Water Heater Supplier Scalded With $7 Million Advertising Law Settlement, Tough Compliance Terms (and Monitor)

Misleading advertising is squarely part of Canadian competition law. Violation of the Competition Act’s civil or criminal misleading advertising provisions can also lead to significant liability for companies or individuals. As a recent reminder of this, the Competition Bureau has announced that water heater supplier National Home Services (National) has agreed to pay a $7 million penalty for alleged false or misleading claims made by its sales agents. The case has been settled under a consent agreement, which is available on the Competition Tribunal’s website. According to the Bureau, National’s sales agents made false or misleading claims relating to their identities, the purpose of their visits and claims that consumers’ water heaters were unsafe or eligible for no-cost upgrades. Based on the consent agreement, the Bureau’s concerns appear to include alleged claims by National’s sales agents that they were associated with the government (or quasi-government agencies), needed to access water … read more »

Hockey Helmet Case a Reminder of Canada’s Performance Claim Rules (and a Few Key Points)

Performance claims remain a popular advertising strategy for many brands. These can include statements about a product’s speed, reliability or other performance. Performance claims in Canada, however, are subject to both the “general misleading advertising” sections of the Competition Act (Act) and a stand-alone performance claims provision (section 74.01(1)(b) of the Act). The importance of ensuring that adequate and proper tests have been performed before product performance claims are made was highlighted again with the announcement earlier today by the Competition Bureau (Bureau) that Bauer has agreed to stop make certain claims in relation to its RE-AKT hockey helmets (and donate $500,000 to charity). Under a consent agreement (i.e., settlement), Bauer has also agreed to remove or modify the challenged claims and adopt an enhanced corporate compliance program. The Bureau had taken issue with claims (both words and images) that, in the Bureau’s view, created the impression that Bauer’s helmets … read more »

Numerous Warning Letters Serve as a Reminder that the FTC is Always Watching

November 11, 2014 Guest post by Shannon Harell (Information Law Group) The Federal Trade Commission (“FTC”) has been very active in its enforcement efforts in the past couple of months. In addition to other actions which we have blogged about, the FTC recently sent dozens of warning letters to advertisers in two separate efforts. In September, the FTC sent letters admonishing companies for their failure to make adequate disclosures in an effort dubbed “Operation Full Disclosure.” Then, in October, the FTC sent letters to companies for their potentially misleading “oxo degradable” claims in violation of the FTC’s Guides for the Use of Environmental Marketing Claims (or “Green Guides”). Operation Full Disclosure Warning Letters First, in Operation Full Disclosure, the FTC sent warning letters to more than sixty undisclosed companies—including twenty of the largest advertisers in the US—for their failure to make clear and conspicuous disclosures in television and print advertisements. … read more »

General Impressions Matter: US FTC, Australian ACCC Take Issue Over Headline Claims (and Some Compliance Tips)

In the advertising law world, general impressions matter – a lot. In Canada, the federal Competition Act even includes specific sections that provide that the general impression of a claim (i.e., not merely the literal meaning of an advertising claim or what is included in disclaimers or contracts) is to be taken into account by a court or the Competition Tribunal in determining whether or not a claim is false or misleading. In two cases earlier today that illustrate this key advertising law principle, the U.S. FTC and Australian ACCC both announced the results of enforcement against advertisers in a variety of industries relating to allegedly false “headline” claims (see: Federal Court orders $300,000 penalty after finding ‘free range’ egg claims to be misleading and Operation ‘Full Disclosure’ Targets More Than 60 National Advertisers). In the Australian case, the Australian Federal Court declared (by consent) that a chicken producer made … read more »

Canadian Competition Bureau Issues Updated Competition Compliance Guidelines

Canada’s Competition Bureau (the “Bureau”) has been working over the past year or two to update its competition law compliance guidelines and policies. Competition law compliance has also figured prominently in recent remarks by Canada’s new Commissioner of Competition, John Pecman (see for example: here). As part of the Bureau’s initiative to raise competition compliance awareness, on September 18th the Bureau issued a revised draft Corporate Compliance Programs Bulletin for public comment (see: here and here).  In releasing the new Bulletin the Bureau said: “In a speech at the Canadian Bar Association’s Annual Competition Law Fall Conference in Ottawa, Commissioner Pecman presented the draft Bulletin as a key part of the Bureau’s ongoing efforts to support healthy competition in Canada by promoting compliance. Compliance with the law ensures competitive markets, spurring innovation and economic activity that benefits businesses and delivers lower prices and more choice to consumers. The Commissioner emphasized that … read more »

Magic Green Beans for Weight Loss? Not Worth Trading a Cow For Says US FTC

In an interesting case that caught my eye earlier today, the U.S. FTC announced a proposed settlement with Texas-based Applied Food Sciences Inc. (AFS) in relation to allegedly “baseless” green coffee extract weight loss claims. According to the FTC, AFS, which sells a green coffee ingredient used in foods and dietary supplements, made public claims (including following publicity on the Dr. Oz Show) that subjects lost weight “without diet or exercise” using their product. These claims were based on an Indian clinical trial which, in the FTC’s view, was a “botched study” that didn’t prove anything. More particularly with respect to the underlying study, the FTC took the position that, among other things: the study’s lead investigator altered the weights and other key measurements of subjects; changed the length of the trial; and misstated whether subjects were taking a placebo or product during the trial. The FTC also concluded that … read more »

IP Law: A Primer on Canadian Trademark Law

WHAT ARE TRADEMARKS? A mark (words, names, symbols, devices, sounds, smells, trade dress) used to distinguish the goods and services of one business from similar goods and services of all other businesses. In Canada, it is possible to register the non-functional shape of a product or its packaging (called distinguishing guise, or “trade dress”). It is also possible to register certification marks (i.e. marks used to demonstrate that goods and services of different companies meet certain criteria set out by the owner of the certification mark). WHAT DO TRADEMARKS PROTECT? Trademarks can protect: words (iPad); symbols and logos (the Nike swoosh); design (Mickey Mouse character); slogans (I’m Lovin’ It); sounds (MGM Roaring Lion sound, Nokia tune); the non-functional shape of the productor its packaging (Coca-Cola bottle); colour (Magenta color registered by T-Mobile). It is important to understand that trademarks do not grant a monopoly over the words, symbols, taglines, etc. … read more »

Contest Law: A Few Interesting Recent Questions, Including CASL & Criminal Code

In Canada, “competition law” overlaps with advertising and marketing law. One of the reasons for this is because the federal Competition Act in Canada includes a number of advertising and marketing law sections, including some specific provisions relating to promotional contests. (Though of course contests in Canada can involve a number of other areas of law including: contract law, the Criminal Code, privacy law, intellectual property law and now Canada’s recently in force anti-spam law – CASL.) Based on the Competition Act sections and my own general interest in contests (as well as my contest law site – see: Canadian Contest & Promotions Law), I tend to both work on a lot of contests and receive quite a few contest related questions and calls. For example, a few days ago I received a few new Canadian contest law related questions over the web with a request that I write a … read more »

“Your Product Is Great” (What Was It Again?): Australian Carpet Cleaning Co. Sued for Alleged Fake Reviews, Some Canadian Points

Each morning, before I begin ‘real work’, I usually spend a little time on an Internet sweep of interesting advertising and competition law cases that have developed overnight or come into my inbox. Earlier today an interesting new advertising law enforcement action by the Australian ACCC caught my eye, in which the ACCC has commenced Federal Court proceedings against a carpet cleaning franchisor (Whistle (1979) Pty Ltd. – the franchisor of the “Electrodry” Carpet Cleaning business) for allegedly being involved in posting fake online testimonials. See: ACCC takes action against Electrodry alleging fake testimonials or reviews. The ACCC alleges that Electrodry posted fake testimonials through contractors and either induced, or attempted to induce, franchisees to post fake Internet testimonials contrary to Australian consumer law. Some Key Canadian Testimonial Points Given how common online testimonials and reviews are, and their potential usefulness to businesses of all types, I thought I would … read more »

CASL (Anti-spam Law): A Few Impacts of the New Law as the “Coming Into Force Dust Settles”

After a last minute flurry of inquiries and companies and individuals finalizing preparations to comply, Canada’s new federal anti-spam legislation will at long last (or as dreaded) come into force on July 1st.  So, for companies and individuals that market electronically and haven’t prepared by Tuesday, it will be “pens down” so to speak or risk the rather draconian potential penalties under the new law. I know you’ve all heard a lot about that so I won’t dwell on it here – for some of the key requirements of the new law see: here.  As such, rather than summarize the main requirements of this complex and rather cumbersome new law, I thought I’d highlight a few of what I see as likely major implications. These include: Content marketing & blogs: It seems to me that the new law will mean a renewed value for paper (i.e., that stuff from trees), … read more »