Advertising, Marketing & Promotion Comparative Guide

1 Legal framework

1.1 What are the main legislative and regulatory provisions that govern advertising in your jurisdiction?

The main legislative and regulatory provisions that govern advertising in Canada are:

• the Competition Act;
• various provincial/territorial consumer protection statutes;
• Canada's Anti-Spam Legislation (CASL);
• the Unsolicited Telecommunications Rules (UTRs); and
• private sector privacy laws, including:
• • the Personal Information Protection and Electronic Documents Act (PIPEDA); and
  • substantially similar provincial legislation.

Certain regulated products/services are subject to industry-specific advertising regulation, such as:

• food;
• alcohol;
• personal care products;
• cannabis;
• tobacco; and
• travel agencies.

The Competition Act prohibits false or misleading advertising and deceptive marketing practices through both civil provisions and criminal provisions. The Competition Act includes additional prohibitions that regulate specific types of advertising issues, including:

• pricing claims;
• performance claims;
• promotional contests;
• testimonials;
• bait-and-switch selling;
• telemarketing; and
• sale above an advertised price.

Under the Competition Act, all statements, warranties and guarantees must be supported by ‘adequate and proper' testing, which puts the onus on the advertiser to substantiate claims made to the public.

Provincial/territorial consumer protection legislation governs advertising and sales to consumers. Most jurisdictions prohibit specific unfair practices by merchants and regulate certain consumer agreements. Many consumer protection statutes give consumers the right to rescind non-compliant agreements and to seek damages, including on a class basis.

Private sector privacy laws govern the collection, use and disclosure of personal information, including interest-based advertising tactics. CASL governs the sending of commercial electronic messages, including:

• emails;
• texts and SMS messages; and
• certain social media interactions.

The UTRs regulate telemarketing, as do certain provincial telemarketing statutes.

1.2 Which bilateral or multilateral instruments or treaties with effect in your jurisdiction (if any) have particular relevance for advertising in your jurisdiction?

The Competition Bureau (the "Bureau") is the federal law enforcement agency responsible for enforcing the Competition Act. It has entered into 16 cooperation instruments with international partners, including:

• the US Federal Trade Commission;
• the UK Competition and Markets Authority;
• the Australian Competition and Consumer Commission;
• the New Zealand Commerce Commission;
• the Competition Commission of Singapore; and
• the Korea Fair Trade Commission.

These agreements generally affirm that the signatory countries:

• will meet on a regular basis and exchange information on their enforcement efforts and priorities; and
• may coordinate their enforcement activities.

1.3 What industry codes or guidelines have relevance for advertising in your jurisdiction?

Ad Standards is Canada's national advertising self-regulatory body and it administers the Code of Advertising Standards. The code sets out the criteria for acceptable advertising in all media to ensure that advertising in Canada is truthful, fair and accurate. It applies to all forms of messages to Canadians designed to influence choice, opinion or behaviour, except for:

• product packaging;
• wrappers;
• labels;
• political/election advertising; and
• foreign media.

Failure to comply with the Code of Advertising Standards can result in:

• complaints to Ad Standards from:
• • consumers;
  • special interest groups; or
  • competitors; and
• an adjudicative ruling to amend or withdraw the ad.

If the advertiser does not comply, Ad Standards may:

• publish details of the non-compliance;
• advise the exhibiting media; and
• forward the matter to the Bureau.

The Canadian Marketing Association (CMA) is the industry association that governs how marketing professionals communicate their message. Many leading companies operating in Canada are members of the CMA, which requires compliance with the CMA Code of Ethics and Standards of Practice. Non-compliance with the CMA code can result in:

• expulsion from the CMA; and
• a public announcement of such expulsion.

1.4 Which bodies are responsible for implementing and enforcing the advertising regime in your jurisdiction? What is their general approach in doing so?

The Competition Bureau is the federal independent law enforcement agency that has jurisdiction over advertising in all sectors in Canada. The enforcement of advertising regulated products is often led by sector-specific regulators. These sector-specific government organisations and agencies regulate special product categories at the federal or provincial level, including in the following industries:

• food;
• alcohol;
• personal care;
• cannabis;
• tobacco;
• travel agency;
• automotive;
• electrical; and
• telecommunications.

The Competition Bureau enforces:

• the Competition Act;
• the Consumer Packaging and Labelling Act;
• the Textile Labelling Act; and
• the Precious Metals Marking Act.

When enforcing the advertising regime in Canada, the Bureau can elect whether to pursue either criminal or civil enforcement, but typically elects the criminal track only for egregious cases.

The Competition Bureau will use various tools and methods to promote voluntary compliance, including:

• sending information letters and warning letters;
• scheduling information meetings;
• conducting on-site inspections;
• arranging compliance meetings; and
• helping businesses to implement corporate compliance programmes.

Additionally, businesses can contact the Competition Bureau to request a binding written opinion on whether a proposed practice is likely to raise an issue under the Competition Act. Generally, civil violations will be settled through negotiated settlements in the form of consent agreements registered with the Competition Tribunal.

Other key regulatory bodies for implementing and enforcing the Canadian advertising regime include:

• the federal Office of the Privacy Commissioner (OPC) (and provincial privacy commissioners); and
• the Canadian Radio-television and Telecommunications Commission (CRTC).

The OPC enforces PIPEDA, while the CRTC enforces CASL and the UTRs.

2 Authorisation and clearance

2.1 Do advertisers need any kind of licence or authorisation in order to operate in your jurisdiction?

Generally, advertisers do not need a licence or authorisation to operate in Canada. Certain types of advertising and consumer business practices are subject to licensing, such as unsolicited telemarketing, which is both federally and provincially regulated and may require licensing. Some industries require pre or post-market product/company licensing or notification, including:

• cannabis;
• drugs;
• alcohol;
• gaming;
• food;
• radio spectrum; and
• electronics.

2.2 Do ads require any kind of clearance before they can be released in your jurisdiction?

Most advertising does not require pre-clearance. Advertising that is broadcast on radio or television must be cleared by the applicable broadcaster or the Telecaster Services of thinktv.

Advertising in certain regulated categories must also be pre-cleared before being accepted by broadcasters. Approved pre-clearance service providers, such as Ad Standards, provide fee-based pre-clearance services for:

• the broadcast advertising of:
• • alcohol;
  • cosmetics;
  • food and non-alcoholic beverages; and
  • consumer drugs; and
• children's advertising.

Other organisations offer sector-specific advertising pre-clearance – for example, the Pharmaceutical Advertising Advisory Board pre-clears advertising directed to healthcare professionals for certain drug and health products regulated by Health Canada.

3 General advertising regime

3.1 What general rules and requirements apply to ads in your jurisdiction?

At a high level, the general rules and requirements that apply to advertising in Canada are derived from the deceptive marketing practices provisions of the Competition Act.

Paragraph 74.01(1)(a) of the Competition Act is the civil provision which prohibits making a materially false or misleading representation to the public when promoting the supply or use of a product or business interest. When determining whether a representation is false or misleading, the regulator or a court will consider the general impression conveyed by the representation, in addition to its literal meaning. There is a parallel criminal provision under Section 52(1) of the Competition Act, which makes it an offence to knowingly or recklessly make a materially false or misleading representation.

Paragraph 74.01(1)(b) of the Competition Act requires that claims about a product's performance be supported by adequate and proper testing, which must be conducted before the claim is made.

3.2 What rules and requirements apply to puffery in your jurisdiction?

Canada currently has no legislative provisions that specifically address puffery. Overall, any representations that could influence a consumer to buy or use a product or service must not be false or misleading. When evaluating contested advertising, the regulator or a court will consider the general impression and the literal meaning it conveys. The ‘general impression' of the advertising is determined from the perspective of a hurried, credulous and inexperienced consumer with no technical expertise. Many claims that may be categorised as puffery in other jurisdictions may require substantiation in Canada.

3.3 Under what circumstances must claims in ads be substantiated?

Any claims about a product's performance, effectiveness or length of life must be proven based on adequate and proper testing. The testing that is used to substantiate these performance claims must:

• take place before the claims are made;
• be performed under controlled circumstances that:
• • eliminate external variables;
  • eliminate subjectivity as much as possible; and
  • reflect the real-world usage of the product; and
• support the general impression created by the marketing claims.

The standard for such substantiation will depend on:

• the nature of the claim;
• the general impression conveyed; and
• the literal meaning of the claim.

Case law has upheld that the substantiation must be secured prior to making a claim, even if subsequent testing proves the claim was true.

3.4 What rules and requirements apply to the use of the following? (a) Test results; (b) Survey results and (c) Testimonials.

(a) Test results

Test results:

• must not be materially false or misleading; and
• must be supported by ‘adequate and proper' substantiation.

To use test results in advertising:

• the test results must have been previously published; or
• the advertiser must have obtained written consent to publish the test results.

The representation of the test results must align with the results that were previously published.

The following factors should be considered when determining whether a test is sufficiently adequate and proper:

• The content of the testing should reflect how a common person would understand the claim;
• The test must reflect the risk or harm that the product is designed to prevent or assist in preventing;
• The test must be conducted under controlled circumstances or in conditions that exclude external variables or take account of such variables in a measurable way;
• The test should be conducted on more than one independent sample wherever possible;
• The test need not be certain but must be reasonable given the nature of the harm at issue;
• The test must establish that the results are materially caused by the product itself; and
• The test must be performed regardless of the size of the seller's organisation or the anticipated volume of sales.

(b) Survey results

Survey results must meet the ‘adequate and proper testing' criteria laid out above. Ad Standards has also issued its self-regulatory Guidelines for the Use of Research and Survey Data to Support Comparative Advertising Claims, which advise that surveys should be designed to be both valid and reliable. To be reliable, a survey must:

• use:
• • a pertinent population;
  • a representative sample;
  • an appropriate sample size;
  • relevant geographic dispersion; and
  • a 95% level of confidence; and
• be based on current data.

To be valid, a survey must:

• replicate consumer use conditions;
• avoid loaded or leading questions; and
• be designed to allow for a ‘no opinion' answer to be provided.

(c) Testimonials

To use testimonials in advertising:

• the testimonial must have been previously published; or
• the advertiser must obtain written consent to publish the testimonial.

Testimonials must comply with the general prohibition against making false or misleading representations.

Advertisers must ensure that:

• a testimonial is based on the endorser's actual use (in accordance with any use instructions); and
• the testimonial is based on the endorser's ongoing honest opinion.

Testimonial advertising:

• must disclose any material financial or other connection between the advertiser and the endorser; and
• if paid, cannot be disguised as an independent consumer review.

3.5 What rules and requirements apply to the protection of minors?

The Code of Advertising Standards prohibits any advertising to minors that:

• exploits their:
• • credulity;
  • lack of experience; or
  • loyalty; or
• presents information or illustrations that could result in their physical, emotional or moral harm.

Broadcast advertising directed to children must be pre-cleared for compliance with the self-regulatory Broadcast Code for Advertising to Children (‘Children's Code'). As a condition of licensure with the Canadian Radio-television and Telecommunications Commission, Canadian broadcasters have agreed to adhere to the Children's Code.

Certain products may not be advertised in any way to appeal to those under the legal age of purchase/consumption, including alcohol and gaming. Some products cannot be advertised to those below the legal age at all, such as tobacco and cannabis products. There are also self-regulatory prohibitions under the Code of Advertising Standards that are similar to these product-specific legal prohibition.

Ad Standards administers the self-regulatory Code for the Responsible Advertising of Food and Beverage Products to Children, which prohibits advertising foods high in salt, sugar or saturated fats to children under the age of 13. At the time of writing, Health Canada has proposed similar regulatory restrictions on advertising these foods to children, but these updates are not yet finalised or in force.

The province of Quebec prohibits any advertising directed to minors under the age of 13. There are some limited exceptions, such as advertising:

• in a children's magazine;
• at a children's entertainment event; or
• via store windows, displays, containers, packaging and labels.

3.6 Are certain forms of advertising prohibited in your jurisdiction?

Human rights legislation prohibits discrimination in providing goods or services on the basis of protected grounds such as:

• race;
• ancestry;
• place of origin;
• colour;
• ethnic origin;
• citizenship;
• creed;
• sex;
• sexual orientation;
• gender identity;
• gender expression;
• age;
• marital status;
• family status; or
• disability.

The Code of Advertising Standards also prohibits advertising that offends standards of public decency:

• generally; and
• through enumerated restrictions against:
• • discrimination;
  • condoning or inciting violence; or
  • bullying, demeaning, denigrating or disparaging any group of persons.

The code also prohibits:

• the depiction of illegal or dangerous practices; and
• disguised advertising techniques.

4 Misleading advertising

4.1 On what grounds will an ad be found to be misleading in your jurisdiction? How does the process unfold?

The Competition Act prohibits all materially false or misleading representations in promoting the supply or use of a product or any business interest. A representation is ‘material' if it could influence a consumer to buy or use the product or service advertised. In evaluating whether a representation is false or misleading, courts will consider both the general impression and the literal meaning it conveys.

The Competition Bureau has the authority to launch an investigation based on its own market surveillance, which in some cases is informed by consumer/competitor complaints. The Bureau conducts its investigations in private and keeps confidential:

• the identity of the source; and
• the information provided.

The Bureau will use various tools and methods to promote voluntary compliance. While some cases are litigated before the Competition Tribunal or the Superior Court, the Bureau often seeks to resolve these civil matters by entering into a consent agreement with the advertiser. Private parties also have the right to file an action to recover damages suffered due to criminally false or misleading advertising.

4.2 If an ad is found to be misleading, what are the consequences for the advertiser?

The maximum penalty for civilly misleading advertising is the greater of:

• C$10 million (C$15 million on a second order); and
• three times the value of the benefit derived from the deceptive conduct.

If the benefit received cannot be determined, the maximum penalty can increase to 3% of the corporation's annual worldwide gross revenues. Other civil remedies can include:

• publication of corrective notices;
• payment of restitution; and
• orders not to engage in similar reviewable conduct for a term of up to 10 years.

On a summary conviction for criminally false or misleading advertising, the advertiser is liable to:

• a fine of up to C$200,000; and/or
• imprisonment for up to one year.

On indictment, the advertiser is liable to:

• a fine at the discretion of the court; and/or
• imprisonment for up to 14 years.

Directors and officers can be held personally liable, unless they can establish that they exercised due diligence to prevent the commission of the offence.

In a self-regulatory complaint or dispute, Ad Standards will require the advertiser to amend or withdraw misleading advertising if it has been found to contravene the Code of Advertising Standards.

4.3 Can the advertiser appeal the decision? If so, what is the process for doing so?

Yes, any decision or order made concerning deceptive marketing practices can be appealed under the self-regulatory regime or to the relevant appeal court. The process for filing an appeal will depend on the rules of procedure applicable to the adjudicative body to/from which the matter is appealed.

5 Specific advertising regimes

5.1 What rules and requirements apply to the following types of advertising in your jurisdiction, and what best practices should be considered in each case? (a) Comparative advertising; (b) Promotional marketing (eg, competitions, lotteries and sweepstakes); (c) Interest-based advertising (ie, tailored advertising based on data collected from internet browsing); (d) Native advertising; (e) Influencer advertising; (f) Ambush marketing; (g) Country-of-origin marketing; and (h) Green marketing.

(a) Comparative advertising

Comparative advertising is permissible as long as it:

• is not false or misleading;
• does not infringe third-party IP rights; and
• does not unfairly discredit, disparage or attack the competitor or its products or services.

Comparisons made between products:

• must not be false or misleading; and
• must ensure that any points of comparison:
• • are relevant to consumers; and
  • align with the intended purpose of the products being compared.

It may be possible to mention competitors by name, provided that this does not cause confusion between the competitor, the advertiser and their respective products or services. Incorporating a third-party trademark, such as a brand logo, into advertising should be done cautiously to avoid potential trademark infringement under the Trademarks Act.

(b) Promotional marketing (eg, competitions, lotteries and sweepstakes)

Promotional contests: Contests and sweepstakes must be carefully structured to avoid the prohibitions against illegal lotteries. This generally requires:

• a no-purchase method of entry; and
• the administration of a test of skill on selected entrants before confirming them as winners and awarding them their prize.

Promotional contest advertising must also include:

• an abbreviated disclosure of the number and value of the prizes;
• any regional allocation of prizes;
• a skill-testing question;
• details of the chances of winning;
• the contest's closing date; and
• any other facts known to the advertiser that would materially affect the chances of winning.

To comply with local language laws, promotional contest advertising in Quebec must generally be provided in French.

Lotteries: Local gaming registration is typically required where:

• participation requires a purchase; and/or
• prizes are distributed on the basis of pure chance.

Provincial lottery authorities and municipal governments have the authority to grant licences for gaming, including issuing registrations to charitable organisations for fundraising purposes. Ads for permitted lotteries must comply with the specific terms and conditions outlined in the licence, including:

• complying with restrictions on audience age;
• avoiding content that appeals to young persons; and
• requiring the promotion of responsible gaming.

(c) Interest-based advertising (ie, tailored advertising based on data collected from internet browsing)

Private sector privacy legislation applies to interest-based advertising that involves personal information collected from internet browsing. At a high level, these privacy laws require advertisers to:

• obtain valid consent for the collection, use and disclosure of personal information; and
• disclose the purposes for which the personal information is being collected, used or disclosed.

Privacy commissioners and regulators have published guidelines and established best practices for using interest-based advertising. If it is possible to identify the individual, privacy laws will apply – for example, if combining anonymous data could lead to identification of the individual.

The self-regulatory AdChoices program developed by the Digital Advertising Alliance of Canada outlines principles for interest-based advertising, including:

• education;
• notice and transparency;
• consumer control;
• data security;
• sensitive data;
• information relating to minors; and
• accountability.

(d) Native advertising

There are no legislative provisions that specifically regulate native advertising; however, the general prohibitions against misleading advertising apply. These laws can be enforced against sponsored content that is not properly identified as advertising. The self-regulatory Code of Advertising Standards also expressly prohibits disguised advertising techniques that present an ad in a format or style that conceals the fact that it is an ad.

(e) Influencer advertising

There are no legislative provisions that specifically regulate influencer advertising; however, the general prohibitions against misleading advertising apply. These laws can be enforced against sponsored influencer content that is not properly identified as advertising.

The self-regulatory Code of Advertising Standards expressly requires that testimonials and other representations of opinion/preference:

• reflect the endorser's genuine, reasonably current opinion; and
• be based on adequate information or experience about the brand.

In its Interpretation Guideline #5, Ad Standards further advises that the fact and nature of any ‘material connection' between an endorser and the brand must be clearly and prominently disclosed. This applies to:

• influencers;
• brand employees;
• brand owners; and
• others with material connections to the brand.

Ad Standards has provided further guidance on how best to disclose material connections in its Influencer Marketing Volunteering Committee Disclosure Guidelines, which:

• set out best practices; and
• provide examples of how to disclose a material connection.

While the format will depend on the social media platform, disclosures should:

• use widely accepted hashtags; and
• be:
• • clear;
  • independent of social media network or channel-specific settings;
  • upfront and identifiable;
  • made in the language of the endorsement;
  • in close proximity to the endorsement;
  • specific about the remuneration;
  • clearly communicated; and
  • written with unambiguous language.

(f) Ambush marketing

There are no legislative provisions that specifically regulate ambush marketing; however, laws of general application have been used to address ambush marketing. Most notably, Canadian IP law provides remedies where ambush marketing constitutes trademark infringement, passing off or copyright infringement. Trademarks associated with prestige events may be subject to specific trademark legislation protecting associated marks, as is the case with the Olympic and Paralympic Marks Act (Canada).

It is common for event sponsors to draft event ticket terms of use that specifically address ambush marketing – for example, by prohibiting attendees from unauthorised promotional conduct, such as:

• attempting to distribute advertising materials;
• attempting to create an unauthorised brand presence; or
• selling unauthorised items.

It is also common for sponsorship agreements to set out:

• the response required in the event of an ambush (for example, seeking injunctions); and/or
• other steps to protect the sponsoring brand.

(g) Country-of-origin marketing

‘Made in Canada' and ‘Product of Canada' claims are not mandatory for Canadian products, except under limited circumstances. If a business voluntarily chooses to make Canadian origin claims, however, such claims must be substantiated. The Competition Bureau has published enforcement guidelines when making a Canadian origin claim that apply to most consumer products, excluding food.

To support a ‘Made in Canada' claim:

• the last substantial transformation of the good must have occurred in Canada; and
• at least 51% of the total direct manufacturing costs must have been incurred in Canada.

Critically, a ‘Made in Canada' claim must be accompanied by a qualifying statement, such as ‘… with imported parts'.

There is a stricter substantiation threshold that must be met in order to make a ‘Product of Canada' claim. To make this claim:

• the last substantial transformation of the good must have occurred in Canada; and
• at least 98% of the total direct manufacturing costs must have been incurred in Canada.

(h) Green marketing

There are no legislative provisions that specifically regulate green marketing. However, the Competition Bureau has stated that greenwashing and other false or misleading environmental benefit claims continue to be an area of active enforcement.

In its enforcement guidance, the Bureau warns against vague claims such as ‘eco-friendly' or ‘safe for the environment', as these types of claims are open to multiple interpretations, misunderstanding and deception. Instead, the Bureau recommends best practices such as:

• using specific claims about precise environmental benefits;
• relying on adequate and proper tests;
• avoiding exaggerations of environmental benefit; and
• referring only to legitimate third-party endorsements/certifications.

6 Direct marketing

6.1 What rules and requirements apply to the following types of direct marketing in your jurisdiction, and what best practices should be considered in each case? (a) Telemarketing; (b) Email marketing; (c) Direct mailings; and (d) Opt-out marketing.

(a) Telemarketing

The Unsolicited Telecommunication Rules regulate telemarketing for solicitation purposes, which includes unsolicited live phone calls and automated dialling-announcing devices (ADAD) such as robocalls. ADAD calls for solicitation always require express consent.

When initiating a live telemarketing call, a telemarketer must:

• register as a telemarketer with the Canadian Radio-television and Telecommunications Commission;
• follow specific operational rules for telemarketing;
• pay ongoing fees to join the Do Not Call List (DNCL); and
• check against the DNCL and its own internal ‘do not call' list before making calls.

There are cases in which a telemarketer may not need to subscribe to the DNCL or check against it, such as when calling:

• business customers; or
• people with whom they already have a business relationship.

Nonetheless, an advertiser may still need to register as a telemarketer to make unsolicited calls.

Operational telemarketing requirements include

• making certain disclosures during the call;
• adhering to limits on calling times;
• handling unsubscribe requests during the call;
• maintaining an internal ‘do not call' list; and
• keeping records.

Some Canadian provinces also have their own registration requirements for telemarketing businesses. Additionally, most provinces have consumer protection laws that regulate contracting with consumers over the telephone, including requiring that certain disclosures be made in order for these contracts to be enforceable.

(b) Email marketing

Canada's Anti-Spam Legislation (CASL) governs ‘commercial electronic messages' (CEMs) sent to recipients located in Canada, including commercial emails and SMS/text messages. The Common Short Code Guidelines may also apply when sending SMS via short code.

In general, CASL requires senders to obtain the recipient's express consent (in a prescribed format) before sending CEMs, and these messages must include prescribed information. Several exceptions to these general rules exist, depending on:

• the sender-recipient relationship; and
• the context of obtaining the recipient's email address or mobile telephone number.

For example, implied consent may be acceptable if the recipient has an ‘existing business relationship' with the sender. Comprehensive record keeping is essential, as the sender must demonstrate compliance with these requirements in the event of a challenge by the local authorities.

(c) Direct mailings

Direct mail is not specifically regulated in Canada; however, private sector privacy laws will apply to the collection and use of the recipient's personal information for this marketing purpose. Individuals must give their informed consent for their personal information to be collected, used and shared, including in the context of direct mail marketing. Relying on implied consent to send direct mail will usually be a low legal risk when the data:

• is not sensitive;
• aligns with what individuals expect; and
• does not pose a significant risk of harm.

When addressing individuals at business addresses, different privacy laws distinguish between sending mail to the business itself and sending mail to an individual at the business. If the direct mail is addressed to the business, this generally will not be covered by private sector privacy laws. If the direct mail is addressed to an individual at the business, private sector privacy laws may apply and the advertiser may need the person's informed consent for any data use or sharing. Unnamed mail is typically not governed by privacy laws.

The Canadian Marketing Association has developed self-regulatory direct mail marketing guidelines and also provides a Do Not Mail Service that is mandatory for members running consumer direct mail campaigns.

(d) Opt-out marketing

The rules for opt-out marketing vary depending on the medium of communication. For email and SMS/text messages, some exceptions under Canada's Anti-Spam Legislation allow advertising on an opt-out basis – for example, where the recipient has made a recent purchase or is under an existing subscription. Relying on implied consent to send direct mail is typically a low legal risk, provided that the advertising content and use of the recipient's address information for this purpose align with what the recipient would reasonably expect – for example, based on his or her interactions and relationship with the sender.

7 Indirect marketing

7.1 What rules and requirements apply to the following types of marketing in your jurisdiction, and what best practices should be considered in each case? (a) Product placement; (b) Sponsorship; and (c) Loyalty programmes.

(a) Product placement

There is no express regulation of product placement in entertainment programming. The legal and self-regulatory prohibitions against disguised advertising techniques will likely apply to product placement in other types of works and therefore require disclosure of remuneration or any other material connection between the brand and the creator.

(b) Sponsorship

Sponsorship is primarily subject to the contractual agreement between the sponsor and the sponsored property. In general, there are no specific statutory restrictions or requirements regulating sponsorship, except that sponsorship is prohibited in connection with specific regulated product categories, such as tobacco and cannabis.

(c) Loyalty programmes

Loyalty programmes are subject to additional regulatory oversight in the provinces of Ontario and Quebec. The key prohibition in these provinces is the expiry of loyalty programme points on the basis of time alone. There are some exceptions for participant inactivity:

• where rewards are all C$50 or less; and
• in the case of rewards that are limited to a single good/service defined in advance (eg, a coffee shop punch card).

Quebec:

• prohibits unilateral devaluing of points; and
• requires specific information be included in loyalty programme terms, including a description of:
• • how to collect and redeem points; and
  • how the sponsor might make changes to the programme terms in the future.

Ontario also requires a sponsor to reinstate points if it reinstates a loyalty programme that was cancelled in the previous 12 months.

8 Industry-specific regimes

8.1 What regulatory regimes apply to advertising in the following industries in your jurisdiction, and what best practices would you highlight? (a) Gambling (including lotteries); (b) Alcohol; (c) Tobacco; (d) E-cigarettes; (e) Pharmaceuticals (prescription and over-the-counter); (f) Therapeutic products (ie, products which claim to have health benefits but which are not medicines or pharmaceuticals, such as vitamin supplements); (g) Food; and (h) Financial products and services.

(a) Gambling (including lotteries)

The Criminal Code:

• prohibits many forms of gaming, gambling and betting completely; and
• forbids any advertising or promotion of these illegal activities.

Gaming is permitted only if authorised by a provincial registration, which in practice happens only to public-sector gaming corporations and charitable organisations. Registered parties may advertise gaming but are subject to restrictions such as:

• limiting the age of the audience;
• avoiding appeal to young persons; and
• ensuring that the content encourages responsible gaming.

(b) Alcohol

Alcohol advertising is regulated at both the provincial and federal levels in Canada. Although the specific rules differ depending on the province and the advertising/media platform, it is generally prohibited to run advertising that:

• appeals to those under the legal drinking age;
• condones irresponsible or excessive drinking;
• associates alcohol with skill-based activities; or
• suggests that alcohol is necessary for enjoyment, success or social status.

Broadcast alcohol advertising must be pre-cleared – for example, by Ad Standards. In Quebec, alcoholic beverage advertising must be pre-cleared by the provincial liquor, racing and gaming authority.

(c) Tobacco

Almost all forms of tobacco advertising to the public are prohibited. The Tobacco Act generally prohibits advertising tobacco products and ‘tobacco product-related brand elements', with limited exceptions for brand preference advertising:

• in publications mailed to an adult who is identified by name; or
• on signs in a location where those under the age of majority are not permitted by law.

Sponsorships and lifestyle advertising of tobacco products are also strictly prohibited.

(d) E-cigarettes

Most forms of e-cigarette advertising to the public are prohibited, particularly advertising that can be seen or heard by young persons. These restrictions under the Tobacco and Vaping Products Act apply to:

• advertising in public places, such as:
• • recreational facilities;
  • public transit facilities; and
  • broadcast media;
• online advertising; and
• the display of vaping product-related brand elements:
• • on retail storefronts, signs and commercial banners; and
  • in publications that can be seen or heard by young persons.

Many provincial or territorial laws also prohibit these products, their packaging and related branding from being visible to young persons.

(e) Pharmaceuticals (prescription and over-the-counter)

Public advertising of prescription drugs is limited to displaying the name, price and quantity of the drug. The advertising may not state:

• the product's therapeutic benefit; or
• the affected disease state it seeks to remedy.

In some cases, it may be permissible to communicate the disease state through advertising if the campaign remains unbranded.

(f) Therapeutic products (ie, products which claim to have health benefits but which are not medicines or pharmaceuticals, such as vitamin supplements)

Non-drug therapeutic products are likely to be regulated as ‘natural health products' in Canada. These products must be approved by Health Canada prior to being sold in the Canadian market and any advertising claims must be consistent with the terms of the product's market authorisation. Therapeutic services advertising is subject to provincial or territorial regulations, typically governed by codes of conduct established by healthcare professionals' colleges, such as physicians and nurses.

(g) Food

Food advertising is heavily regulated. This includes adhering to specific formats and limitations on allowable claims when:

• making statements about the nutritional content or qualities of food or health claims about food; and
• making comparisons between different foods.

The Code for the Responsible Advertising of Food and Beverage Products to Children prohibits advertising foods with elevated sugar, salt or saturated fats when directed at children under the age of 13; and similar federal legislation is likely to be introduced.

(h) Financial products and services

All advertising related to credit, financing or lease products must adhere to the consumer protection laws at the provincial level. These laws:

• dictate the information that must be disclosed, including:
• • the annual percentage rate;
  • relevant interest rates; and
  • borrowing costs; and
• differ from province to province.

Regulated financial institutions and entities are also subject to similar rules outlined in the Bank Act and similar legislation.

9 Enforcement

9.1 On what grounds can the following parties take action against ads in your jurisdiction? (a) Competitors; (b) Consumer associations; and (c) Members of the public.

(a) Competitors

Ad Standards offers fee-for-service self-regulatory dispute adjudication through its Advertising Dispute Procedure. This confidential process adjudicates concerns that competitor advertising contravenes the Code of Advertising Standards. If the Ad Dispute Panel concludes that the advertising contravenes the code:

• the advertising claim(s) must be amended or withdrawn; and
• Ad Standards will publish a non-identified case summary regarding the matter.

Failure to comply with the Ad Dispute Panel's decision can result in Ad Standards:

• notifying carrying media and the Competition Bureau;
• naming the advertiser in its case summary; and/or
• refusing to adjudicate future Ad Dispute complaints filed by the advertiser.

The timeline of the entire process is set to 37 days and is generally more cost-effective than going to court.

Alternatively, advertisers have the option to challenge a competitor's advertising in court. If IP causes of actions are unavailable, the Competition Act grants a private right of action to advertisers that can prove they suffered damages due to the misleading advertising. It is typically a challenge to quantify damages due to a misleading advertising claim, however, which can be a substantial bar to litigation. The private right of action also requires the plaintiff to prove that the competitor's advertising was ‘knowingly' or ‘recklessly' misleading – the mens rea required to establish the criminal misleading advertising offence. Private advertising litigation is rare in Canada, given:

• these complexities;
• the cost of litigation; and
• the longer timeframe to obtain a final judgment.

Advertisers may also submit formal complaints to the Competition Bureau or relevant sector-specific regulators, alleging violations of the Competition Act and/or other applicable laws. Complainants:

• are generally not advised if the complaint leads to an investigation;
• are not parties to such an investigation; and
• are unlikely to be updated on the status of such a complaint.

(b) Consumer associations

Consumer associations have similar avenues of challenge to competitors. These ‘special interest groups' are eligible to use the same Advertising Dispute Procedure that Ad Standards offers to advertisers. Consumer associations can similarly file a private right in court but will likely have additional difficulty proving that they suffered damages because of the deceptive advertising.

Consumer associations may also submit complaints to the Competition Bureau and other sector-specific regulators for further investigation.

(c) Members of the public

Members of the public have access to a free complaint process offered by Ad Standards to address concerns that advertising contravenes the Code of Advertising Standards. Each complaint is forwarded to the advertiser, which has an opportunity to respond before the matter is adjudicated by the Ad Standards Council. If the Council determines that the ad contravenes the code, it will:

• request the advertiser to amend or withdraw the ad; and
• name the advertiser in a summary of the case.

In addition to the private right of action under the Competition Act, consumers have additional remedies available under local consumer protection legislation. These statutes generally prohibit suppliers from engaging in deceptive marketing practices and give consumers the right to rescind agreements that do not comply with local law. Consumer protection laws generally protect the right for consumers to file these actions on a class basis.

Members of the public may also submit complaints to the Competition Bureau and other sector-specific regulators for further investigation, as described above.

9.2 What mechanisms are available to them to do so, and what are the pros and cons of each?

Advertising can be challenged before Ad Standards or before the courts. Challenging an advertisement before Ad Standards will generally lead to a relatively quick resolution and is more cost-effective than going to court; however, the only remedy available is for the advertiser either to modify or withdraw the challenged ad. There is little recourse to force a challenged advertiser to comply with the results of the adjudication.

Challenging an ad before the courts may allow the challenger to obtain a wider range of remedies, including an injunction or damage. While more enforceable, litigation is typically longer and more expensive than self-regulatory adjudication.

9.3 How does the procedure typically unfold and how long does it take?

A consumer complaint to Ad Standards is typically resolved within a few months and the Ad Dispute Procedure timeline is 37 days. Securing a court date to hear an injunction might take several months; and the process of litigating an action related to misleading or false advertising, or similar legal matters, can extend over several years.

9.4 What costs are incurred?

At Ad Standards, the fees for filing a dispute and having an initial resolution meeting currently range from C$1,500 to C$2,000; and there is an additional charge of C$7,000 to C$8,500 to move forward to full adjudication. Optionally, the parties can agree to a voluntary mediation for an additional C$2,000 to C$3,000. These fees are not recoverable. Members of Ad Standards pay the lower end of these fees. Parties are typically represented by legal counsel whose fees are additional to the filing fees.

If a dispute goes to court, the costs can vary significantly but may total C$250,000 or more, depending on the desired remedy and the case complexity. In some cases, the prevailing party may be awarded costs for legal fees, but it is unlikely to recover the full amount of these costs.

9.5 What defences are typically raised by the advertiser?

The defences raised by the advertiser will vary depending on the specific allegations of non-compliance. Typical defences include introducing evidence that substantiates any implied or express claims made in the advertising – for example, claims concerning the product's performance or efficacy. While less common, consumer perception testing can be helpful in establishing the general impression created by the advertising.

9.6 What remedies are available?

For Ad Standards, the only remedy available is for the advertiser either to modify or withdraw the challenged ad. If a challenger brings a challenge before the courts, it may be able to obtain an injunction and/or damages as a remedy. Securing an injunction can be quite challenging. To succeed in a case heard on the merits, the challenger will typically need to demonstrate that it suffered damages attributable to the non-compliant advertising.

9.7 Can the decision be appealed? If so, what is the process for doing so?

Decisions issued by Ad Standards' Ad Dispute Panel can be appealed to a second panel. Ad Standards does not have the authority to issue orders. If an advertiser fails to comply with a decision, Ad Standards may:

• publicly share the decision's outcome; and/or
• bring the matter to the attention of the Competition Bureau.

In a court case, there is likely a right to appeal to a higher court, which will be determined by the applicable court's rules of procedure. Misleading advertising cases are typically brought before the specialised Competition Tribunal, the Federal Court or a provincial superior court.

10 Trends and predictions

10.1 How would you describe the current advertising landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Environmental, social and corporate governance advertising claims continue to be a key risk for regulatory enforcement and class action; as do drip pricing and other ‘dark pattern' advertising tactics. Recent amendments to federal misleading advertising laws have increased potential fines to the greater of C$10 million or three times the value of the benefit obtained from the deceptive conduct. Where the benefit obtained cannot be ‘reasonably determined', the maximum penalty could instead be up to 3% of annual worldwide gross revenues.

Notable incoming legislative reforms include:

• restricting the advertising of ‘unhealthy' food to children;
• strengthening consumers' rights and remedies for deceptive business practices; and
• overhauling private sector privacy laws, which increasingly limit the permissibility interest-based advertising techniques.

11 Tips and traps

11.1 What are your top tips for companies that advertise their products and services in your jurisdiction and what potential sticking points would you highlight?

Canada's markets and laws are very similar to other common law countries such as the United States and United Kingdom, making it a popular jurisdiction when a brand is expanding its global presence. While overwhelmingly similar, Canadian laws are comparatively strict when governing certain advertising practices, which can catch global companies by surprise.

Key areas to watch out for include:

• sale pricing claims;
• ensuring that the form of consumer contracts is enforceable (especially e-commerce and ongoing memberships/subscriptions);
• data privacy requirements; and
• marketing via email, SMS and telemarketing.

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.