Each morning, before I begin ‘real work’, I usually spend a little time on an Internet sweep of interesting advertising and competition law cases that have developed overnight or come into my inbox.
Earlier today an interesting new advertising law enforcement action by the Australian ACCC caught my eye, in which the ACCC has commenced Federal Court proceedings against a carpet cleaning franchisor (Whistle (1979) Pty Ltd. – the franchisor of the “Electrodry” Carpet Cleaning business) for allegedly being involved in posting fake online testimonials. See: ACCC takes action against Electrodry alleging fake testimonials or reviews.
The ACCC alleges that Electrodry posted fake testimonials through contractors and either induced, or attempted to induce, franchisees to post fake Internet testimonials contrary to Australian consumer law.
Some Key Canadian Testimonial Points
Given how common online testimonials and reviews are, and their potential usefulness to businesses of all types, I thought I would post a little refresher with some of the Canadian rules governing testimonials/reviews:
1. In Canada, false testimonials can be challenged under the Competition Act (the “Act”) where they are either literally false or misleading – i.e., under the general civil or criminal misleading advertising provisions of the Act.
2. Testimonial challenges can also be made from a variety of factual perspectives, including most clearly where the person providing the testimonial literally didn’t use the product or service. Other potential bases of challenge can include: where claims appear to be testimonials when there is in fact no user/customer (yes this does actually happen from time-to-time), where unsupported performance claims are made in conjunction with a testimonial, or where testimonials or performance claims are distorted or don’t correspond to the advertised product.
3. The Competition Act includes specific provisions that require that performance claims be substantiated prior to being made (i.e., be supported by “adequate and proper testing”).
4. The Competition Act also includes standalone testimonials provisions that prohibit using testimonials unless the person publishing the testimonial can show that it was previously made or published (or approved and permission to make/publish it was given in writing). Any testimonial must also generally accord with what is actually said.
5. Like other enforcement agencies, Canada’s Competition Bureau (the “Bureau”) has highlighted false testimonials (including in the online context) as an enforcement concern, including in some of its “Fraud Prevention Month” efforts – see for example: Competition Bureau Announces its Top 2 on “2 Good 2 B True Day”.
6. In the Bureau’s False or Misleading Representations and Deceptive Marketing Practices pamphlet, the Bureau further describes how false testimonials can be challenged under Canadian competition law and offers tips for using testimonials to comply with Canadian law.
7. Finally, a point that also appears likely to arise in the Australian carpet cleaning case, in Canada companies can face liability for claims and advertising by agents. For online claims, the Bureau’s leading statement of its enforcement position on this point remain its Internet Advertising Enforcement Guidelines, in which it generally takes the position that it will focus on the party who “causes” an online claim to be made (which involves considering, among other things, which party has decision-making authority or control over content, the nature/degree of that control and the nature/degree of control over the content of the person making the claim).
A Few Tips for Testimonials in Canada
A few general tips for using testimonials in Canada include: (1) don’t use testimonials from people who haven’t used the product (seems obvious, but I’ll say it anyway); (2) don’t make claims that look like testimonials when there is no customer/user (i.e., fictional “customers” endorsing a product); (3) don’t use the results of product performance tests and/or testimonials in advertising unless authorized to use them; (4) if authorized to use them, don’t distort user statements or test results and also ensure they’re relevant to the product; and (5) ensure that any performance claims made in conjunction with testimonials can be supported by adequate and proper testing before claims are made.
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I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
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