Tell the Whole Story – New Rules for Influencer Marketing under the Competition Act

Authors: Jared Dunlop, Robel Sahlu

On December 19, 2019, the Competition Bureau – the government entity charged with ensuring businesses comply with the Competition Act – sent more than 100 letters to businesses to remind them of the rules relating to the use of social media influencers. In light of the Competition Bureau’s new emphasis on influencer marketing, businesses must ensure their marketing plans comply with the Competition Act.

Now, more than ever, businesses and advertisers are contracting with social media influencers – individuals with significant online notoriety or an influential presence on a social media platform – to promote their products and brands. With the rise of social media, influencer marketing has quickly become one of the most effective ways to market, advertise, or brand certain products and services online. Both small and large businesses are using influencer marketing to generate their own applause under the guise of organic and uncompensated experiences. However, paying an influencer for a review or opinion that contains product claims which have not been based on adequate and proper testing are potential violations of the Competition Act.

For these reasons, the Competition Bureau has become increasingly concerned with combatting misleading representations made to the public through influencer marketing. Businesses must be reminded that deceptive marketing and misleading representations are both civil and criminal violations of the Competition Act, which can lead to serious monetary penalties and/or imprisonment. The Competition Bureau has created two checklists to assist influencers and advertisers navigate the risks of influencer marketing. First, the “Influencers’ Checklist” contains five key concepts, which can be summarized as follows:

  1. Ensure that disclosures are as visible as possible (e.g. do not bury the disclosure in a flurry of hashtags);
  2. Disclose material connections in each social media post, including whether the influencer received any benefit in exchange;
  3. Use clear and contextually appropriate words and images;
  4. Ensure disclosures are inseparable from the content so they are not separated when shared online;
  5. Base all reviews and opinions on actual experience; and
  6. Avoid ambiguous references and abbreviations.

Second, the “Advertisers’ Checklist” assists businesses when dealing with social media influencers specifically. The key concepts are as follows:

  1. Ensure that influencers clearly disclose material connections;
  2. Disclose material connections in each social media post (e.g. if the business has provided a benefit to the influencer in exchange for his or her review or opinion);
  3. Ensure that the representations are not false or misleading; and
  4. Verify that influencers are not making performance claims on behalf of the business unless it is based on adequate and proper testing.

Given the risk of criminal and civil liability under the Competition Act, businesses must approach influencer marketing cautiously. Businesses should consult their legal advisers to ensure that their marketing arrangements comply with the Competition Act.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.