January 12, 2020
Over the past several years, competition enforcement agencies have been increasing their scrutiny of false and misleading influencer marketing. The U.S. Federal Trade Commission (FTC) initially led the charge in terms of guidance and enforcement, which included its Endorsement Guides, Endorsement Guides FAQs and warning letters to brands and influencers to improve their social media endorsement disclosures. This was accompanied by enforcement in some cases.
Now, over the past year, the Canadian Competition Bureau (Bureau), has also been significantly increasing its focus on false and misleading influencer marketing, which follows earlier enforcement in Canada, including 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).
The Bureau’s increased scrutiny of false and misleading influencer marketing coincides with other international efforts, including Facebook and eBay recently removing dozens of groups offering fake and misleading online reviews after the U.K.’s competition regulator increased its enforcement on the online platforms (see Facebook, EBay Crack Down on Fake Reviews After CMA Warning).
Some of the recent Bureau-related and other Canadian influencer marketing developments include:
Competition Bureau Influencer Guidance (Twitter): On January 10, 2020, the Bureau announced that it was launching a series of tips on Twitter (@CompBureau) to help marketers ensure that influencer marketing campaigns comply with the Competition Act. Influencer advertising claims can violate the civil or criminal misleading advertising provisions of the Competition Act where, among other things, an influencer has not actually used the product or service being promoted, product claims don’t reflect the influencer’s actual experiences, unsubstantiated performance claims are made or, most importantly for enforcers, the material connection between a brand and the influencer are not adequately disclosed to consumers.
New Competition Bureau Influencer Guidelines: On December 19, 2019, the Bureau issued new influencer marketing guidelines. It also announced that it had sent letters to close to one hundred brands and marketing agencies advising them to comply with the Competition Act. The Bureau’s initiative follows a similar effort by the U.S. FTC in 2017 advising brands and influencers to comply with the law (see here and here). The Bureau’s new guidelines largely reiterate prior guidance that it has provided, particularly emphasizing that any material connection between a brand and an influencer is clearly disclosed. Its announcement, however, also indicates that it may (and is possibly preparing) to commence enforcement action against brands and agencies that fail to take steps to ensure that influencer marketing campaigns they are involved in are not false or misleading. In this respect, it is important to note that the Bureau’s position is that any individual or company that has control over false or misleading content – i.e., not only the individual or company making the claim – is potentially exposed to misleading advertising liability under the Competition Act.
Updated Ad Standards Influencer Marketing Guidelines: In 2018, Ad Standards, which is the Canadian advertising industry’s self-regulatory body, issued Influencer Marketing Disclosure Guidelines, which were updated in 2019. Ad Standards’ guidelines, which include prior guidance provided by the U.S. FTC (see, for example, The FTC’s Endorsement Guides: What People Are Asking), include compliance do’s and don’ts for influencer advertising, best practice language for disclosures and examples for YouTube, Instagram and Twitter. The self-regulatory body’s guidelines also provide examples for disclosing different types of material connections between brands and influencers, including gifted items, paid influencers and where influencers attend brand marketing events. Its guidelines supplement its existing clause 7 in its Canadian Code of Advertising Standards (testimonials) and its Interpretation Guideline #5 (Testimonials, Endorsements, Reviews).
Increased Bureau Focus on the Digital Economy: Recent efforts by the Bureau have included hiring a new Chief Digital Enforcement Officer to “guide [its] efforts in improving the manner in which [it enforces] the law in the digital economy”, increasing its capabilities to monitor and enforce online deceptive marketing (see here) and issuing specific guidance for influencer marketing, including its 4th volume of its Deceptive Marketing Practices Digest, which includes compliance checklists for influencers and advertisers. The Bureau’s recent influencer marketing related warning letters to brands and agencies, for example, apparently followed a Bureau-initiated Internet sweep of potentially false or misleading influencer advertising.
Based on increased Bureau scrutiny of influencer marketing in Canada, there is more pressure on brands, agencies and influencers to ensure that adequate disclosures are made to consumers in endorsement/testimonial related marketing. In addition, brands and agencies may consider implementing agreements with influencers that, among other things, set out the obligations of influencers to comply with the law, give the brand/agency control to review influencer marketing content and to shift risk in the event of enforcement or penalties (e.g., indemnity provisions in favour of the brand).
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