Advertising Law

Advertising in Canada is primarily regulated at the federal and provincial levels. This includes laws of “general application” that can apply to any advertising claim that is false or misleading (e.g., the general misleading advertising provisions of the federal Competition Act and provincial and territorial consumer protection legislation) and legislation governing particular types of advertising, such as anti-spam law (CASL), promotional contests, endorsements and testimonials (i.e., influencer marketing), “ordinary selling price” (OSP) claims and sales, consumer packaging and labelling and performance claims, among others.

In addition to federal and provincial legislation, many sector-specific and profession-specific codes of conduct can also apply to advertising and marketing in Canada (e.g., in the context of regulated professions, such as law, real estate services, dentistry, chiropractic, etc.), as well as social media platforms’ terms of use, depending on the type of marketing and medium. Specific types of products are also subject to specific advertising/marketing rules (e.g., alcohol, cannabis, cosmetics, drugs, food and medical devices).

Given the potential civil or criminal penalties and negative impact on a brand, advertisers and their agencies and counsel should ensure that marketing complies with Canadian laws, particularly in relation to potentially high risk areas including price and performance claims and electronic marketing (i.e., potential anti-spam law risk under CASL).

Some of the key areas of Canadian advertising law are summarized below and in the overview pages here on our blog.

COMPETITION ACT

Federally, the Competition Act is the primary legislation governing advertising and marketing in Canada. The Competition Act is enforced by the federal Competition Bureau, which is a federal enforcement agency based in Ottawa and headed by the Commissioner of Competition. The Competition Act contains both general criminal and civil misleading advertising provisions, which prohibit false or misleading representations made to the public to promote a product or any “business interest”.

In addition to the “general” misleading advertising provisions, the Competition Act also contains a number of other criminal and civil provisions that either prohibit (i.e., criminal offences) or civilly regulate specific types of advertising/marketing practices.

These include bait and switch selling (section 74.02(2)), deceptive prize notices (section 53), deceptive telemarketing (section 52.1), double ticketing (section 54), drip pricing (sections 52(1.3) and 74.01(1.1)), specific types of electronic advertising (section 74.011), multi-level marketing and pyramid selling schemes (sections 55 and 55.1), ordinary selling price (OSP) and sales claims (section 74.01(2)-(3)), performance claims (section 74.01(1)(b)), promotional contests (i.e., sweepstakes) (section 74.06), selling products above advertised prices (section 74.05) and testimonials and endorsements (i.e., influencer marketing) (sections 52, 74.01 and 74.02).

Some of the Competition Bureau’s key advertising and marketing related enforcement priorities include false and misleading price claims, drip-pricing, misleading influencer marketing, performance claims and “ordinary selling price” (OSP) claims.

In general, it is important before conducting a particular type of marketing to review whether any provisions of the Competition Act may apply – for example, to ensure that endorsements/testimonials are not false or misleading and that adequate disclosures are made for promotional contests, that performance claims meet the statutory test of adequate and proper testing, that OSP claims meet the legislative test or that the statutory information required to be disclosed when telemarketing is included.

The potential penalties for violating the civil misleading advertising provisions of the Competition Act include Competition Tribunal or court orders to cease the conduct, publish a corrective notice, pay restitution to consumers and/or pay administrative monetary penalties (AMPs): (i) for individuals up to the greater of $750,000 ($1 million for each subsequent order) and three times the value of the benefit derived from the deceptive conduct if that amount can be reasonably determined; and (ii) for corporations up to the greater of $10 million ($15 million for each subsequent order), three times the value of the benefit obtained from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of the company’s annual worldwide gross revenues.

The potential penalties for violating the criminal misleading advertising sections of the Competition Act include imprisonment, criminal fines and prohibition orders to stop the conduct.

Other laws that can apply to advertising in Canada include federal anti-spam law (CASL), privacy law, intellectual property law and provincial and territorial consumer protection statutes. Some of these laws are discussed in more detail below.

For more information about Canadian competition law, see Canadian Competition Law.

CONSUMER PROTECTION LEGISLATION

In addition to the federal Competition Act, provincial consumer protection legislation exists across Canada in the provinces and territories (e.g. the Ontario Consumer Protection Act and British Columbia Business Practices and Consumer Protection Act).

Canadian provincial consumer protection rules differ depending on the particular province, but typically include both general misleading advertising rules (i.e., that prohibit false, misleading or deceptive representations about products or services) and rules governing specific industry sectors, such as direct selling, gift cards, auto repairs, fitness clubs and payday loans.

ANTI-SPAM LAW (CASL)

Canada’s federal anti-spam legislation (CASL) is often relevant to electronic marketing in Canada, including when running contests and other types of promotions. This can include when electronic distribution lists are used for marketing or a promotion/contest, a contest/promotion will include the collection of e-mails for marketing unrelated to administration of the promotion, if customers or participants in a promotion’s e-mails will be shared with third parties (e.g., affiliate marketers) or participants in a contest or other type of promotion are asked or incentivized to “share” the promotion with friends or family (e.g., for bonus entries).

Given the potentially severe penalties for violating CASL, which include administrative monetary penalties of up to $10 million, it is important to ensure that CASL is complied with for electronic marketing to Canadians.

For more information about CASL, see: anti-spam legislation (CASL). For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors. For CASL checklists and precedents that we offer for sale to comply with CASL, see: CASL Checklists and Precedents.

CONTESTS

Promotional contests (i.e., sweepstakes) in Canada are largely governed by the federal Competition Act (mandatory disclosures for advertising), Criminal Code (illegal lottery offences under section 206 that must be avoided) and contract law (the terms and conditions between the contest sponsor and entrants).

Other laws that frequently also apply to the operation of contests in Canada include CASL (Canadian anti-spam legislation) (e.g., if e-mail lists will be used for electronic marketing or distribution lists will be built from entrant information), intellectual property law (e.g., if entrants submit original works to enter or a sponsor uses third party IP) and privacy law (e.g., relating to the collection and use of entrants’ personal information).

On October 27, 2023, the province of Quebec made significant changes to its rules relating to publicity contests open to Quebec residents. In this regard, it repealed the provisions of the Act respecting lotteries, publicity contests, and amusement machines relating to publicity contests and repealed its former rules regarding publicity contests. As such, sponsors of contests open to Quebec residents no longer must formally file their contests with the Régie des alcools, des courses et des jeux (Régie) or pay duty (essentially a fee) to the Régie based on the value of contest prizes, file a winners report at the end of a contest or post security in Quebec, where which was formerly required in some cases. Other requirements applying to publicity contests run in Quebec were also eliminated, including the necessity to include specific Quebec-related disclosure language in contest rules and seek permission for contest modifications after launch.

Given that running a promotional contest without following Canadian laws can result in civil or criminal liability or what is often worse for brands – adverse publicity or negative goodwill – it is important to review proposed contest rules and marketing materials for Canadian legal compliance prior to launching a contest.

The main components of a Canadian contest are generally to include both short and long contest rules (setting out the statutory disclosures and rules of the contest), a winner release form  (particularly important in higher risk promotions, such as trip contests), review of draft creative materials before launch to ensure they are not false or misleading and, if the sponsor wants to use entrant information for e-mail or other electronic marketing, complying with the consent and other requirements of CASL (Canadian anti-spam law).

In some cases, sponsors also enter into co-sponsor agreements (e.g., where there are multiple sponsors or prize sponsors) or indemnification agreements with third parties involved in the contest (e.g., where a sponsor only contributes prizes and/or its brand related assets such as its name/marks and another party, such an influencer or contest administrator, is largely responsible for most of the marketing and operation of the contest). Such agreements can be useful to shift risk where a sponsor wants to limit potential liability, particularly with unsophisticated co-sponsors or marketing partners. For more information, see: Influencer/Co-Sponsor Agreements.

For more information about Canadian contest laws, see: Contests, Contests & CASL, Contest/Sweepstakes FAQs, Contest Forms, Contests & Social Media and Contest Tips.

INDUSTRY CODES

In addition to federal and provincial advertising laws, some sectors, particularly regulated professions such as real estate services, law, dentistry and chiropractors, have industry codes of conduct that include advertising and marketing rules.

While such rules are generally not legislation (unless a regulator has regulatory powers relating to advertising), it can be very important to review industry rules before launching an advertising campaign – especially where there may be professional discipline for violating an industry code or other rules.

Canada also has a national not-for-profit advertising self-regulatory body, Advertising Standards Canada (Ad Standards), which has published the Canadian Code of Advertising Standards (the Code). The Code includes rules relating to many types of advertising and marketing practices, including price claims, bait and switch advertising, comparative advertising and testimonials. While the Code is only binding on Ad Standards’ members, it can provide helpful guidance for specific types of advertising and marketing practices and is, in many instances, consistent with the federal Competition Act and Competition Bureau guidance.

SOCIAL MEDIA RULES

Most advertising and marketing campaigns now include some (and commonly many) social media sites, which may include Meta, Twitter, Instagram, TikTok or other social media sites. Social media platforms, however, commonly include detailed terms of use, including rules governing their use for advertising and marketing and some specific types of promotions (e.g., contests). As such, it is prudent for advertisers to review the terms of use for the social media platforms to be used for a promotion before launch.

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SERVICES AND CONTACT

We are a Toronto competition and advertising law firm that helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.

Our Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.

For more information about our services see: services

To contact us about a potential legal matter see: contact

For more information about our firm, visit our website: Competitionlawyer.ca