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New Guidelines for Paid Endorsements and Incentivized Marketing

In a world where businesses are aggressively competing for the attention of consumers, paid online reviews and endorsements are now popular and even commonplace forms of advertisement and promotion. However, this form of paid advertising is, now more than ever, raising questions around bias and lack of transparency in incentivized marketing.

 

Increasingly, businesses are paying “digital influencers” and endorsers to promote their brands, products and services. These are multi-platform users who share their opinions, likes and dislikes with their online subscribers - they are the paid Tweeters, bloggers and vloggers of the social media world.  By offering compensation in exchange for the digital influencer’s promotion, businesses get access to the digital influencer’s mass of committed followers who trust the digital influencer and the products and services that they promote and use. This can have a tremendous influence on a business’ success.

Digital influencers and endorsers also benefit the consumer. Consumers now have easy access to a wide variety of opinions and reviews of brands and products which they often rely on to better inform their purchasing decisions.

However, disingenuous reviews and endorsements or biased opinions without appropriate disclosure of the endorser’s remuneration and can lead to misled consumers, misrepresentation, and unfair competition.

To get ahead of these issues the Canadian Competition Bureau, (along with other major competition and consumer protection agencies), has begun reviewing these forms of advertisement to ensure transparency, consumer protection, and compliance with the Competition Act and international standards.  

In June of 2016 the International Consumer Protection Enforcement Network (ICPEN) published new Online Reviews and Endorsements Guidelines (hereafter the “Guidelines”). While these Guidelines are not the law, the Canadian Competition Bureau is a member of the ICPEN and supports the Guidelines and their implementation. Last month, in follow up to the publication of the ICPEN Guidelines, the Canadian Competition Bureau, together with its international competition enforcement agency partners, conducted an Internet advertising sweep focused on false or misleading online endorsements.  The sweep serves as a good reminder of the need for businesses to engage in fair and transparent competition and the importance of informed consumerism.

In the spirit of transparency, the following is a summary of the Guidelines which will be of particular interest to both businesses who employ Bloggers, Vloggers, Tweeters and other digital influencers and to consumers who rely on their endorsements.

The Guidelines suggest that digital influencers, be guided by the following 4 principles:

1.      Clear and Prominent disclosure of paid for content:

·         Digital influencers are expected to clearly identify when they have been paid to post content. “Paid-for” content is not limited to financial payment – it also includes remuneration in kind or the receipt of “free-stuff” in exchange for the post. This content might include ads, product placement, sponsored links, paid-for consumer interest stories etc.

2.      Transparency regarding other commercial relationships:

·         To comply with these Guidelines, digital influencers should disclose to their readers any relevant commercial relationships that they have with businesses featured in their online content. For example, if they are a paid brand ambassador, they should let their readers know.

3.      Provide genuine views on markets, business, goods and services

·    Simply put, digital influencers are expected to be genuine. Where they present an opinion that is not genuine or their own account they are expected to disclose this to their readers and be clear on whose opinion is being shared.

4.      Say ‘no’ to non-compliant businesses

·         It is the Digital Influencer’s obligation to turn down requests from business who ask them to post paid content without proper disclosure.

For more information, here is a link to the Guidelines: https://www.icpen.org/files/icpenDownloads/ICPEN___ORE___Guide_3___Guidelines_for_Digital_Influencers___JUN_2016_FNL.pdf

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Toba Cooper was called to the Ontario Bar in June of 2015. She obtained her J.D., with honours, from the University of Ottawa, Faculty of Law. Before entering the profession, Toba worked in the commercial arts sphere. She articled at a major Bay Street Law firm where she focused her work on intellectual property and intellectual property litigation.