August 14, 2018
By Amanda Branch and Jasmine Godfrey
As consumers become increasingly overwhelmed with information from all directions, influencers are playing an even more important role in acting as a trusted guide for consumers’ purchasing decisions. Online influencers have a powerful ability to influence the behaviour of their dedicated followers, subscribers and readers who value their expertise, opinions or unique points-of-view. Naturally, followers want to, and should, know if the source of the opinions that they have come to trust has a relationship with the featured brand and whether the influencer has been compensated in some way. As such, proper disclosure of a relationship between the influencer and the recommended brand or product is essential.
Recent cases highlight how brands can suffer if not careful about their endorsements. For example, we’ve written about Bell Canada’s consent agreement with the Competition Bureau which required Bell to pay a $1.25 million dollar fine after its employees were encouraged to write favourable reviews online without disclosing their relationship with Bell Canada. Not only can endorsers be fined, but their actions can also breach the Competition Act, resulting in civil or criminal action. The Competition Act prohibits misleading advertising and deceptive marketing practices, and just like any other form of marketing, these provisions apply to influencer marketing as well.
In a similar vein, two social media influencers widely followed in the online gaming community have settled Federal Trade Commission charges that they deceptively endorsed the online gambling service CSGO Lotto by failing to disclose that they jointly owned the company (see our article here). Additionally, these influencers allegedly paid other well-known influencers to promote their website on YouTube, Twitch, Twitter and Facebook, without requiring them to disclose the payments in their social media posts.
Ad Standards has recently released its Disclosure Guidelines, which it created in collaboration with an industry panel of influencer marketing companies (the “Guidelines”). These Guidelines are intended to educate the influencer industry and to provide a practical framework for making proper disclosure. The Guidelines will be regularly updated to accommodate evolving technology and marketing trends.
The Guidelines are meant to compliment the requirement to disclose material connections that already exists under Clause 7 of the Canadian Code of Advertising Standards (the “Code”) and the Interpretation Guideline #5 – Testimonials, Endorsements, Reviews. The Guidelines also list other sources that influencers may wish to consult, including the Federal Trade Commission Endorsement Guides.
A list of Do’s and Don’ts is included in the Guidelines and highlights considerations such as:
Additionally, the Guidelines offer useful channel specific information for YouTube, Instagram, Snapchat, Twitter and blog posts on how to ensure that disclosures are appropriate to these specific platforms. For those using platforms not mentioned in the guidelines, or encounter a situation outside its current scope, Ad Standards recommends continuing to apply the principles that disclosure is necessary and must be clear, conspicuous, and broadly understood.
Similarly, the Competition Bureau has recently released The Deceptive Marketing Practices Digest – Volume 4, which includes guidelines for influencer marketing. It also emphasizes the importance of disclosing material connections and doing so in a way that is transparent and easily understood by consumers.
There is general consensus among consumer protection agencies, regulators and industry groups about the importance of clear and effective disclosure of material connections between influencers and advertisers. Disclosing material connections is not only important from the perspective of consumer protection, but it is also important for the reputation of advertisers and influencers in maintaining their brand equity. Consumers will quickly lose trust in brands (whether the business itself or the influencer) when they realize that the advice is presented in a misleading or deceptive way.
There is nothing wrong with advertisers using influencers to promote their goods and services, or with influencers acting as a spokesperson for a brand, but both parties must remember that they are making representations to consumers and must disclose any material connection. After all, influencers are a marketing communications channel for advertisers that enable them to target a particular audience, and in a way that may not be possible with traditional media.
Information on this website is for information only. It is not, and should not be taken as, legal advice. You should not rely on, or take or not take any action, based upon this information. Professional legal advice should be promptly obtained. Bereskin & Parr LLP professionals will be pleased to advise you.