bureau Investigates Novel Case Involving Political Parties’ Collection and Use of Personal Information).
While the Bureau has not publicly announced whether it will seek penalties in this matter, which was initiated by a six-resident complaint filed by the Centre for Digital Rights, it states in its recent remarks that “when firms make false or misleading statements about the type of data they collect, why they collect it, and how they will use, maintain and erase it, we will take action.”
Like international enforcement agencies, adequate disclosure of the use of personal information is also a concern for the Bureau in relation to major social media platforms.
OSP (Ordinary Selling Price Claims)
Finally, the Bureau indicates that the ordinary selling price (OSP) area, which is related to false and misleading price claims, remains an ongoing priority.
The Bureau has typically commenced one or two major cases in this area a year, with a $4.5 million penalty agreed to in a case involving Hudson’s Bay in May 2019 (see: Competition Bureau Enforces “Sale” Sections of Competition Act, Brings Case Against Hudson’s Bay).
Other OSP cases in the past have involved pricing claims for craft supplies (Michaels), sporting goods (Forzani), online retail (Amazon), tires (Sears) and retail clothing (Suzy Shier), among other types of products.
Implications
Based on the Bureau’s digital marketing related remarks, as well recent enforcement and advocacy efforts, it is important for brands engaged in digital marketing to review their practices for compliance with the misleading advertising and other relevant provisions of the Competition Act and Bureau guidance.
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