Ad Standards Canada ("Ad Standards") recently published its report regarding ad complaints and disputes that it received in 2019. This article provides an overview and highlights the trends from 2019. Competitor complaints addressed misleading superiority and ranking claims. On the other hand, consumer complaints largely concerned accuracy and clarity, price claims, unacceptable depictions and portrayals and safety.
Ad Standards - Canada's Self-Regulatory Body
Ad Standards is a national, not-for-profit, self-regulating body that oversees Canada's advertising industry. It administers the Canadian Code of Advertising Standards (the "Code"), which creates the criteria for acceptable advertising, and adjudicates consumer complaints and disputes between competitors. Note that Ad Standards does not have jurisdiction over claims made on packaging.
Updated Advertising Dispute Procedure
Ad Standards handles consumer complaints and complaints between industry competitors through different processes. The Advertising Dispute Procedure in 2019 (the "Procedure") governs disputes between advertisers alleging competitor contraventions of the Code, and was updated in 2019.
As part of the 2019 update, the Procedure now requires the complainant advertiser make a good faith attempt to resolve their concerns directly with the defendant advertiser. Parties also have the option to attend Resolution Meetings before a matter is set down for adjudication by the Ad Dispute Panel so that they may discuss the claims in contention. Typically parties do not engage in the optional Resolution Meetings, but instead proceed directly to adjudication.
The Ad Dispute Panel is chaired by a lawyer with expertise in advertising law and only considers written submissions. There are no live hearings and parties are only allowed to make submissions in writing. The Panel reviews the complaint, the advertiser's response / defence, and the written replies from each of the parties before making its decision, which is final and non-appealable. The process is confidential and, accordingly, neither of the parties involved may publicly discuss the matter or the decision outside of their organization, with very limited exceptions. Depending on the outcome, Ad Standards may publish an anonymized summary of the case to inform the advertising community and the public about the outcome and to provide clarity about the Code. However, if a party does not comply fully with the Panel's decision or an advertiser does not participate in the Procedure, Ad Standards may choose to publish a summary of the Panel's decision including details of the facts and issues in dispute and the names of both parties, as well as exercise other remedies.
Competitor Complaints: What the Ad Dispute Panel Found
In 2019, two cases adjudicated by the Ad Dispute Panel under the Advertising Dispute Procedure found contraventions of the Code.
One case concerned a multimedia advertising campaign that invited consumers to switch to a higher quality product that included a comparison to industry competitors' products. The Panel had no evidence before it to substantiate the implication that the defendant's product was superior and in turn found that the claim made in the ad contravened the clauses of the Code which prohibit inaccurate or misleading claims. The Panel also found that the ad violated the Code's clause prohibiting unfair comparative claims. Of note is the fact that the Panel found that a variation of the ad that did not invite the consumer to switch products did not violate the Code.
In another case in 2019, the Panel also found a violation of the Code where an advertisement claimed that a consumer product was the highest rated and the best-selling in its class. The Panel found that the unqualified claim of "highest rated" created the impression that the product was superior to all others in the category and that such a claim required robust, reliable, well-designed, head-to-head testing versus other products in the category. The advertising also included a claim of a "perfect star" rating. In actuality, this claim reflected a rounding up practice by the advertiser. The Panel found the rounding up resulted in "misleading visual representations" and determined that the advertising contravened the Code. Making superiority claims without sufficient support was also found to be a contravention of the Code.
Complaints From the Public
Consumer complaints are either dealt with administratively or sent to the Standards Council for adjudication. The administrative procedure may be used to deal with a contravention of the Code's Accuracy, Clarity and Price Claims provisions. However, the process is only available where the advertiser has permanently removed or amended the disputed advertisement before or immediately after being informed a complaint was made. Retail advertisers must also publish a "correction notice" or "correction ad" in their consumer-facing media or at their retail locations to both identify and correct the error. Complaints going through this procedure are not dealt with by the Standards Council for judgment.
Ad Standards received 1,858 consumer complaints in 2019. Almost half of these complaints alleged misleading or inaccurate advertising.
Interestingly, for a third consecutive year Ad Standards received the highest number of complaints about non-commercial entities, with 537 complaints. Television advertising garnered the most complaints of any media form. Digital advertising also accounted for a portion of complaints, of which 135 complaints specifically related to ads on social media.
2019 Trends - Administratively Resolved Cases
Ad Standards advised in their report that for administratively resolved complaints in 2019 some main concerns were related to Clause 1 Accuracy and Clarity and Clause 3 Price Claims of the Code. Under Clause 1, concerns focused on:
- Promotional offers by retailers that omitted restrictions and/or conditions needed to qualify for advertised offers;
- Promotional membership offers that omitted additional fees or the requirement that consumers buy their own devices for telecommunications offers;
- Ads that omitted relevant information;
- Terms of ads that were only applicable in some provinces where the ad appeared; and
- Ads using unqualified claims such as "unlimited" or "without risk" when in reality these offers required qualification.
Clause 3 concerns were mostly related to non-disclosure of US currency in advertisements and deceptive price claims or discounts, inflated circular prices, and non-disclosure of regular prices.
Of the complaints not dealt with administratively, 50 ads were forwarded to the Standards Council for adjudication, and more than half of them were found to contravene the Code. Similarly, most of the complaints sent to the Council for adjudication were related to accuracy and clarity, price claims, unacceptable depictions and portrayals and safety.
The use of influencers on social media platforms has been on the rise in recent years but has also created new concerns in advertising. Ad Standards has published guidance to assist influencers and advertisers in their compliance with the Code. In a number of cases, Ad Standards allowed influencers and advertisers to administratively resolve their cases by amending the post (for example, by adding #ad) where the only issue was the failure to disclose the existence of a material connection between the influencer and the advertisement, which would render the ad false and misleading.
Six complaints concerning influencers were received in 2019 and each one was resolved administratively. Ad Standards advised in its report that since the industry has now been given sufficient time to adjust to the guidance published by Ad Standards, future similar complaints will be dealt with using the regular consumer complaint procedure.
Government, Political, and Election Advertising
While "government advertising" is subject to the Code, "political advertising" and "election advertising" are not. In response to some confusion regarding what these terms actually meant, Ad Standards issued Interpretation Guideline #6, which further clarifies if and when the Code applies to government, political, and election ads. Although Ad Standards does not accept complaints about political and election advertising, as these are beyond the scope of the legislation, the Code still states that "Canadians are entitled to expect that the standards in the Code will be respected in advertising by and for Canada's political parties and government."
Making Claims in Advertising
As a reminder, it is important that advertisers have competent and reliable substantiation for the claims made in the advertisements, and that the claims do not contravene the Code. Certain products that are regulated may also have additional rules that apply to the claims that can be made about the products (e.g., pharmaceuticals, cosmetics, natural health products, medical devices and food).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.