Posted on

Social media can influence consumer decisions, especially when patrons rely on claims made by online personalities and celebrities, known as “influencers,” that they believe are genuine and impartial.

Influencers that share their interests and daily activities with their followers and develop a following based on their genuineness and honesty can become a trusted source of product reviews and recommendations. However, advertisers can partake in influencer marketing by paying influencers to create and share content featuring their products or services. This means that consumers could be susceptible to harmful and misleading information when influencers conceal their endorsements or compensation in the form of free products, gifts, money or exposure, or place crafty advertisements in their publications that they receive from advertisers.

At times, followers and consumers can be unintentionally misled by influencers. Some examples of commercial images being exposed to consumers without proper disclosure include an Instagram post by Selena Gomez that featured her drinking a Coca-Cola bottle without reference to an ad, a gift from Airbnb that was referred to as a rental by Kylie Jenner, [1] or the undisclosed advertising of a product to alleviate morning sickness during pregnancy by Kim Kardashian.[2]

In Canada, the Competition Act prohibits deceptive marketing practices that could misinform consumers, in order to promote truthfulness in advertising by ensuring that material connections with companies are disclosed and that influencers do not create content that is misleading. Influencers that promote specific products or brands must follow the “influencer’s checklist” provided by the Competition Bureau of Canada when posting reviews and opinions on social media, which states that influencers must:[3]

  • Ensure that disclosures are as visible as possible, so that consumers won’t dig around;
  • Disclose material connections in each post;
  • Disclose whether the content shared has been paid for;
  • Use clear and contextually appropriate words and images;
  • Ensure disclosures are inseparable from the content so they travel together when shared;
  • Base all reviews and opinions on actual experience and genuine views; and
  • Avoid ambiguous references and abbreviations, such as “Thank You Company X,” “Ambassador,” “Partner,” “SP,” “Spon.”

Failure to obey the Act and the guidance of the Competition Bureau renders both influencers and advertisers liable for misrepresentations, which could involve criminal and civil punishments under the Act, including fines in the millions and jail time. Asa a result, advertisers should ensure that influencers disclose material connections in each post, make representations that are not false or misleading, and ensure that performance claims are not made without adequate testing.[4] As important, consumers should remember the adage of caveat emptor, which means “buyer beware,” particularly when it comes to the reviews and claims of influencers.

Alongside the Act, Advertising Standards Canada, a voluntary group of advertisers that self-regulates, places restrictions on influencer marketing via the Canadian Code of Advertising Standards, which allow consumers to make complaints that could result in the amendment or withdrawal of advertisements if any material connections are undisclosed. According to the ASC’s “Disclosure Guidelines,” recommended practices include the use of clear hashtags (e.g. #ad or #sponsored), upfront disclosures at the beginning of videos, the close proximity of endorsements and disclosures, and the clear and unambiguous communication of disclosures.

Unlike governmental actions abroad that have required the disclosure of relationships between influencers and advertisers, such as the United Kingdom’s Competition and Markets Authority and the United States Federal Trade Commission demands that have targeted high-profile personalities and celebrities, the government of Canada has yet to take any direct action to compel disclosure.

Nonetheless, the Competition Bureau claims that the Competition Act applies to influencer advertisements despite it not expressly referring to digital marketing, and there has been a trend on international platforms to ensure that disclosures are made in accordance to the guidelines of the FTC and Ad Standards for prominent websites including YouTube, Instagram, Snapchat, and Twitter.

While the Competition Bureau can only regulate deceptive marketing practices in Canada, influencers and advertisers (particularly those that may happen to enter Canada or the Canadian market in the future) should be aware that the Bureau has the ability to refer criminal matters to the Attorney General, may bring civil matters against them before the Competition Tribunal or other courts, or work with the International Consumer Protection Network and the local jurisdiction of an influencer to remedy any improper practices.

Consumers must keep in mind that influencer marketing is a common practice online. As such, the general public should be aware that online personalities of all types and sizes may be compensated for their opinions, that there is no mandatory way for communicating promotions, and the failure to disclose a relationship with an advertiser is not actionable without an element of materially false or misleading advertisement.

If consumers happen to come across any deceptive marketing practices in Canada, they may notify the Government of Canada via a complaint filing with the Competition Bureau, any provincial or territorial consumer affairs office such as Consumer Protection Ontario, or Advertising Standards Canada which is a private organization designed to discourage false or misleading advertising through its code of conduct.

Links

[1] See Adrienne Sconyers, “Corporations, Social Media, & Advertising: Deceptive, Profitable, or Just Smart Marketing” at page 428.

[2] See “As the UK Cracks Down on Social Media Endorsements, Where does Canada Stand?” at https://www.cbc.ca/news/entertainment/as-u-k-cracks-down-on-social-media-endorsements-where-does-canada-stand-1.4989857

[3] See “Government of Canada: Deceptive Marketing Practices Digest” at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04372.html

[4] See “Current Competition Issues for Digital Marketers” at https://ca.practicallaw.thomsonreuters.com/w-007-9769?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1