Influencer Advertising: Rules and Regulations

influencer advertising

Influencer advertising is a powerful way to promote products and services, however, it also comes with certain obligations and expectations from regulators and consumers, including compliance with the deceptive marketing provisions of the Competition Act. Ad Standards, the self-regulatory body for the advertising industry in Canada, has outlined detailed influencer-specific Guidelines (the “Guidelines”) to help guide the clear disclosure of material connections between brands and influencers. 

The Guidelines are based on three key clauses: 

Clause 1 (Accuracy and clarity): Ads must not leave out important information that would make them misleading or deceptive. If you’re an influencer and you’re talking about a product, service or brand that you have any kind of connection with, you need to tell your audience about it. This is a “material connection”. It could be anything from getting paid, receiving free products, entering a contest, getting invited to an event, having a family or work relationship, or owning a stake in the company. You must explicitly disclose any relationship that could affect your credibility or objectivity. 

Clause 2 (Disguised Advertising Techniques) – Ads must not hide that they are ads and disclosure must be clear and obvious. It is best practice to use a clear and obvious hashtag that everyone can understand, like #ad, #sponsored, #[brand]partner or #[brand]ambassador. Avoid vague or confusing hashtags, and don’t hide your disclosure in your bio or comment section. It needs to be visible and inseparable from your post, and it needs to be specific to each sponsored post. 

Clause 7 (Testimonials) – Statements must be current, genuine, and based on adequate information or experience. The viewer has the right to know about the material connection between the reviewer and the entity offering the product/service, which is why clear and prominent disclosure is essential. 

The Guidelines were recently updated, now offering specifications based on the type of post (e.g., static, character-limited, video, story, blog) rather than the specific social media platform (e.g., Instagram, Twitter (or X), YouTube, TikTok, Snapchat) in an effort to make the Guidelines more flexible and adaptable to the ever-changing landscape of social media. 

There have also been updates to the “Do I Need to Disclose?” chart: 

“Well-known partnerships” – The guidance for this example (previously called “code exception” rather than “well-known partnerships”) has shifted to emphasize that users should be cautious to clearly disclose this relationship unless the partnership is obvious and explicit. The icons showing whether disclosure is required have changed from a Red “X” (i.e., no disclosure required) to a Yellow “!” (i.e., caution, meaning whether disclosure is required will depend on the situation). 

“Gifted product but no endorsement” – The Guidelines now explain why it must be clear that an item has been gifted, namely that without such information, the implication is the influencer chose to buy the item, which is an endorsement. The icons showing whether disclosure is required have changed from a Red “X” (i.e., no disclosure required) to a green checkmark (i.e., disclosure required). 

The Guidelines have also been updated to provide new examples relating to avatar or AI influencers. Both Ad Standards and the United States Federal Trade Commission (“FTC”) now make clear that the fact that an avatar is not a real person does not affect the requirement to disclose a material connection. Ad Standards also explicitly says the avatar should not give a testimonial that it obviously cannot experience.  

Consequences for Non-Compliance 

Influencers and marketers must consider national standards, industry-specific rules, and platform terms to remain in compliance and trustworthy in the dynamic realm of influencer marketing. Consequences of non-compliance may vary depending on the party that identifies the breach.  

Ad Standards Canada is a self-regulatory body that reviews hundreds of ads every year. If they find you in breach of their guidelines, they will ask the advertiser to change or withdraw the ad. They will also publish a public report explaining why the ad was problematic. 

The Competition Bureau is a federal agency that enforces the Competition Act, and sometimes sends letters to brands and agencies involved in influencer marketing, warning them to comply with the law. They can also impose fines or penalties for serious violations. 

Specific social media platforms or industry-specific institutions may also have their own consequences for non-compliance.  

Best Practices for Influencer Advertising

So how can you avoid trouble and make the most of influencer marketing in Canada?   

  1. You must ensure you have a strong agreement with your influencer or your advertiser. The agreement must clearly outline what type of content is acceptable, including the requirement to disclose a material connection and to only make truthful and accurate statements. It is also suggested that the agreement gives you the right to remove or edit any posts that are problematic, and that it limits your liability if the influencer or the advertiser does not follow the rules. To learn more about influencer agreements, check out our blog post 8 best practices for drafting an influencer agreement.
  2. As a business, you should be monitoring and reviewing your influencer’s posts. Don’t just trust that your influencer will do everything right, you must confirm that their post(s) are consistent with your agreement. 
  3. Seek legal advice. Influencer marketing is a complex and evolving area of law, and you don’t want to take any chances or make any assumptions. If you have any questions or doubts about a campaign, or if you encounter any issues or challenges, you should consult a lawyer. They can help you understand the rules and risks, and advise you on the best course of action. 

Caravel has a team of over 100 qualified and experienced lawyers, including those who can help you navigate influencer advertising and agreements. Get in touch with our team today to find out more. 

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