Canada: Advertising & Marketing 2023 – Canada

1. Legal Framework and Regulatory Bodies

1.1 Primary Laws and Regulation

Advertising is regulated at both the federal and provincial/territorial level in Canada.

Federal Laws

The Competition Act governs false or misleading advertising and sets out prohibitions relating to various types of representations, including price claims, unsubstantiated performance claims, testimonials, misleading warranties and guarantees, bait-and-switch tactics and promotional contests.

The Criminal Code prohibits Illegal lotteries and affects how promotional contests and sweepstakes may operate.

Intellectual property laws (copyright and trademark) also apply.

There are sector- and product-specific laws governing advertising for products, including alcohol, cannabis, tobacco, food, natural health products, cosmetics and advertising directed at children.

Federal laws also impose packaging and labelling requirements for consumer products,, including certain bilingual requirements.

Provincial/Territorial Laws

The consumer protection legislation in the provinces and territories governs consumer advertising, protection and transactions. It prohibits certain deceptive and false marketing practices and establishes a framework for credit disclosure, direct sales and internet contracts, unsolicited goods, referral selling, and implied warranties. With the exception of Quebec, the prohibitions are fairly similar in each province and territory.

Quebec legislation differs from other provincial consumer protection as there are several applicable laws setting out comprehensive and stringent rules that cover many topics, including the following:

• prohibited business practices regarding claims, misleading representations, material disclosures, warranties, drip pricing, etc;
• advertisement of extended warranties;
• advertising to children;
• promotional contests;
• travel agency advertising;
• credit advertising;
• alcoholic beverages advertising;
• mandatory French language requirements; and
• privacy obligations.

Quebec consumer protection legislation is the most consumer-friendly in Canada.

1.2 Enforcement and Regulatory Authorities

Competition Bureau

The Competition Bureau (the "Bureau") is the independent law enforcement agency that enforces the false and misleading advertising provisions of the Competition Act. False or misleading advertising can be a criminal or civil offence under the Competition Act.

The Bureau has broad investigative powers. Investigations are conducted privately, keeping the identity of any sources and information confidential. It has statutory mechanisms to gather evidence, compel testimony and execute search and seizure actions.

The Competition Act penalty for criminal violations may involve a prison term of up to 14 years and/or an unlimited fine for indictable offences or a prison term of up to one year and/or a fine of up to CAD200,000 for summary conviction offences.

Civil penalties can include orders not to engage in conduct, to publish corrective notices, to pay administrative monetary penalties (AMP) and/or restitution to consumers. AMPs can be up to the greater of CAD10 million (for first-time corporate offenders), CAD15 million (for repeat corporate offenders) and three times the value of the benefit from the deceptive conduct or, if that cannot be reasonably determined, up to 3% of the company's annual worldwide revenues with no cap.

Provincial and Territorial Ministries

The administration and enforcement of provincial/territorial consumer protection laws is the responsibility of the applicable provincial/territorial ministry, which will generally seek to enforce consumer protection laws through orders, fines and undertakings.

In Quebec, the Office de la protection du consommateur (the "Consumer Office") oversees consumer protection legislation, the Régie (Régie des alcools, des courses et des jeux) oversees promotional contests and alcoholic beverages advertising, the Office québécois de la langue française (the "Language Office") oversees French language requirements, and the Commission d'accès à l'information (the "Commission") oversees privacy issues. Remedies may include correcting orders and fines as well as AMPs.

Industry-Specific Regulators

Certain products and services are regulated by industry-specific legislation which imposes restrictions and penalties. These include alcohol, cannabis, tobacco, food, natural health products, cosmetics, drugs, leasing services, transportation, and financial services. The regulatory bodies responsible for enforcement of these regulations include Health Canada, the Canadian Food Inspection Agency (CFIA), the Financial Consumer Agency of Canada and the Canadian Transportation Agency.

1.3 Liability for Deceptive Advertising

Any individual or corporation that makes deceptive representations to the public for the purpose of promoting a product or business interest may be held liable if the representation is literally false or misleading and the claim is "material" or likely to influence a consumer to buy a product or service or otherwise alter their conduct.

In Quebec, any "advertiser", that is anyone who prepares, publishes or broadcasts an advertisement or who causes an advertisement to be prepared, published or broadcast, may also be liable for deceptive advertising.

1.4 What Is Advertising?

Advertising includes virtually any representation made to the public in any media that is intended to influence choice, opinion or behaviour or otherwise promote, directly or indirectly, a product, service, company or interest.

In Quebec, "advertisement" means a message designed to promote goods, services or an organisation. This is very comprehensive and includes all types of advertising, whether in newspapers, on flyers, posters, television, radio, online, etc.

1.5 Pre-approvals

The Bureau has the discretion to provide a binding written opinion on how the Competition Act would apply to a proposed practice. This service is provided upon request and payment of a fee.

Canadian government regulators have largely delegated pre-approval to industry self-regulatory agencies. Advertising appearing in provincial liquor retailers is often subject to approval procedures and timelines imposed by the provincial retailer.

In Quebec, alcohol beverage advertising must be pre-approved by the Régie.

Ad Standards Canada ("Ad Standards") offers a fee-based advertising copy review and advisory service. Pre-clearance services are available for:

• alcoholic beverages;
• children's advertising;
• cosmetics;
• food and non-alcoholic beverages;
• responsible advertising of food to children; and
• health products.

Canadian broadcasters typically require pre-clearance from an authorised pre-clearance service provider before accepting broadcast advertisements.

1.6 Intellectual Property and Publicity Rights

Copyright, trademark and other intellectual property laws must be considered to avoid infringement of third-party intellectual property rights.

There are both common law and statutory rights to personality in Canada. The use of a person's personality (including name, image, likeness, voice, identity) without permission could lead to a claim of misappropriation of personality and should only be included in advertising with the person's consent.

The Civil Code of Quebec (the "Civil Code") provides that every person has a right to the respect of their reputation and privacy (including the use of their image, likeness or voice), which right has been interpreted generously by the Supreme Court of Canada and requires written consent.

1.7 Self-Regulatory Authorities

There are significant industry self-regulation requirements in Canada that are administered by self-regulatory bodies including Ad Standards.

Ad Standards Canada

Ad Standards is the national body for self-regulation of the advertising industry. It administers the Canadian Code of Advertising Standards (the "Code") which sets out the criteria for acceptable advertising in all media. Complaints submitted by the public are adjudicated by a Council comprised of senior industry and public representatives, and are co-ordinated by Ad Standards. Complaints about advertisements between advertisers are administered under Ad Standards' Advertising Dispute Procedure.

If an ad is found to violate the Code, the advertiser can be instructed to remove or amend the offending advertisement and may be publicly identified in a complaints report, and offending ads will not be carried by newspapers, broadcasters and digital platforms that are members of Ad Standards.

Other Self-Regulatory Bodies

There are various industry associations and self-regulatory bodies, including the Canadian Marketing Association, the Digital Advertising Alliance of Canada, the Canadian Beverage Association, and others that lead voluntary initiatives and self-regulatory programmes in the advertising industry.

1.8 Private Right of Action for Consumers

Members of the public can challenge advertising by filing a complaint with Ad Standards or before the courts. A consumer complaint is filed with Ad Standards by sending a communication that raises an issue of non-compliance with the Code. The complaint to Ad Standards is typically resolved within a few months. The only remedy available is the amendment or discontinuation of the advertising.

A private right of action is available to consumers who have suffered damages attributable to the offending advertisement, by initiating a court proceeding (either individually or through a class action), which can take several years to complete. The remedies available through the courts are the granting of an injunction or damages.

1.9 Regulatory and Legal Trends

Environmental claims continue to be a high-priority area for the Bureau. For example, in November 2022, the Bureau confirmed that it had commenced an inquiry regarding alleged deceptive marketing practices relating to environmental claims in response to an application supported by the Canadian Association of Physicians for the Environment. The claims in issue relate to claims made in advertising of the Canadian Gas Association with respect to the environmental impact of natural gas and claims that it is "clean" and "affordable".

Both Health Canada and the Bureau are likely to continue to closely monitor claims relating to health in product advertising. "Healthwashing", or the attempt by advertisers to promote products as "healthy" because one aspect of the product is beneficial even though the product as a whole cannot reasonably be considered to be healthy, is likely to receive the same level of vigilance as "greenwashing".

In May 2023, the Competition Bureau commenced a proceeding against Cineplex Inc. ("Cineplex") before the Competition Tribunal for allegedly engaging in misleading advertising in the form of "drip pricing". In particular, the Bureau alleges that Cineplex advertised a lower ticket price than the amount customers were required to pay. This is the first contested matter relating to drip pricing since the 2022 amendments to the Competition Act which added specific drip pricing provisions and suggests that the Bureau will continue its vigilance with respect to this type of deceptive advertising.

Food advertising directed at children is also likely to be a focus as Ad Standards introduced a new advertising code in June 2023 that is intended to expand upon legislative, regulatory, and self-regulatory regimes that already exist in Canada (including in Quebec). In addition, in April 2023, Health Canada provided a policy update on restricting food advertising primarily directed at children.

1.10 Taste and Cultural Concerns

There are no taste or cultural restrictions prescribed by law but the Code mandates that advertising not offend the standards of decency prevailing among a significant segment of the population.

There are French language laws in the Province of Quebec requiring that advertising be In French.

1.11 Politics, Regulation and Enforcement

The federal government passed legislation to help the Canadian news industry which has seen falling subscriptions and ad revenue over time as ad expenditures have shifted to the leading online platforms. The Online News Act will come into effect in December 2023. The Online News Act aims to ensure that dominant news platforms compensate news businesses fairly when their content is made available on their services.

Most Canadians now get their news online. In 2022, online advertising revenues in Canada were CAN14 billion, with two platforms receiving roughly 80 percent of these revenues. While digital platforms earn billions in online advertising, the loss of advertising revenue to these platforms has negatively affected Canadian news outlets.

2. Advertising Claims

2.1 Deceptive or Misleading Claims

In order for an advertising claim to be considered false or misleading, it must be made to the public and be false or misleading in a "material" respect. This applies to ads made in any form. A representation is "material" if it would likely influence a person to purchase the good or service to which it relates. There is no need to demonstrate that anyone was actually misled or deceived and it is not necessary to show that the person to whom the claim was made was within Canada or that the claim was made in a place to which the public had access. The courts will consider the literal meaning of the representation and its general impression. In order to determine the general impression of a claim, the courts will take into account a credulous and inexperienced consumer's understanding of the claim. The meaning of a claim will be taken from the advertisement as a whole (ie, text, images, symbols, and other content).

Similar standards apply under provincial and territorial consumer protection legislation and under the Code.

The Competition Act has two regimes for dealing with false and misleading advertising: a criminal track and a civil track. While the provisions under the two regimes are very similar, in order for the criminal track to apply, the claim must have been made knowingly or recklessly.

Quebec

In Quebec, no one may, by any means whatsoever, make false or misleading representations to a consumer, whether or not a product or service has in fact been sold. A representation includes an affirmation, a behaviour or an omission. Similarly to the federal regime, to determine whether a representation constitutes a prohibited practice, the general impression it gives and the literal meaning of the terms used must be taken into account. The general impression test must be applied from the perspective of the average consumer, who is credulous and inexperienced and takes no more than ordinary care to observe upon first entering into contact with an entire advertisement.

2.2 Regulation of Advertising Claims

All advertising claims, whether express or implied, are subject to regulation as described in 2.1 Deceptive or Misleading Claims and must be substantiated. Generally, claims will require "adequate and proper" substantiation, which will depend on the type of claim, the circumstances under which it is being made, and the intended audience. There is no statutory test setting out what is considered adequate and proper. Similarly, the Code requires that claims be supported by "competent and reliable" evidence. Typically, if a claim involves content that is clearly meant to be humour or fantasy, this will be taken into account when determining whether it is properly substantiated. See 2.3 Substantiation of Advertising Claims for additional details regarding substantiating advertising claims.

Quebec

As discussed in 2.1 Deceptive or Misleading Claims, the scope of advertising claims subject to regulation is very broad and includes both express and implied claims. In addition, no one may rely upon data or analyses falsely presented as scientific or distort the meaning of any information. It is also forbidden to falsely ascribe certain special advantages or characteristics of performance to goods or services.

2.3 Substantiation of Advertising Claims

Whether substantiation is "adequate and proper" or "competent and reliable" depends on the circumstances. The literal meaning and general impression of the claim must first be determined, and then it must be considered whether the testing and empirical evidence support that interpretation. If it does not, or if such testing does not exist, then the substantiation is unlikely to be considered "adequate and proper" or "competent and reliable", such that the claim is likely to be deemed false and misleading.

Factors to consider when determining if there is "adequate and proper" or "competent and reliable" substantiation include:

• whether the test is appropriate for the product or service;
• whether the substantiation is appropriate for the type of claim (eg, therapeutic claims may require clinical trials for support);
• whether the test is an accurate way of measuring the statements made in the claim (eg, certain comparative claims may require consumer perception studies or market share information);
• whether the test is reflective of the appropriate market to which the claim applies (eg, if the claim relates to the North American market but the test sample only consists of Canadian subjects); and
• whether standards typical for the applicable type of study were used (eg, control tests, double-blind studies, peer review, statistically significant findings).

The test results should support and align with the general impression of the claim and should be available before the claim is made. Testing should not be done after a claim is already in the market (for example, at the time it is being challenged for accuracy and truthfulness).

2.4 Product Demonstrations

Where products and their uses are depicted in advertising, the same principles related to false and misleading advertising as described in 2.1 Deceptive or Misleading Claims will apply. The demonstrated use should be an accurate depiction that the consumer would reasonably expect to have upon their use of the product. Any aspects that would not be available to the consumer should be disclosed and identified in a prominent and clear manner. For example, under most provincial and territorial consumer protection legislation, making a representation that goods or services meet a certain standard, quality, grade, style, or model – when they actually do not – would be considered a false and misleading claim.

2.5 Endorsements and Testimonials

The use of endorsements and testimonials about products and services in advertising is subject to the Competition Act, the Code and provincial/territorial consumer protection legislation. Generally, in order to use such statements in a compliant manner:

• The person making the statement must have actually used the product, and their statement must be their honest opinion.
• Any material connections between the person making the statement and the company marketing the product must be clearly and prominently disclosed (eg, disclosing that the person endorsing the product has been paid by the company or received free products).
• The claims made must not be false or misleading and must be substantiated.
• Generally, the person whose testimonial or endorsement is being used must have approved that use. A company should not falsely claim that a product or service is certified, recommended, sponsored, endorsed or approved by a person if it is not.
• The statements should not be disguised as independent consumer reviews. Similarly, where an actor portrayal is used, this should be very clearly disclosed.

See 5. Social Media Influencer Campaigns and Online Reviews in relation to Influencer Marketing.

2.6 Disclosures

When using disclosures/disclaimers in advertising, there are a few basic principles that will apply:

• Fine print is acceptable as long as it is only adding useful information, expanding upon, or otherwise clarifying potential ambiguities of a representation that is already truthful and accurate in the main body of the ad.
• A disclosure should not be used to restrict, contradict or somehow negate the main message to which it relates. The main representation must not be false or misleading in itself.
• The language in the disclosure should be clear, legible and placed in a location where the consumer is unlikely to miss it.
• See 2.5 Endorsements and Testimonials for information regarding disclosure of material connections.

2.7 Representation and Stereotypes in Advertising

While there are no special laws that expressly address stereotyping, or equity, diversity and inclusion in Canadian advertising, the Code sets out provisions related to unacceptable depictions and portrayals. Clause 14 prohibits ads that:

• condone any form of discrimination including based on race, national or ethnic origin, religion, gender identity, sex or sexual orientation, age or disability;
• condone or encourage violence or bullying;
• demean, denigrate or disparage identifiable persons, groups or products; or
• undermine human dignity.

Additionally, the Online Streaming Act (Canada) recently came into force in April 2023 and amends the Broadcasting Act (Canada) to account for internet audit and video services. Online undertakings are now required to invest in Canadian content and policy objectives have been established to require such undertakings to appropriately contribute to the creation, production and distribution of Canadian and Indigenous content. The policy objectives are also intended to ensure that the broadcasting system serves the needs of racialised communities, and of Canadians of diverse ethno-cultural backgrounds, socio-economic statuses, abilities and disabilities, sexual orientations, gender identities and expressions, and ages.

2.8 Environmental Claims

The general false and misleading representation provisions of the Competition Act apply to environmental claims. The Bureau has also published a short bulletin, "Environmental Claims and Greenwashing", which indicates that when making environmental claims, businesses should ensure claims are truthful, are specific and precise about environmental benefits, are substantiated and verifiable, and do not exaggerate the environmental benefits of a product.

The Bureau is in the process of updating its guidelines and has released a proposed regulatory framework regarding recycled content requirements and labelling rules for recyclability and composability. The Bureau's Environmental Claims Guide previously provided some interpretive guidance on environmental claims but in November 2021, the Bureau archived this guidance and indicated that it does not reflect its current views. However, in the absence of other comprehensive guidance, these guidelines are still helpful in providing a general impression of how the Bureau may handle these claims.

2.9 Dark Patterns

"Dark patterns" are a variety of manipulative tactics that are meant to trick or trap a consumer into engaging in a behaviour that is different from what they originally intended by using language or formatting that is deceptive. The use of dark patterns in advertising is not specifically regulated, although aspects of it are addressed indirectly through privacy laws, anti-spam legislation, the false and misleading advertising provisions of the Competition Act, and provincial/territorial consumer protection laws in connection with unconscionable behaviours. The Bureau has published warning bulletins to consumers related to the use of dark patterns in subscription-based services and free trial offers. Proposed federal privacy legislation also includes provisions addressing the use of dark patterns in the privacy context.

Quebec

It is forbidden to require that a consumer to whom services or goods are provided free of charge or at a reduced price for a certain period of time send a notice at the end of that period indicating that they do not wish to receive the services or goods at the regular price.

It is also forbidden to give any reason as a pretext for soliciting the sale of goods or the provision of services. As an example provided by the regulator, it would be prohibited to conduct an air quality survey for the purpose of selling an air purifier or dehumidifier to a consumer.

2.10 Children

The Canadian Radio-Television and Telecommunications Commission's (CRTC) Broadcast Code for Advertising to Children sets out general restrictions on advertising directed at children, including avoiding excessive repetition, urging a child to make a purchase, and including characters that would be appealing to young persons. Similarly, Ad Standards' Children's Code applies to broadcast advertising and aims to guide advertisers to ensure that they are aware of the special characteristics of the children's audience.

Certain federal statutes, such as the Cannabis Act and the Tobacco and Vaping Products Act, prohibit advertising to children under the age of majority in their province of residence, and ads must not be appealing to young persons or depict certain lifestyles.

Many provinces have included restrictions in their alcohol-related legislation that prohibit advertising alcohol products to children under the age of majority or the use of ads that would be appealing to young persons, along with other restrictions. In many cases, these prohibitions are aligned with the CRTC Code for Broadcast Advertising of Alcoholic Beverages.

In 2023, Ad Standards began administering and enforcing its Code for the Responsible Advertising of Food and Beverage Products to Children, which sets out a general prohibition on advertising (subject to certain exceptions) any food or beverage product in a manner that is primarily directed at persons under the age of 13, unless the product meets certain nutritional criteria.

Bill C-252 was introduced in the House of Commons in February 2022 and is proceeding through Parliament. This bill proposes to amend the Food and Drugs Act to prohibit the advertising of foods and beverages that contribute to excess sodium, sugars and/or saturated fat in children's diets in a manner that is primarily directed at persons who are under 13 years of age.

See also 6.5 Marketing to Children for more details from the privacy perspective regarding marketing to children in the context of the use of their personal information.

Quebec

Subject to very limited exceptions, it is forbidden by statute to direct any commercial advertising at children under 13 years of age. To determine whether or not an advertisement is directed at such children, account must be taken of the context of its presentation, and in particular of the nature and intended purpose of the goods advertised, the manner of presenting such advertisement and the time and place it is shown.

2.11 Sponsor ID and Branded Content

If a company pays or compensates someone in kind to promote its products on social media or other media, those online and other posts must clearly be identified as advertising or sponsored content.

The deceptive marketing practices provisions of the Competition Act apply to anyone who is promoting a product, service, or any business interest. It would be misleading if an influencer did not disclose all material connections with the business, product or service they are promoting.

A connection may be "material" if it has the potential to affect how consumers evaluate the independence of an influencer from a brand. There may be a material connection if the influencer:

• received payment in money or commissions;
• received free products or services;
• received discounts;
• received free trips or tickets to events; or
• has a personal or family relationship.

If there is a material connection, the influencer should make clear and prominent disclosure of the connection on all platforms.

Ad Standards has also published guidelines to help ensure that influencer content is not deceptive. It requires that the representations disclose any material connection between the influencer and the entity behind the brand, product or service being promoted. The guideline further requires that the disclosure be clear, prominent, and in close proximity to the representation being made.

2.12 Other Regulated Claims

There are a number of other types of claims that are subject to specific regulations or guidelines, for example, country of origin and "natural" claims, among many others. The rules surrounding when these claims are permitted may also depend on the type of product.

Country of Origin

Canadian-origin claims are typically not mandatory for Canadian products except under certain circumstances. If a Canadian origin claim is voluntarily made, then it must be substantiated. Typically, a "Product of Canada" claim can be seen as more difficult to make, as these products must have a higher threshold of Canadian content (98%, along with certain other requirements), while products with "Made in Canada" claims are subject to a 51% threshold of Canadian content. When a "Product of Canada" claim is made about food, the CFIA will expect that all of the significant ingredients in the product are of Canadian-origin and that non-Canadian material is negligible. Certain foods may be required to declare their country of origin.

Natural

Whether a "natural" claim may be used depends on the product. Food can only be described as "natural" if it does not contain an added vitamin, mineral, nutrient, artificial flavouring or food additive, has not had any portion removed or significantly changed, nor has been processed in a way that significantly alters its physical, chemical or biological state. For health products, their therapeutic action cannot be described as "natural" as each such product modifies the body's physiological functions or structure; however, their ingredients can generally be described as being "natural" where the source is not synthetically derived, provided that the claim is clear.

3. Comparative Advertising and Ambush Marketing

3.1 Specific Rules or Restrictions

Comparative advertising is permitted, provided that it is not false or misleading, does not infringe on third-party intellectual property rights and does not unfairly disparage the competitor or its products/services. Using a third-party trademark in advertising may constitute trademark infringement under the Trademarks Act.

There are certain sector-specific restrictions on comparative advertising (eg, in drug advertising it should be supported by direct head-to-head human clinical studies, while in food advertising specific requirements must be met when using comparisons).

Quebec

It is forbidden to falsely discredit goods or services offered by others by any means whatsoever.

3.2 Competitor Copyrights and Trade Marks

Canadian law distinguishes between trademarks used in association with goods and trademarks used in association with services. A trademark registered in association with goods may appear in comparative advertising without constituting an unauthorised use. However, since "use" of trademarks registered in association with services includes use in advertising, use of such marks in comparative advertising in any media may result in claims of unauthorised use.

Disparaging a competitor's brand or depreciating the goodwill associated with its trademarks should be avoided. Depicting a competitor's packaging or logo may constitute copyright infringement.

3.3 Challenging Comparative Claims Made by Competitors

An advertiser can challenge competitor claims by filing a complaint with the Bureau based on misleading advertising, filing a complaint with Ad Standards or initiating an action in the courts.

The remedies for each of these options are set out in 1.2 Enforcement and Regulatory Authorities, 1.7 Self-Regulatory Authorities and 1.8 Private Right of Action for Consumers.

3.4 Ambush Marketing

Ambush marketing is associated with the practice of trading off the goodwill associated with a particular event, product or organisation without paying for the right to do so. Ambush marketing is an extension of the tort of passing off as it implies that one is a sponsor or is otherwise connected to an event. This inaccurate impression is created in order to promote the product or service of the entity that actually has no connection with the event, product or organisation.

There are no special rules in Canada to deal with ambush marketing. Typically, an action initiated by the aggrieved party will allege trademark infringement, passing off, depreciation of goodwill and/or interference with contractual relations.

4. Social/Digital Media

4.1 Special Rules Applicable to Social Media

The same rules that apply to other advertising apply to social media advertising. This includes the requirement that all claims must be true and not materially false, and applying the general impression test. Advertising on social media involves specific additional considerations such as any restrictions imposed by the relevant platform's terms of service, and how to present required information at the required time in an accessible way (eg, if an online campaign format involves the unfolding of advertising through a series of steps or pages, consumers could be misled if essential disclosures are presented at a later stage in the process after having already made a commitment in relation to the advertisement).

4.2 Liability for Third-Party Content

An advertiser may be exposed to liability for content posted by others on the advertiser's website or social media channels if the poster has a material connection with the advertiser and fails to disclose it, or where the advertiser appears to endorse the content.

For Quebec, please see 1.3 Liability for Deceptive Advertising.

4.3 Disclosure Requirements

In addition to the disclosure requirements that apply to other forms of advertising, social media advertisements must comply with rules that pertain specifically to that context. For example, Ad Standards and Bureau guidance indicate that disclosures of material connections by influencers can be made using hashtags, as long as they are clear (eg, #ad or #sponsored – unclear disclosures include: #partner, #ambassador, #spon, and "promo"). This assists with meeting space constraints and character limits on posts.

Disclosures should be clear and unambiguous and placed in accordance with guidelines (eg, a hashtag should be presented first and not be buried in a list).

The guidance also includes information on how to change disclosures for different formats (eg, video posts) and across social media platforms, including TikTok, YouTube, Instagram, and SnapChat. It indicates that disclosures should be inseparable from advertisement content so that it stays with the content when shared by social media users. While some platforms include features that permit disclosure of advertising relationships, these features should be carefully reviewed and, in cases where they are insufficient to meet disclosure requirements, used in combination with additional disclosures. The use of additional disclosures also ensures that the same information can be transferred across platforms.

4.4 Requirements for Use of Social Media Platforms

There are no special laws that apply to the use of major social media platforms. However, users must be aware of the terms of service for any platform they use, which contain restrictions on behaviour on the platforms and may include guidelines for advertising. Advertisers should be aware of privacy and anti-spam laws that may apply when using social media to connect with audiences.

There are no major social media platforms that are not permitted to be used in Canada. However, it was recently confirmed by Meta (owner of Facebook and Instagram) that in anticipation of Bill C-18 (the Online News Act) coming into force, news content will no longer be available on Instagram and Facebook for Canadian users. This Act will require social media platforms to pay news outlets for the rights to post their work on the platforms.

4.5 Special Rules for Native Advertising

There are no special laws that target "native advertising". However, the Competition Act's prohibitions against false and misleading advertising will apply in the same ways they apply to all types of advertising, including the requirement to disclose material connections between advertisers and the third parties providing editorial/entertainment content.

5. Social Media Influencer Campaigns and Online Reviews

5.1 Special Rules/Regulations on Influencer Campaigns

In addition to complying with laws that apply to all advertising, advertisers using influencer campaigns must be aware of requirements that are specific to that format, as set out in guidance from Ad Standards and the Bureau (eg, influencers must disclose any material connection they have with the advertiser whose product or brand they are promoting). Failure to do so risks that the advertisement will be considered false or misleading to consumers.

See also 2.5 Endorsements and Testimonials for additional information on endorsements and testimonials, including material connection disclosures.

5.2 Advertiser Liability for Influencer Content

Generally, advertisers can be held liable for content posted by their influencers. Advertisers should ensure that their influencers:

• clearly disclose material connections in each post they make;
• make representations that are not false or misleading; and
• do not make performance claims on behalf of the advertiser if they are not based on adequate and proper testing.

For Quebec, please see 1.3 Liability for Deceptive Advertising.

5.3 Consumer Reviews

Guidance from the Bureau and Ad Standards indicates that disclosure of material connections is important in consumer reviews even if the review is honest and unbiased, since consumers value the independence of third-party reviews. For example, employees posting reviews about their employer's products would be required to disclose that they are an employee. The disclosures must be clear, prominent and in close proximity to the representation. Advertisers should consider the context in which the review is displayed, including whether the format will allow the review to be separated from the disclosure of a material connection, and whether it will come across as an impartial opinion.

5.4 Liability for Consumer Reviews

Generally speaking, advertisers can be held liable for consumer reviews in the event that a reviewer fails to disclose a material connection to the advertiser.

6. Privacy and Advertising

6.1 Email Marketing

Canada's Anti-Spam Legislation (CASL) governs the sending of "commercial electronic messages" (CEM) to Canadian individuals, such as emails, direct messages through social media and text/SMS messages. Promotional emails are generally considered CEMs. Unless an exemption or implied consent applies, express, opt-in consent is required to send CEMs to Canadian individuals. The consent request must include certain prescribed disclosures.

Express Consent

Requests for express consent must include the following information:

• the purpose for which the consent is sought;
• the name under which the entity seeking consent does business;
• the mailing address of the entity seeking consent;
• either a toll-free telephone number providing access to an agent or voicemail, OR an email address, OR a website, for the entity; and
• a statement indicating that consent can be withdrawn.

Prescribed CEM Disclosures

In most instances, CEMs themselves must also include prescribed information. The prescribed information is the name of the sender, its mailing address, and one of the following for the sender: (i) toll-free telephone number providing access to an agent or voicemail, OR (ii) an email address, OR (iii) a website. The CEM must also include a valid unsubscribe function that meets certain prescribed requirements.

Liability

If a corporation is found to have violated CASL, it may be subject to a penalty of up to CAN10,000,000. In certain circumstances, directors and officers can also be liable to a fine of up to CAN1,000,000.

Quebec

Under recently updated Quebec privacy legislation in the private sector (in effect since 22 September 2023), it is now necessary to obtain a free and informed specific and separate consent (in clear and simple language) from the persons concerned before collecting and using their personal information for marketing purposes (opt-in), either by email, telephone, text message or otherwise. In addition, a person concerned may withdraw their consent at any time. The regulator has taken the position that marketing should be considered a "secondary" purpose, which requires a separate consent, and that the person concerned must have the right to refuse such a purpose without impacting the "primary" purpose (ie, the provision of a service/good).

Anyone who commits an offence is liable to a fine of between CAD5,000 and CAD100,000 in the case of a natural person (including directors, officers and representatives), and between CAD15,000 and CAD25,000,000 in all other cases, or 4% of worldwide sales for the previous fiscal year, whichever is greater. The regulator may also impose an AMP up to CAD50,000 in the case of a natural person and, in other cases, CAD10,000,000 or 2% of worldwide sales for the previous fiscal year, whichever is greater. In principle, no one can be liable for both a fine and an AMP.

6.2 Telemarketing

The Unsolicited Telecommunications Rules (UTR) administered and enforced by the CRTC govern inbound/outbound telemarketing communications. There are also rules specific to the use of automatic dialling-announcing devices.

Registration Requirement

In order to initiate unsolicited telemarketing calls to consumers, telemarketers must be registered with the operator of the National Do Not Call List (DNCL) and pay certain fees, otherwise they are prohibited from engaging in such calls. If a consumer's telephone number is included on the DNCL, telemarketers are prohibited from contacting them unless the consumer has provided the telemarketer with express consent to be contacted.

Telemarketers must also establish and maintain their own internal "do not call" list, even if they are subject to exemptions under the UTR.

Exemptions

Certain persons (eg, registered charities engaged in fundraising, newspapers, political parties, and persons marketing to other businesses) are exempt from the application of the DNCL rules. If a telemarketer has an existing business relationship with a consumer, they are also exempt from the DNCL rules with respect to that consumer, as long as certain requirements are met.

Enforcement

Violations of the UTR can result in AMPs of up to CAD15,000 for corporations.

Quebec

Please see the comments In 6.1 Email Marketing.

6.3 Text Messaging

Sending communications by text message is also subject to the same rules under CASL and privacy laws as email marketing. For more details, please see 6.1 Email Marketing.

6.4 Targeted/Interest-Based Advertising

Consumer data used for the purposes of targeting consumers with potentially relevant advertising is likely to be considered personal information under Canadian federal and provincial privacy laws.

The advertiser is permitted to collect that personal information as long as they obtain express or implied consent from the consumer. In order for such consent to be valid, the consumer must have been aware of the collection and the intended purpose prior to the time that the consumer data is collected. The consumer also needs to be able to easily opt out of having their consumer data used for targeted advertising. The advertiser will need to ensure that it complies with applicable privacy laws generally, including properly protecting the consumer data, limiting access to it, limiting the amount of data used for targeting purposes to only what is actually needed, and ensuring that it is only retained as long as needed for its intended purpose, then properly destroyed or de-identified.

Quebec

Under recently updated Quebec privacy legislation in the private sector (in effect since 22 September 2023), anyone who collects personal information from the person concerned using technology that includes functions allowing the person concerned to be identified, located or profiled must first inform the person of the use of such technology and of the means available to activate the functions that allow a person to be identified, located or profiled, which includes targeted advertising.

According to the regulator, functions enabling identification, location or profiling cannot be activated by default, and it is up to the person concerned to activate them if he or she so wishes, which is akin to requiring an express consent to do so.

Please see 6.1 Email Marketing regarding consents and liability.

6.5 Marketing to Children

Canadian private sector privacy legislation does not differentiate between the collection, use and disclosure of personal information of adults versus children. However, the Office of the Privacy Commissioner of Canada (OPC) has published guidance related to the collection of personal information from youth (defined as those aged 18 and below, including children) and children (defined as those under 13 years of age). The OPC views the collection of such information as being of particular sensitivity especially if the child is younger. The key issue when dealing with youth and children is whether the organisation would have valid consent, as it raises the question of whether the child or youth would understand the nature, purpose and consequences of the collection, use or disclosure of the information for which they are providing consent. The OPC has published a list of best practices when collecting personal information of youth/children.

Quebec

In Quebec, personal information concerning a child under 14 years of age may only be collected with the consent of the person having parental authority or of the tutor, unless collecting it is clearly for the child's benefit (which exception has not yet been interpreted). The consent of a minor 14 years of age or over may be obtained from the minor, the person having parental authority or the tutor. If this provision is not complied with, the consent is without effect. Please see 2.10 Children for rules related to advertising to children.

6.6 Other Rules

Quebec's private sector privacy legislation has undergone major changes, which, for the most part, came into effect on 22 September 2023. New rules now govern the consent of individuals to the collection, use or communication of their personal information, which are applicable without limitation to advertising purposes. Additional new provisions that are applicable to advertising include the following:

• It is necessary to conduct privacy impact assessments before transferring or communicating any personal information outside of the province of Quebec.
• It is necessary to post a confidentiality policy, drafted in clear and simple language, on the organisation's website if it collects personal information on Quebec individuals through technological means.
• It is necessary to inform individuals when their personal information is used to render a decision based exclusively on automatic processing of such information, which might include targeted advertising.
• The organisation's highest officer must see to ensuring that Quebec's privacy legislation is implemented and complied with, and must appoint a privacy officer in writing, failing which he or she is deemed to be the privacy officer in Quebec.

There are rules on mandatory reporting of confidentiality incidents.

7. Sweepstakes and Other Consumer Promotions

7.1 Sweepstakes and Contests

Sweepstakes and contests are governed by the Criminal Code and the Competition Act, along with specific legislation in the province of Quebec. Generally, the key requirements for contests are as follows:

• All advertising and promotional materials related to the contest must include material information about the contest.
• There must be an option to enter the contest that does not require a purchase to be made.
• The contest must include an element of skill. This requirement is often in the form of having the winner correctly answer a time-limited, unassisted, math skill testing question in order to be declared the winner.

Quebec

All promotional contests with prizes over CAD100 (total) are subject to the legislation on "publicity contests". All such contests that are open to Quebec residents must be registered with the Régie unless the contest is international (ie, not limited to Canada only). Certain provisions are mandatory in the contest rules (including a clause to the effect that any litigation respecting the conduct or organisation of the publicity contest may be submitted to the Régie) and there are some obligations regarding the content of any related advertisements. If the total value of the prizes offered exceeds CAD2,000, there are increased requirements, including the filing with the Régie of the contest rules, contest-related advertising, and a final report regarding the winners.

Lotteries, Raffles, and Drawings

In addition, lotteries, raffles and drawings where no element of skill is included (including without limitation drawings whose prize is determined based on the percentage of gross revenues such as a 50/50 draw) are highly regulated in Canada and often limited to organisations with charitable or religious purposes.

7.2 Contests of Skill and Games of Chance

Generally, to be considered a game of skill, contestants must be able to exercise sufficient skill to compensate for elements of chance that may be included in the contest. In Quebec, according to the Régie, contests where the aim is to recognise talent or skills (eg, photography or dance competitions) are excluded from Quebec's contest legislation.

7.3 Registration and Approval Requirements

With the exception of Quebec, Canada does not have any contest registration or approval requirements. For more details regarding Quebec, please see 7.1 Sweepstakes and Contests.

7.4 Free and Reduced-Price Offers

The Competition Act sets out certain prohibitions related to misleading representations regarding the prices at which products or services are ordinarily sold. Any free or reduced-price offer is prohibited unless those goods/services were offered at that regular price for a "substantial period of time" before making the representation, and a substantial volume was sold at that regular price. The time period will depend on the nature of the product or service (for example, the period would be shorter for seasonal goods and services). There is also a broad requirement that each product be offered at the regular price in "good faith" and there are a number of factors that indicate whether the regular price was set in good faith. With regard to volume of sales, there is no set volume to meet, but generally, the Bureau has indicated that a volume of only 10% of sales of a product at a particular price is much too low to substantiate the regular price.

Clearance Sales

If products are sold on clearance, the company would not need to comply with the above-noted test and price substantiation requirements. Products must actually be on clearance, such that new orders are not being placed for the product.

Quebec

There are several special rules in Quebec regarding promotional offers. It is forbidden to:

• falsely claim a price reduction;
• indicate a false regular price or another reference price for goods or services;
• falsely let it be believed that the price of certain goods or services is advantageous;
• give consumers the impression that they can avoid paying taxes by using phrases such as "no taxes";
• put greater emphasis in an advertisement on a premium (including a rebate) than on the goods or services offered;
• advertise goods or services of which there is an insufficient quantity to meet public demand unless specifically noted.

The use of phrases such as "cost price" should be avoided. See also 7.5 Automatic Renewal/Continuous Service Offers.

7.5 Automatic Renewal/Continuous Service Offers

Automatic renewals and continuous service offers are governed on a province-by-province basis under consumer protection legislation. Generally, it is permitted to have arrangements for goods/services that automatically renew where the marketer can continue to ship and bill for products and services on a recurring basis until the consumer cancels, provided that:

• it is made clear at the time that the consumer enters into the arrangement that it is recurring/continuous in nature;
• all material matters are disclosed, including a description of the goods or services, the frequency of delivery, the payment amount and schedule;
• a cancellation method is provided and implemented when requested by the consumer; and
• the supplier complies with other requirements under consumer protection laws, including regarding unilateral changes to terms.

There are provisions under provincial consumer protection laws that prohibit charging the consumer for the provision of unsolicited goods/services. In certain cases, if a consumer is receiving goods/services on an ongoing basis and there is a material change in such goods/services, the goods/services may be deemed to be unsolicited from the time of the material change, unless the supplier is able to establish that the consumer consented to the material change.

Quebec

It is forbidden to require that a consumer to whom services/goods are provided free of charge or at a reduced price for a certain period of time send a notice at the end of that period indicating that the consumer does not wish to receive the services or goods at the regular price.

8. Artificial Intelligence

8.1 AI & Advertising Content

There are no laws in Canada that govern the use of artificial Intelligence (AI) in particular. Changes are expected relatively soon as the Digital Charter Implementation Act, 2022 has completed its second reading at the House of Commons. It aims to regulate the development and use of "high-impact" artificial Intelligence systems by businesses In Canada.

This proposed act does not include provisions related to copyright in content developed by generative AI. While Canadian law is not entirely clear at this time with regards to who owns the copyright in materials, including advertising content, produced by generative AI, there is some support for the conclusion that content must be created by a human being in order for it to be protected by copyright. Until the law is more settled, advertisers relying on materials created by generative AI should consider that they may not have copyright protection over those materials.

8.2 AI-Related Claims

There are no special rules related to making claims about AI, such as claims that a product is developed through the use of AI, is powered by AI or has AI-related capabilities. However, advertisers must always comply with the misleading advertising and deceptive marketing provisions in the Competition Act, such that all claims regarding AI must not be false or misleading, and must be supported by adequate and proper testing.

8.3 Chatbots

There are no special rules related to the use of chatbots. Regulators like the Bureau and Ad Standards have not yet provided guidance regarding the use of chatbots.

9. Web 3.0

9.1 Cryptocurrency and Non-fungible Tokens (NFTs)

To the extent that a cryptocurrency, non-fungible token (NFT), or other crypto-asset fits within the definition of a "security" under applicable provincial law, its distributors will be required to comply with securities legislation, including licensing and disclosure obligations. Securities are regulated on a provincial basis; however, the Canadian Securities Administrators (CSA) Is an umbrella organisation comprised of all 13 provincial/territorial regulators. The CSA, along with the Investment Industry Regulatory Organization of Canada (IIROC) has published guidance to help crypto trading platforms comply with securities laws and IIROC rules for advertising, marketing and social media use in relation to crypto-assets that are securities. This guidance is called Staff Notice 21-330 Guidance for Crypto-Trading Platforms: Requirements relating to Advertising, Marketing and Social Media Use (the "Notice").

The Notice provides guidance regarding statements that could be considered false or misleading, compliance when using social media to promote crypto trading platforms, and concerns regarding the use of gambling-style contests that may promote excessive trading on platforms. Examples of misleading statements include:

• statements that suggest a crypto trading platform is registered under securities legislation when it is not;
• statements that suggest that a securities regulator has approved or endorsed a crypto trading platform, products on the platform or any other representation made by the platform; and
• statements about any matter that a reasonable investor would consider relevant or important in deciding whether to enter or maintain a trading or advising relationship with the crypto trading platform, if the statement is untrue or omits necessary information.

The Notice also reminds crypto trading platforms that are registered securities dealers that the CSA may review their marketing and advertising as part of the registration process and regulatory compliance reviews. As a result, issues with misleading advertising may affect a platform's registered status under securities laws.

If a crypto-asset is not a security under applicable provincial laws, its marketers will still be required to comply with the misleading advertising and deceptive marketing provisions In the Competition Act.

Quebec

In Quebec, certain platforms that facilitate the sale of cryptocurrency must comply with securities regulations, including some disclosure obligations. These platforms must be registered with the regulator (Autorité des marchés financiers) as a broker.

9.2 Metaverse

Currently, there are no laws that specifically target regulation of the metaverse. Regulators like the Bureau and Ad Standards have been silent on this issue as well. The current regulatory framework applies to all advertising whether it is within or outside the metaverse.

For example, advertisers should continue to comply with the Competition Act's provisions regarding misleading advertising and deceptive marketing practices. Advertisers assessing the general impression of their claims in the metaverse should consider all aspects of what consumers are seeing and hearing as they experience augmented reality and interact with the virtual aspects of their metaverse experience, taking into account the general impression test.

Advertisers should be aware of the terms and conditions related to accessing and using the platform they rely on to enter the metaverse space. Each platform has its own set of terms and conditions that outline platform-specific rules regarding the content and format of advertising.

10. Product Compliance

10.1 Regulated Products

There are specific rules that apply to advertising of regulated products such as food, drugs, medical devices, alcohol, vaping/tobacco products, and cannabis, among others.

Drugs and Cosmetics

There are three categories of drugs under the Food and Drugs Act to consider: (i) prescription drugs; (ii) non-prescription (OTC) drugs; and (iii) natural health products (NHPs). Unlike the other drugs, NHPs are only for use by human beings and only the items listed in Schedule 1 of the Natural Health Product Regulations are permitted as medicinal ingredients. Such items include plant or plant materials, extracts, isolates, amino acids, essential fatty acids, minerals, probiotics, and their synthetic duplicates.

Prescription Drugs

Advertisements to the general public can only describe the name, price and quantity of the prescription drug. They are prohibited from referencing how the drug works or what ailment/symptom it treats under any circumstance.

OTC Drugs

To be advertised in Canada, OTCs need to be licensed by Health Canada. It is permitted to advertise the availability of OTCs but all claims made about them may only reflect those included on the product label or found on the OTC's licence. advertising cannot make any reference to Schedule A.1. diseases (eg, diabetes, obesity, cancer, anxiety, asthma, depression, etc).

NHPs

To be advertised in Canada, NHPs must be licensed by Health Canada. It is permitted to advertise the availability of NHPs but all claims made about them should reflect those included on the NHP's label or those found on its licence. Further, the advertising cannot make any reference to Schedule A.1 diseases (eg, diabetes, obesity, cancer, anxiety, asthma, depression, etc).

Cosmetics

Cosmetics are substances manufactured, sold or represented for use in cleansing, improving or altering the complexion, skin, hair or teeth. Advertisements of cosmetics may not make any therapeutic claim or health claims.

Food Products

Advertising of food is governed by the Safe Food for Canadians Act and the Food and Drugs Act. There are a number of requirements that must be met in order to make claims about food (eg, "organic", "low calorie", "non-gmo", nutrient function claims, etc). It is not permissible to make health or disease reduction claims about foods, subject to certain exceptions. Therapeutic claims (eg, treating or mitigating disease) are generally prohibited.

Alcohol

Alcohol advertising is regulated at both the federal and provincial levels. Generally, all radio and television ads must comply with the CRTC's "Code for Broadcast Advertising of Alcoholic Beverages". Generally, these ads must be consistent with responsible consumption, and cannot promote a particular lifestyle, appeal to minors, associate consumption with driving a vehicle, or suggest illegal activity. Typically, ads must also comply with Ad Standards' "Alcoholic Beverage Advertising Code", and where the ad relates to spirits, with Spirits Canada's "Code of Responsible Advertising and Marketing". The provinces have implemented requirements similar to those in the CRTC Code and restrictions that apply to digital advertising as well.

Tobacco and Vaping

Advertising of tobacco and vapes is governed by both federal and provincial legislation. The federal legislation prohibits almost all forms of tobacco advertising, which would include digital advertising, except direct mail to adults (which is restricted to brand preference and informational advertising). Digital advertising of vapes is permitted subject to a number of restrictions. The provincial legislation generally focuses on advertising of these products done in or outside retail establishments and in public places.

The federal legislation prohibits vaping advertisements that appeal to young persons and that contain lifestyle advertising, testimonials and endorsements, sponsorship, promotions about health benefits and health comparisons with tobacco products, vaping products with certain flavours, sales promotions, unauthorised therapeutic claims, misleading claims, among other restrictions. Different rules apply to the advertising of vapes if the vape is for use with cannabis; in this case, it would be subject to the restrictions under the Cannabis Act.

Cannabis

The advertising of cannabis (which includes cannabidiol (CBD)) is governed by the Cannabis Act and is extremely restricted. Cannabis ads cannot be published in a manner where they will be accessible to individuals under the applicable legal age of majority. Cannabis ads must not:

• depict a person, character or animal;
• associate cannabis with certain types of lifestyles (eg, glamour, recreation);
• include testimonials or endorsements;
• communicate price or distribution;
• refer to certain sponsorships;
• appeal to young persons;
• make health or therapeutic claims;
• associate cannabis with alcohol, tobacco or vaping products;
• refer to inducements; or
• give an erroneous impression about the product.

10.2 Product Placement

The placement of products in entertainment content is subject to intellectual property laws and accordingly, such placements must be authorised by the brand owner. Typically, this embedded marketing is done through product placement agreements which would set out the terms related to payment, intellectual property licensing and details regarding the actual placement and duration.

10.3 Other Products

There are several laws and regulations setting out specific rules or restrictions regarding advertisement of a large array of goods and services, including:

• timeshare accommodation rights;
• credit;
• travel products; and
• lotteries and gambling.

Originally published by Chambers and Partners.

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.