Advertising & Marketing 2021 Comparisons

Last Updated October 08, 2021

Contributed By Baker McKenzie

Law and Practice

Authors



Baker McKenzie has an advertising and marketing practice in Canada that provides full-service Canadian advertising and marketing support to leading domestic and international companies, focused on food, cosmetic, drug, device and consumer product safety and packaging and labelling compliance; misleading advertising and deceptive marketing practices compliance; marketing-related privacy, anti-spam and direct marketing regulation; consumer protection, e-commerce and online sales regulation; complex contests, sweepstakes and promotions; social media and digital marketing risk management; advertising clearance, standards and consumer/trade complaints; interface and advocacy with advertising regulators; and marketing-related commercial agreements. The practice has a long record of accomplishment in serving leading clients in the Canadian market, including high-profile domestic and international companies in the food and beverage, fashion and luxury, cosmetics and personal care, pharmaceutical and health products, consumer electronics and retail sectors. The authors would like to thank Baker McKenzie associates Andrew Chien and Shira Sasson, and articling students Daniel Gao and Juliette Mestre, who also contributed to this publication.

Advertising is regulated both federally and provincially/territorially. 

Federal Regulation

The primary source of regulation is the Competition Act, which contains criminal and civil prohibitions on false or misleading advertising in any medium. Criminal prosecution is reserved for the most egregious offences (eg, fraud-like conduct or deliberate breaches), with the civil regime used to deal with all other conduct.

In addition to the general prohibitions against materially false or misleading representations, the civil provisions contain specific prohibitions relating to:

  • unsubstantiated performance claims;
  • misleading warranties and guarantees;
  • bait-and-switch selling;
  • false or misleading price claims;
  • testimonials; and
  • promotional contests.

The criminal and civil provisions are mutually exclusive – once criminal charges have been laid or a civil application has been filed, the regulator cannot switch tracks.

Provincial and Territorial Regulation

Provincial and territorial consumer protection statutes set out prohibitions against deceptive marketing practices, similar to those under the Competition Act. With the exception of Quebec, Canada’s only civil law jurisdiction, these prohibitions are relatively similar. Quebec’s consumer protection legislation differs in a number of areas, including:

  • advertising to children;
  • promotional contests;
  • credit advertising;
  • advertising of premiums; and
  • French language requirements for advertising materials.

Other Regulation

Canada has a number of other federal and provincial/territorial laws, regulations and guidelines that apply to the advertising of specific categories of products (eg, food, drugs and health products, cosmetics, textiles, cannabis, alcohol, tobacco, pre-packaged consumer products, jewellery, gaming and financial services).

Federal Regulatory Authorities

The Deceptive Marketing Practices Directorate within the Competition Bureau is charged with enforcing the false or misleading advertising provisions of the Competition Act. The Competition Bureau has broad investigative and enforcement powers, including the ability to commence formal inquiries, seek document production, issue subpoenas and search warrants, and order wiretaps.

The Competition Act imposes significant penalties for false or misleading advertising. Criminal violations may involve a prison term for individuals for up to 14 years and an unlimited fine. Civil sanctions may include:

  • a prohibition order lasting up to ten years (the violation of which is a criminal offence);
  • a requirement to publish a corrective notice;
  • an administrative monetary penalty of up to CAD10 million for each count for the first violation by corporations (CAD750,000 for individuals) and CAD15 million for each count for subsequent violations (CAD1 million for individuals); and
  • restitution to consumers. 

Several other federal regulatory authorities are responsible for product or service-specific advertising laws, including:

  • Health Canada, which enforces advertising rules for food, drugs, natural health products, tobacco, cannabis, vaping products and certain pre-packaged consumer products;
  • the Canadian Food Inspection Agency, which, along with Health Canada, enforces advertising, packaging and labelling requirements for food;
  • the Financial Consumer Agency of Canada, which oversees the advertising of financial products and services; and
  • the Canadian Transportation Agency, which enforces advertising restrictions related to certain air, marine and land-based transportation.

Violation of product or service-specific advertising laws may attract civil or criminal penalties similar to those under the Competition Act. Breaches of product-specific laws may also result in product recalls and the seizure or detention of goods.

Provincial and Territorial Regulatory Authorities

Consumer protection authorities are responsible for enforcing the advertising and marketing provisions of the applicable statutes (eg, in Ontario, the Director under the Consumer Protection Act and the Ministry of Government and Consumer Services). While penalties vary by jurisdiction, they typically include fines ranging from CAD1,000 to CAD300,000 (or three times the amount obtained by the violator as a result of the offence, whichever is greater), terms of imprisonment of up to three years for individuals and other remedies (eg, prohibition orders, retractions and corrective notices).

Both corporations and individuals may be held liable for violating federal and provincial advertising and marketing laws.

Generally, both civil and criminal liability for misleading misrepresentations attaches to the person who had control or decision-making authority over the content of the representation. Although individual owners, shareholders and third parties – such as advertising and telemarketing agencies – can technically be liable for misleading advertising, in practice, this is unlikely, as they are not likely to have decision-making authority over the content of representations. 

Director and Officer Liability

Although director and officer liability is explicitly codified in only some provisions of the Competition Act dealing with misleading representations, in principle, directors and officers may be liable under both the criminal and the civil prohibitions. As part of a settlement with the Competition Bureau reached in 2021 by an online flight-booking platform in connection with allegedly misleading representations about prices and services, charging of hidden fees and posting false online reviews in violation of the civil misleading advertising provisions, two company directors agreed to penalties of CAD400,000 each.

The Publisher’s Defence

The civil misleading advertising provisions of the Competition Act provide for a so-called “publisher’s defence”, which generally allows persons who merely print or publish, or otherwise disseminate, a representation on behalf of another person in the ordinary course of their business to avoid liability, assuming certain conditions are met.

Product-Specific Advertising Requirements

While the specific circumstances giving rise to liability vary by statute, generally, as with the Competition Act, individuals will not be liable for misleading advertising unless they have some degree of control or decision-making authority over a misleading advertisement. It should also be noted that the “publisher’s defence” may not be available under certain product-specific legislation (eg, the Cannabis Act prohibits a person from publishing, broadcasting or otherwise disseminating, on behalf of another person, prohibited promotions, including misleading advertisements). While not yet interpreted by the courts, this broad provision implies that third parties such as internet platforms and marketing agencies could potentially be liable for non-compliant cannabis advertising.

Ad Standards

The most significant self-regulatory organisation in the advertising/marketing space in Canada is Ad Standards, the advertising industry’s self-regulatory body. Ad Standards administers the Canadian Code of Advertising Standards (Code), which contains 14 clauses and six interpretation guidelines setting out a number of basic principles of acceptable advertising including prohibitions against:

  • misleading advertising;
  • deceptive price claims;
  • disguised advertising;
  • false testimonials;
  • deceptive comparative advertising;
  • unsubstantiated claims;
  • depictions of unsafe behaviours;
  • unacceptable advertising to children and minors; and
  • unacceptable portrayals and depictions (eg, discriminatory, indecent or otherwise objectionable content).

Although adherence to the Code is technically voluntary, in practice, those found to be in violation can be asked to amend or withdraw their advertising and newspapers, broadcasters or digital properties that are members of Ad Standards will not carry an advertisement found to be in contravention of the Code. 

Pre-clearance Services

Ad Standards also provides pre-clearance services to advertisers with respect to alcoholic and non-alcoholic beverages, cosmetics, children’s advertising, health products and food products. Pre-clearance assesses compliance with relevant Canadian Radio‑television and Telecommunications (CRTC) codes and certain product-specific requirements (eg, under the Alcohol and Gaming Commission of Ontario’s Liquor Advertising Guidelines, the CRTC Code for Broadcast Advertising of Alcoholic Beverages, the Broadcast Code for Advertising to Children and the Guidelines for the Nonprescription and Cosmetic Industry Regarding Non-therapeutic Advertising and Labelling Claims).

Most Canadian broadcasters require an Ad Standards or equivalent approval number before airing broadcast advertisements, and pre-clearance is common or required in certain other circumstances.

Other Self-Regulating Bodies

There are a number of other industry associations and self-regulatory bodies. Some regulate marketers generally (eg, the Canadian Marketing Association and the Digital Advertising Alliance of Canada) and others (eg, the Canadian Beverage Association, which publishes the Code for the Responsible Advertising of Food and Beverage Products to Children, and the Pharmaceutical Advertising Advisory Board, a pre-clearance agency for drug products) are industry-specific. 

A private right of action (including through class actions) is available for consumers who have suffered loss or damage as a result of a breach of the criminal misleading advertising provisions of the Competition Act (or a prohibition order under the civil provisions). Although this right of action is available irrespective of whether there has been a conviction for the underlying conduct, in practice, private actions are mostly brought following a conviction or a guilty plea. Consumers may recover damages equal to the actual loss suffered, plus investigation and proceeding costs.

Individual or class actions may similarly be brought under most provincial or territorial consumer protection statutes.

Several industries, products and services are subject to specific regulations and guidelines at both the federal and provincial/territorial levels. These include:

  • food;
  • cosmetics;
  • consumer health products;
  • drugs;
  • medical devices;
  • pre-packaged consumer products;
  • textiles;
  • precious metals;
  • alcohol;
  • tobacco and vaping products;
  • cannabis;
  • transportation;
  • lotteries and gaming; and
  • credit and financial services.

Recent Trends and Enforcement Actions

COVID-19

Over the past 12 months, one of the key areas of focus for the Competition Bureau has been misleading advertising related to COVID-19. In addition to investigations into claims related to COVID-19 “cures”, which were the Bureau’s main focus early in the pandemic, more recently, the Bureau has focused on investigating potentially false or misleading claims related to COVID-19 government benefit programmes.

Digital marketing

Another key area of focus is online marketing (including influencer marketing), especially in the telecommunications, financial services, health and infrastructure sectors. In January 2021, a business selling health and dietary supplements was fined CAD15 million for operating a “subscription trap” (ie, promoting free trial offers that trapped customers into monthly subscriptions with significant monthly fees). Another recent investigation relating to deceptive telemarketing in connection with online directories resulted in individual criminal charges.

Recent Trends

Digital advertising and particularly influencer marketing and the collection of consumer data in exchange for “free” online products and services have been key areas of concern for the Competition Bureau.

Influencer Marketing

The Competition Bureau recently sent over 100 letters to advertisers known to use influencer marketing, urging them to revise their practices to ensure compliance with deceptive marketing laws. It has also published extensive guidance on the topic, providing both influencers and advertisers with tools to promote compliance with the law. 

“Free” Digital Products

The Competition Bureau has expanded its reach into the privacy domain, recently including a particular focus on access and collection of various types of consumer data in exchange for “free” digital products. In co-ordination with the CRTC and the Office of the Privacy Commissioner of Canada, the Competition Bureau issued 36 warning letters to various mobile app companies expressing concerns related to the companies’ use and collection of data and disclosure of compulsory fees. The Competition Bureau has also published guidance outlining the types of representations most likely to raise concerns with the accuracy of disclosure regarding the collection, use and retention of consumer data. 

In spring 2020, the Competition Bureau reached a settlement (resulting in a CAD9 million fine, plus CAD500,000 towards the Competition Bureau’s investigation costs) with a social networking service/platform in connection with allegedly false and misleading statements about the type of data collected from consumers, as well as the reasons for collection and the use and retention of the data.

Notable Recent Actions

Notable actions over the past 12 months include the following.

An investigation of false or misleading claims made by an online flight-booking platform relating to the price of flights, as well as the cost and terms associated with cancellations, rebooking and seat selection. The investigation resulted in a CAD5 million penalty for the company and individual penalties of CAD400,00 each for two company directors.

A consent agreement with a sports equipment manufacturer in connection with performance claims made about hockey helmets that suggested the helmets could reduce the risk of concussions. Although the manufacturer had data to substantiate the claims, the Competition Bureau concluded that the testing was not “adequate and proper”, as required by the Competition Act. In addition to paying the Competition Bureau’s investigation costs and implementing an enhanced corporate compliance programme, the manufacturer agreed to make a make a CAD100,000 donation in equipment to support youth sports.

While protecting consumers has always been a key priority of the Competition Bureau, this focus intensified in the first few months of the pandemic, when it prioritised enforcement of deceptive claims related to various COVID-19 “cures”. Various public health laws put in place to combat the pandemic have prompted an increase in consumer advertising complaints, in particular with respect to advertisements designed to play upon consumers’ fears, such as those related to health, the environment, personal finances and consumer product availability. In addition to enforcement actions, this has led to guidance from various regulatory and self-regulatory bodies, including Ad Standards, which issued guidance encouraging advertisers to consider their messaging in light of the current public health crisis.

Prior to the September 2021 federal election, the incumbent Liberal government introduced Bill C-10, a bill to regulate online broadcasters, and C-11, which would have significantly strengthened Canadian privacy law. While the bills would have impacted the regulation of advertising only indirectly, they reflect an increased focus on consumer protection generally.

Although the bills ultimately failed when the Canadian Parliament dissolved in advance of the election, the re-election of a Liberal minority government may lead to the reintroduction of one or both bills, or other legislation impacting advertising to consumers.

To be actionable, an advertising claim must be made to the public and must be false or misleading in a “material” respect. The elements of the offence are substantially similar under both the civil and criminal provisions of the Competition Act, with the latter further requiring that a deceptive representation have been made “knowingly or recklessly”.

Representations to the Public

While only representations directed to the public are actionable, it is not necessary to show that:

  • any person was actually deceived or misled;
  • a member of the public to whom a representation was made was within Canada; or
  • a representation was made in a place to which the public had access.

Materiality

Materiality depends on both the literal meaning and the general impression of the representation in question. Generally, the test is whether a representation influenced a person to make a purchase. However, when advertising is disseminated through certain electronic means (eg, email or SMS), there is no materiality requirement for representations contained in the sender information, subject matter information or locator information (eg, URL and metadata) of an electronic message.

Similar materiality standards apply under provincial and territorial consumer protection legislation and the Canadian Code of Advertising Standards.

All advertising claims, whether express or implied, are regulated and all provable advertising claims that may reasonably be taken as true by consumers must be substantiated.

Claim Substantiation

Any type of performance claim, whether express or implied, must be supported by an “adequate and proper test”, as discussed in 2.3 Claim Substantiation. The substantiation required for other types of claims will depend on the circumstances, including the type of claim and the audience for which it is intended.

Hyperbole

If a claim is so clearly an exaggeration that a consumer would not reasonably believe it to be true or if a claim is clearly the opinion of the advertiser, generally no substantiation is required. Ad Standards has published guidance on the application of the elements of humour and fantasy in assessing the general impression conveyed by an advertisement.

There are no statutory criteria for what constitutes an adequate and proper test of a performance claim, and the adequacy of any given test largely depends on the circumstances, such as the nature of the claim, the product itself or the availability of any standard testing procedures. While an adequate and proper test does not need to be the best available test or meet the standard typically required for studies published in peer-reviewed journals, it must be appropriate for the product, its material features and performance, and the claim being tested, as well as valid in the market where the claim is made. Canadian courts have generally interpreted the term “proper” to mean suitable, fit or as required by circumstances.

Any testing done to substantiate a performance claim must be done before the claim is made. It is not permissible to wait until the claim is challenged to test it. Even if testing later proves the claim to be true, the claim would not have met the substantiation requirements.

Standards largely depend on the circumstances, such as the nature of the claim, the product itself or the availability of any standard testing procedures. While there are generally no requirements prescribing how testing must be conducted or minimum sample sizes, when assessing whether a test is adequate and proper, courts will generally consider, among other things, the following factors:

  • the test is reflective of the risk which the product is designed to prevent;
  • the test is carried out under controlled circumstances;
  • the test is conducted on more than one independent sample wherever possible;
  • test results are reasonable given the nature of the harm at issue and demonstrate that the product causes the desired effect and the effect is material; and
  • subjectivity in the test is eliminated as much as possible.

Standardised industry testing will generally be considered a reasonable benchmark for adequate and proper testing. Research and/or consumer survey data will generally be necessary to support any comparative claim.

In a recent enforcement action against a hockey equipment manufacturer claiming the use of its helmet reduced the risk of concussion, the Competition Bureau concluded that despite testing having been conducted prior to making the claim, it was not adequate and proper as the manufacturer relied on injury studies focused on sports with significantly different injury patterns to those suffered while playing ice hockey.

Therapeutic claims – ie, claims regarding a product’s safety, effectiveness, and/or use – are subject to a high degree of scrutiny. Manufacturers of health products must ensure they have robust clinical evidence to substantiate any therapeutic claim. Typically, evidence comes in the form of clinical studies that often result in published, peer-reviewed, controlled and double-blind human studies with demonstrated clinical and statistical significance. In some circumstances, unpublished data may be sufficient, if independently reviewed. Importantly, the studies should directly test and support the approved indications of the advertised product, in the intended population, as specifically authorised by Health Canada; this is especially true for drug products. Therapeutic claims related to food products must also be substantiated by human clinical studies and certain food-related therapeutic claims must be pre-approved by Health Canada and the Canadian Food Inspection Agency, depending on the health condition addressed in the claim. 

Many types of claims are subject to specific regulatory guidelines and requirements, including environmental, “free”, “natural”, “Made in Canada”, “Product of Canada”, and therapeutic claims.

Environmental Claims

Environmental claims, including those related to sustainability, recycling, safety or environmental impact, including “free of” claims, are subject to detailed regulatory guidance, which, while not having the force of law, is used by the Competition Bureau as a reference for evaluating self-declared environmental claims.

“Free” Claims

To advertise a product as “free” of charge, there should not be any required or implied cost to obtain it, whether the product is provided on its own or as part of a bundle where the consumer is required to pay for the other bundled item (in the latter case, there should be no cost recovery to offset the cost of the “free” product).

Canadian Origin Claims

“Product of Canada” and “Made in Canada” claims are subject to detailed regulatory guidance for both food and non-food products that outlines conditions that must be satisfied to allow the claims, including factors such as the percentage of the product’s total direct costs that must have been incurred in Canada. As the “general impression” test used to assess all advertising claims is similarly applicable to origin claims, it might be possible for an origin claim to be conveyed through a combination or words and visual elements even where the specific words “Product of Canada” or “Made in Canada” are not displayed.

“Natural” Claims

Whether a “natural” claim may be used depends on the product. “Natural” claims related to food are permitted only where food has not been processed in such a way that would alter its chemical, physical or biological state. Although a health product’s therapeutic action can never be advertised as “natural”, given that every health product alters the body’s physiological function, individual ingredients may be described as “natural” where they meet specific criteria (ie, where the ingredient is obtained from a natural source material, is in a form found in nature and has undergone only minimal processing – eg, drying, grinding, powdering, chopping or encapsulating).

Therapeutic and Health Claims

Therapeutic and health claims are regulated by Health Canada and must be substantiated with human clinical evidence, as discussed in 2.5 Clinical Studies. Any product that claims to have a medical effect or purpose brings the associated product within Health Canada’s jurisdiction and must be specifically approved for that claim.

There are no statutory rules or restrictions specifically applicable to comparative advertising claims. Such claims are, however, subject to specific provisions under the Canadian Code of Advertising Standards and related guidelines that mandate that a comparison not, among other things, unfairly disparage or discredit a competitor or its products or exaggerate the nature or importance of differences. While advertisers are permitted to mention a competitor by name, they may only do so pursuant to intellectual property laws and must not infringe third-party intellectual property rights (see 3.3 Challenging Comparative Claims).

There are additional, stricter guidelines for comparative advertising in the healthcare/pharmaceutical context (eg, comparative claims in drug advertising should be supported by direct head-to-head human clinical studies - see 2.5 Clinical Studies).

Like non-comparative advertising claims, comparative advertising must not be materially false or misleading, based on both the literal meaning and the general impression created by the comparative claim.

Challenge through Ad Standards

An advertiser can challenge a comparative claim under the Canadian Code of Advertising Standards through Ad Standards’ Advertising Dispute Procedure. The procedure is confidential and subject to a partially refundable filing fee. If a challenge is successful, the advertiser will be asked to withdraw or amend the advertisement and failure to do so may result in Ad Standards publishing its decision and notifying the Competition Bureau, which can take further enforcement action.

Challenges under the Copyright Act and Trademarks Act

Comparative advertising referring to a competitor’s name, logo, label or pictures may attract liability under federal intellectual property laws. Specifically, advertisers may challenge a competitor’s advertisements under the federal Copyright Act where an advertisement reproduces a work or any part without the consent of the copyright owner. An advertiser may also have a cause of action under the Trademarks Act if its competitor:

  • reproduces a trademark (registered or unregistered) in a manner that is considered likely to depreciate the goodwill attached to the mark;
  • makes false or misleading statements discrediting an advertiser’s business, goods or services; or
  • passes off the advertiser’s goods or services, or otherwise causes confusion as to the source of the goods or services being advertised.

Determining whether comparative claims warrant a challenge on intellectual property grounds requires a case-by-case analysis. Recent case law has held that mere overstatements are not always considered false or misleading, and using competitor marks for the purposes of distinguishing goods/services may be acceptable, if supported by evidence. If a challenge is successful, remedies may include injunctions, damages and the removal of infringing advertising material.

Advertising on social media is subject to the same requirements as advertising claims generally: it must be true and not materially false or misleading, based on both the literal meaning and the general impression created by the advertisement. If social media advertising is conducted through testimonials or influencer marketing, additional requirements apply, including a requirement to disclose any material connection with a business, product or service in each social media post.

The Competition Bureau takes the position that both influencers and brands are responsible for ensuring proper disclosures of sponsored posts and compliance with the Competition Act and regulatory guidance requirements. Brands must be vigilant in monitoring social media advertising, as they may be held accountable for representations made by consumers or other individuals about their products. However, in the circumstances where individuals with whom brands have no contractual relationship make misleading representations in social media, brands may have no – or limited – ability to control the content of the representations, which may present compliance challenges. 

In principle, an advertiser may be held liable for content posted on its website or social media channels if individuals posting the content fail to disclose a material connection with the advertiser.

In addition to being subject to the same disclosure requirements applicable to traditional media, social media advertising is subject to additional disclosure requirements set out in regulatory guidance. Among other things, social media disclosure must be inseparable from the posted content, able to travel with the message when shared and independent of any particular social media platform (ie, not reliant on platform-specific built-in disclosure mechanisms that are not part of the post (eg, a “paid partnership” header).

Similarly, regulatory guidance provides examples of acceptable hashtags that are commonly used as a way of ensuring disclosure due to word count limitations (and timing requirements for videos) that exist under most social media platform rules.

While no special rules exist under general advertising and marketing laws, special considerations do apply under privacy and anti-spam laws and guidance issued by Ad Standards addresses medium-specific disclosure, including disclosure on video-based platforms. 

“Native advertising” is subject to the same general rules as other advertising, including the requirement to disclose a material connection with the advertiser in cases where an advertiser influences editorial content by, for example, offering free products or services for reviews.

Although influencer marketing has been steadily growing over the past decade, in recent years, advertisers have increasingly favoured influencers with smaller profiles – but a large, engaged following – over mega celebrities. Not only are these influencers more active on traditional social media channels such as Instagram or Facebook, but a growing number are using streaming services and video-based platforms particularly popular among the younger demographic, for whom they have become a key source of information when making product choices.

Canadian regulators have taken note and have increased enforcement in this area, publicly announcing regulation of influencer marketing as one of the key ongoing priorities, with influencer marketing being a key focus of the Competition Bureau’s enforcement efforts. Increased enforcement of influencer marketing is expected to continue. 

In addition to the general requirements applicable to all marketing campaigns, influencer marketing campaigns may be subject to the provisions of the Competition Act applicable to testimonials. The Competition Bureau has also issued guidance pertaining to testimonials and influencer marketing.

Testimonials

Testimonials must reflect the true opinion of the person giving them, and must be based on the person’s actual experience with the advertised product. Regulatory guidance sets out the following obligations for influencers when posting reviews and opinions:

  • disclosing all material connections (ie, any relationship or arrangement that would cause consumers to re-evaluate their opinion about the truthfulness of the advertising) regardless of perceived magnitude;
  • using clear and contextually appropriate words and images;
  • using unambiguous references and abbreviations to communicate an influencer relationship;
  • ensuring that disclosures are inseparable from the specific content that it pertains to (ie, a blanket disclosure would not be acceptable);
  • basing reviews and opinions on actual experience; and
  • making disclosure visible and accessible.

Advertisers may in principle be held liable for content posted by influencers if an influencer makes a false or misleading claim or fails to disclose a material connection with the advertiser.

Regulatory guidance encourages advertisers to ensure all influencer contracts contain “compliance with laws” clauses and impose obligations on influencers to disclose any material connection with the brand, and to actively monitor their influencers’ activities to ensure statements influencers make about their products and/or services are not false or misleading and that material connections are properly disclosed.

Any form of electronic marketing (eg, through email, text messaging/SMS, instant messaging or messaging over social media) is generally subject to Canada’s Anti-Spam Legislation (CASL), which applies to any “commercial electronic message” (CEM) and prescribes specific consent and form requirements. A CEM is defined very broadly to include any electronic message that encourages participation in a commercial activity. 

Consent Requirement

A CEM cannot be sent without the recipient’s express opt-in consent, unless the sender can rely on an exemption or is able to establish a valid basis to imply consent. Consent must be confirmed prior to the sending of a CEM; an email requesting consent is itself considered a CEM.

Identification Requirements

A CEM must identify the sender and anyone on whose behalf it is sent. This includes their identities, contact information, and mailing addresses. If sent on behalf of multiple persons, all parties must be identified in the CEM. In general, however, only persons who play a material role in the content of the CEM and/or the choice of the recipients must be identified. If it is not practical to include this information in the CEM itself, a hyperlink to a webpage with the information is acceptable, provided it is accessible without additional cost and the link is clearly and prominently set out in the CEM.

Unsubscribe Mechanism Requirement

A CEM must provide an unsubscribe mechanism which must be readily accessible, easy to use and remain active 60 days after a CEM is sent. Unsubscribe requests must be given effect within ten business days. 

Exemptions

CASL contains two broad categories of exemptions: one that exempts certain electronic messages from the statute’s application entirely and the other that exempts certain messages from the consent requirements, while still applying the form requirements.

Misleading Representations

CASL also introduced amendments to the Competition Act that establish specific prohibitions for misleading representations in individual elements of electronic messages, including the sender information, subject line, and locator information such as URLs or metadata.

Enforcement

Corporations found in violation of CASL may be subject to an administrative monetary penalty of up to CAD10 million. Individual directors and officers may also face individual liability of up to CAD1 million if they had a significant role in the violation.

Inbound and outbound telemarketing are subject to the Unsolicited Telecommunications Rules (UTRs) of the Canadian Radio-television and Telecommunications Commission (CRTC).

Telemarketing Rules

Telemarketers are prohibited from initiating unsolicited telemarketing calls on their own behalf (or on behalf of a client) to consumers unless the telemarketer (if initiating telemarketing calls on their own behalf) or their clients (if initiating telemarketing calls on their client’s behalf) have registered with and provided information to the National Do Not Call List (DNCL) operator and paid all applicable fees. The UTRs also impose certain obligations and restrictions on telemarketers and their clients, including record keeping requirements.

National DNCL

Telemarketers are prohibited from initiating telemarketing calls:

  • to consumers whose telephone numbers are on the DNCL, unless a consumer has provided express consent to be contacted;
  • on their own behalf unless they are registered subscribers of the DNCL and have paid all applicable fees to the DNCL operator; or
  • on behalf of a client unless the client is a registered subscriber of the DNCL and the applicable fees to the DNCL operator associated with the client’s subscription have been paid.

Telemarketers must also maintain their own internal do not call lists and update them when consumers ask not to be contacted.

The DNCL rules do not apply to exempt telemarketers, including registered charities raising funds, newspapers, political parties and their candidates, and business-to-businesses marketers. Companies that make telemarketing calls to consumers with whom they have an existing business relationship are also exempt from the application of the DNCL rules, provided they meet the prescribed requirements.

Being an exempt telemarketer does not eliminate the telemarketer’s responsibility to maintain its own internal do not call list.

ADAD Rules

Automatic dialling-announcing devices (ADAD) are subject to additional rules under the UTRs, including requiring that each call begins with a clear message identifying the person or group on whose behalf the call is being made; describing the purposes of the call; limiting the days and time period when calls can be made; and ensuring that appropriate caller ID is established.

Enforcement

UTRs violations can result in administrative monetary penalties of up to CAD15,000 for corporations, subject to a due diligence defence. 

Text messaging is subject to CASL. See 6.1 Email Marketing for further details.

Regulation under PIPEDA

Data collected for interest-based advertising is generally considered personal information and requires consent under Canada’s Personal Informational Protection and Electronic Documents Act (PIPEDA), and substantially similar provincial legislation in certain provinces. Personal information may generally be collected for interest-based advertising on the basis of implied consent, provided:

  • consumers are made aware of the purpose of the practice and are provided with information about the parties involved before the time of collection;
  • consumers can easily opt out, with the opt-out being immediate and persistent;
  • collected information is not sensitive; and
  • collected information is destroyed as soon as possible or de-identified.

The Office of the Privacy Commissioner of Canada (OPC) has actively encouraged advertisers to not knowingly target children for interest-based advertising.

Enforcement

Enforcement under PIPEDA is carried out by the OPC, either on its own initiative or on behalf of an individual complainant. While the OPC does not have the independent power to issue binding compliance orders or administrative monetary penalties, other than in limited circumstances, it may bring an action in Federal Court, which has the power to award sanctions against the organisation or award damages to complainants.

Self-Regulation

The Digital Advertising Alliance of Canada (DAAC), a non-profit consortium of trade associations, administers AdChoices, a self-regulatory programme for interest-based advertising. To encourage increased notice, transparency, and accountability from the advertising sector online to consumers, AdChoices has issued a number of recommendations including that advertisers provide consumers with an ability to choose whether data is collected and used and not collect personal information from children under the age of 13 or sensitive information from anyone without consent.

Marketing to Children

There are no federal statutes of general application that specifically regulate advertising to children.

The federal Cannabis Act and the Tobacco and Vaping Products Act (TVPA) prohibit advertising to children under the age of 18 (some provinces have increased this age restriction to 19 or 21) or advertising to adults in any form where there is a risk it may be accessed by children. The TVPA further prohibits the use of certain forms of advertising, such as lifestyle advertising, sponsorship promotion, testimonials and endorsements, or promotions that would be appealing to youth or feature any prohibited ingredients or flavours. The TVPA’s Vaping Products Promotion Regulations also prohibit advertising and point of sale promotion of vaping products or a vaping product-related brand element to persons under the age of 18.

Violations may be subject to (i) a maximum fine of CAD1 million or imprisonment for a term of up to two years, or both, for a manufacturer; and (ii) a maximum fine of CA$500,000 for all persons other than a manufacturer.

The CRTC Code for broadcast advertising of alcoholic beverages (the Broadcast Code), administered by the CRTC, contains several provisions restricting alcohol marketing to children or those under the legal drinking age. While the Broadcast Code in principle applies only to television and radio broadcasts, many provinces have incorporated the Broadcast Code by reference into their alcohol regulations, and apply them to advertising in any medium. Under the Broadcast Code, advertisers cannot:

  • direct advertisements to anyone under the legal drinking age;
  • associate their product with youth or youth symbols;
  • portray persons under the legal drinking age or persons who could reasonably be mistaken for such persons in a context where any such product is being shown or promoted;
  • portray the product relating to an activity that is primarily attractive to people under the legal drinking age; or
  • use an endorsement by a person, character or group who is likely to be a role model for minors.

Child-directed broadcast advertising is also regulated through the Broadcast Code for Advertising to Children (the Children’s Broadcast Code), which defines a child as anyone under the age of 12. As a practical matter, all child-directed advertising must comply with the Children’s Broadcast Code before it airs.

The Children’s Broadcast Code deems any advertising during children’s programming, as well as any child-directed advertising during other programming, to be children’s advertising, and sets out strict criteria for acceptable forms of child advertising, including:

  • prohibitions on pressuring a child to buy or use a product;
  • exaggerated demonstrations;
  • endorsements by cartoon or fantasy characters (unless specifically created for the product); and
  • excessive repetition (for example, a child-directed commercial can only be broadcast once each 30-minute time slot).

Restrictions on advertising to children under the Canadian Code of Advertising Standards

The Canadian Code of Advertising Standards prohibits advertising directed at children from:

  • exploiting their credulity, lack of experience or their sense of loyalty; and
  • presenting information or illustrations that might result in their physical, emotional or moral harm.

The Children’s Advertising Initiative

Ad Standards also administers the Children’s Advertising Initiative, developed by the food and beverage industry and designed to address childhood obesity. The Children’s Advertising Initiative requires participating companies to, among other things, promote healthy dietary choices in children's advertising and not to advertise food or beverage products in elementary schools. While participation is currently voluntary, Health Canada has announced its intention to amend federal food advertising laws to restrict commercial marketing of food/beverages to children, particularly food products that contribute to excess consumption of sodium, sugars and saturated fat.

Advertising to children in Quebec

Advertising to children under the age of 13 is expressly prohibited in Quebec pursuant to the Quebec Consumer Protection Act, subject to limited exceptions where strict conditions have been met. Violations are subject to fines of CAD2,000–100,000 for a corporation.

Collection of Personal Information from Children

The OPC has taken the position that under PIPEDA, the consent of a parent or guardian is required for the collection and use of personal information for children under the age of 13. However, certain provinces, including British Columbia, Alberta, and Quebec, have not set a specific age threshold, but instead consider whether the individual understands the nature and consequences of the exercise of the right or power in question. Where a child/minor is unable to do so, parental or guardian consent is required. However, Quebec’s Bill 64 (which proposes to amend Quebec’s private sector privacy legislation), provides that parental consent will become mandatory for the collection, use and disclosure of personal information concerning a minor under 14 years of age. Bill 64 was adopted on 21 September 2021; the majority of its provisions will come into force on 21 September 2023.

The Canadian Marketing Association’s Code of Ethics and Standards of Practice (CMA Code) also addresses the collection and use of the data of children and teenagers. Like the OPC’s position under PIPEDA, the CMA Code stipulates that the collection of data from children under the age of 13 requires parent or guardian consent. For teenagers, defined as individuals between the ages of 13 and the age of majority, parental consent is only necessary where the teenager is younger than 16 and the information being collected is personal information, that is, any general information other than contact information (ie, name, address, email address, and home and mobile telephone numbers). The CMA enforces the CMA Code through internal or external mediation or through a hearing before an independent panel, which results in a resolution and/or corrective action being recommended.

The Criminal Code

Canada’s Criminal Code prohibits the conduct of contests where winners are determined solely by chance. To avoid this, contests other than those of skill (see 7.2 Contests of Skill) typically include a mathematical skill-testing question.

Contests based on skill alone or mixed chance and skill are allowed, provided they comply with certain requirements, including that participants are not required to pay money or give other valuable consideration to participate in a contest of mixed chance and skill. As a result, Canadian contest rules typically provide for an alternative and equally acceptable means of entry that does not require a “purchase” or any other type of consideration.

The Competition Act

The Competition Act contains specific provisions applicable to contests, including adequate and fair disclosure of, among other things, the number, regional allocation and approximate retail value of prizes, as well as any fact that materially affects the chances of winning. The Competition Act also requires that the ultimate distribution of prizes not be unduly delayed.

Provincial Requirements

The province of Quebec imposes extensive requirements for contests open to Quebec residents (see 7.3 Regulatory Bodies).

While contests in which winners are determined solely by chance are prohibited under the Criminal Code, those based solely on skill are generally permitted, although what constitutes pure skill or mixed skill and chance has been subject to some debate. Although Canadian courts have held that an element of chance in a game does not necessarily make it a game of mixed chance and skill, to be considered a game of pure skill participants must be able to exercise sufficient skill to compensate for any element of chance. 

With the exception of Quebec, Canada does not have any contest registration or approval requirements. Quebec’s Act respecting lotteries, publicity contests and amusement machines and the Rules respecting Publicity Contests impose an advance registration requirement, and additionally require the inclusion of certain statutory language in contest rules, payment of prize duties and a security bond in certain cases, reporting and record-keeping.

There are no federal laws that apply directly to loyalty programmes. To date, Ontario and Quebec are the only Canadian provinces that specifically address loyalty programmes as part of consumer protection legislation.

In both provinces, legislation generally prohibits the expiry of loyalty points based on the passage of time alone. Additional key requirements in Quebec include:

  • merchant disclosure obligations prior to entering into a loyalty programme agreement;
  • notice obligations where a loyalty programme agreement will be unilaterally amended; and
  • restrictions on increasing the number of points to obtain a good or service.

Reduced-Price Offers

The Competition Act prohibits advertisers from misleading the public about the prices at which products are ordinarily sold and requires that any reduced-price offer meet one of the tests set out below.

Volume test

A substantial volume of sales must occur at or above the reference price within a reasonable period of time before or after making the representation. The “substantial volume” requirement is met if more than 50% of sales are at or above the reference price. The “reasonable period of time” is the 12 months immediately before or after the representation, although it may be shorter depending on the nature of the product.

Time test

The product must be offered for sale in good faith at or above the reference price for a substantial period of time before or after making the representation. The “substantial period of time” is six months immediately before or after the making of the representation, although it may be shorter depending on the nature of the product.

Clearance Sales

Clearance sales are not subject to either the volume or time test. However, a supplier promoting a clearance sale is subject to specific requirements, including demonstrating that:

  • the sale was clearly marked as a clearance sale;
  • markdowns are permanent and inventory is not replenished;
  • the price representations refer to the original price and any subsequent interim prices; and
  • the original price was offered in good faith.

Free and Bonus Claims

Free or bonus offers cannot include any attempt to recover the cost of the free item. In a recent settlement with a social media platform, the Competition Bureau signalled its position that the prohibition in the Competition Act against making false or misleading claims about a product or service to promote a business interest applies to “free” digital products the same way it applies to regular products or services purchased by consumers. This is a growing area of enforcement. For further information, see 1.7 Regulatory Trends.

Automatic Renewal

Provincial and territorial consumer protection statutes generally allow automatic renewal of consumer contracts, provided prescribed conditions are met. A number of provinces, however, are considering changes to their regulatory regimes to address automatic renewals. Amendments proposed to the Ontario Consumer Protection Act, if enacted, will only permit automatic agreement renewals if:

  • the consumer is able to cancel at no additional cost; and
  • the renewal is made with express consent or by a renewal process that provides advance notice and renews the agreement into an indefinite term.

Continuing Services Contracts

British Columbia’s Consumer Protection Act specifically limits the duration of continuing services contracts and gives consumers the right to cancel the contract either ten days after receiving a copy of the contract or at any time due to a material change, and imposes requirements on the supplier once a contract has been cancelled. These requirements include refunding the customer within 15 days and returning all negotiable instruments executed by the consumer within 30 days.

Other provinces provide rules for the renewal of consumer service contracts, but do not specifically address continuous contracts. These typically require that the supplier provide the customer with a notice of renewal within a certain period of time prior to the expiry of the existing contract. Customers and suppliers have the option of refusing the renewal by providing notice to the other party. In certain provinces, these rules only apply to particular contracts, such as personal development or travel club contracts, and often exclude indeterminate contracts.

Unsolicited Goods or Services

Several provinces specifically regulate unsolicited goods and services by allowing recipients to refuse them and prohibiting suppliers from demanding payment. Where the suppliers receive payment for unsolicited goods or services, consumers are typically permitted to demand a refund within a stipulated time period.

Subject to limited exceptions, the federal Criminal Code prohibits all types of gambling and betting. Prohibited activities include provision of in-person or online casinos, bingo, ticket lotteries, betting, poker and other card games, and electronic games.

The main exception to this prohibition applies to provincial and territorial governments, which are permitted to supply gambling facilities or services and regulate any legal gambling activities taking place within the province. Other exceptions may apply in limited circumstances to charitable and religious organisations, boards of fairs or exhibitions and their concession operators, and public places of amusement.

Sports Betting

Although certain forms of sports betting, such as parlay betting, have historically been legal in Canada, until recently, betting on the outcome of a single sporting event was prohibited by the Criminal Code. The Safe and Regulated Sports Betting Act, which decriminalises single-event sports betting and allows provincial governments to regulate single-event sports betting within a province, came into effect in August 2021.

Since then, British Columbia has made single-event sports betting available through its online platform, although it has yet to announce plans for betting at land-based facilities. Ontario has released a roadmap outlining how it plans to allow registered operators to offer single-event sports betting by December 2021. Alberta has announced that it will undergo stakeholder consultation in the coming months to offer single-event sports betting for land-based operators and intends to offer such betting online through Play Alberta, Alberta’s regulated online gambling website, by the end of 2021. Other provinces are expected to make announcements regarding single-event sports betting.   

Legal gambling operations (ie, those that are authorised by a provincial government) including licensed lotteries, can be advertised so long as they comply with provincial requirements and promote responsible gambling. For example, the Ontario standards require that advertising and marketing of gambling not target underage or self-excluded individuals and not be misleading as to the gambling services offered. Other provinces, such as British Columbia, require that operators provide the factual odds of winning in a clearly stated and accessible way.

Although there are no rules or regulations directly applicable to the advertising and marketing of cryptocurrency and/or NFTs, provincial securities regulators have indicated an intention to regulate in this space. The Ontario Securities Commission, for example, has brought a number of proceedings requiring crypto-asset trading platforms to comply with provincial securities laws and the regulatory framework proposed by the Canadian Securities Administrators (CSA).

Recently, the CSA and the Investment Industry Regulatory Organization of Canada (IIROC) published guidance on the application of securities legislation and IIROC rules to the advertising, marketing and social media activities of crypto-trading platforms (CTPs). The guidance highlights prohibitions on false or misleading statements in advertising materials, which for registered or prospective CTPs may apply to the following.

  • False suggestions that a CTP is registered under securities legislation.
  • Suggestions that a securities regulatory authority or regulator has approved:
    1. the CTP;
    2. products offered on the CTP; or
    3. any disclosures made by the CTP.
  • Statements that are untrue about a matter that a reasonable investor would consider relevant or important in deciding whether to enter into a trading or advising relationship with the CTP.

The guidance also sets out obligations that registered CTPs have to their clients, including:

  • treating clients fairly, honestly and in good faith, particularly with respect to advertising or marketing strategies that may encourage excessively risky trading;
  • knowing the client, product, and suitability assessments; and
  • identifying and responding to any conflicts of interest.

The CSA and IIROC have also cautioned CTPs that using social media to promote their products does not absolve them of certain applicable requirements and provided guidance on policies and procedures that CTPs must adopt for the governance of social media marketing, including:

  • reviewing, supervising, retaining and retrieving all advertising and marketing materials on social media sites;
  • designating a responsible individual for the supervision or approval of marketing communications; and
  • implementing a system to monitor compliance with such policies and procedures.
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Law and Practice in Canada

Authors



Baker McKenzie has an advertising and marketing practice in Canada that provides full-service Canadian advertising and marketing support to leading domestic and international companies, focused on food, cosmetic, drug, device and consumer product safety and packaging and labelling compliance; misleading advertising and deceptive marketing practices compliance; marketing-related privacy, anti-spam and direct marketing regulation; consumer protection, e-commerce and online sales regulation; complex contests, sweepstakes and promotions; social media and digital marketing risk management; advertising clearance, standards and consumer/trade complaints; interface and advocacy with advertising regulators; and marketing-related commercial agreements. The practice has a long record of accomplishment in serving leading clients in the Canadian market, including high-profile domestic and international companies in the food and beverage, fashion and luxury, cosmetics and personal care, pharmaceutical and health products, consumer electronics and retail sectors. The authors would like to thank Baker McKenzie associates Andrew Chien and Shira Sasson, and articling students Daniel Gao and Juliette Mestre, who also contributed to this publication.