On March 28, 2018, Ad Standards introduced new Disclosure Guidelines (the “Guidelines”). Developed with the cooperation of influencers and advertisers, the Guidelines are intended to provide suggested best practices for when, and how, to disclose any material connection between an advertiser or brand and the influencer.
The Guidelines inform an Interpretation Guideline under the Canadian Code of Advertising Standards (the “Code”), issued in October 2016, requiring that any “material connection” between an influencer and a brand be “clearly and prominently disclosed in close proximity to the representation about the product or service.” The Interpretation Guideline says what to do, but suggested looking to other sources including the FTC’s Guide to Testimonials & Endorsements for how to do it. The new Guidelines provide a Canadian resource, with illustrative examples of “dos” and “don’ts” to assist industry in complying with the Code.
The need to disclose the relationship between an influencer and the product or service being discussed, where one exists, arises both under the self-regulatory Code and under the Competition Act (Canada). In law, it is a reviewable practice to make a representation to the public that is false or misleading in a material respect, including creating a false or misleading general impression. It is understood that consumers may have a different take-away about any given content if they know that an influencer is being paid to promote a product, or if some other connection exists between the influencer and a brand. On that basis, disclosure of any material connection is necessary to keep the general impression created by the influencer’s content from being false or misleading.
Under the Guidelines, the definition of a “material connection” is broad, meaning “Any connection between an entity providing a product or service and an endorser, reviewer, influencer or person making a representation that may affect the weight or credibility of the representation, and includes: benefits and incentives, such as monetary or other compensation, free products with or without any conditions attached, discounts, gifts, contest and sweepstakes entries, and any employment relationship.” The guiding principles set out in the Guidelines are twofold: “Up front is best,” and, “When in doubt, spell it out.” In other words, transparency is key, and the Guidelines recommend ways of making any disclosure in a way that is most likely to be noticed by the consumer and, if there is any doubt about whether to disclose, to err on the side of disclosure.
The Guidelines are issued in draft for now, and are intended to be an evolving document, adapting over time to changes in platforms, technology, and industry practices.