Influencer Marketing: Legal Implications for Canadian Content Creators and Advertisers

In the rapidly evolving landscape of digital content creation and influencer marketing, advertisers are faced with many legal considerations that can significantly impact their success and protect their interests. Ranging from advertising standards to branding, it is crucial to be aware of the regulatory landscape to ensure legal compliance and optimize growth opportunities. With the increasing use of influencer marketing for brand promotion, Ad Standards – the self-regulatory body for the advertising industry in Canada – has issued revised Influencer Disclosure Guidelines. Advertisers are advised to assess their current advertising methods to ensure legal compliance. 

What Is ‘Influencer Marketing’?

Influencer marketing is an increasingly prominent advertising approach where individuals, known as influencers, leverage their credibility and impact to endorse products or services to their audience. This strategy relies on the trust between influencers and consumers, with legal constraints to uphold this trust among brands, advertisers, platforms and influencers.

Influencer Disclosure Guidelines

In an effort to assist the industry, Ad Standards’ Influencer Marketing Steering Committee recognized the increase of new and emerging social media platforms and provided guidance based on the type of post (e.g., video, static, story) rather than the specific platform. While the core principles remain unchanged from previous guidelines, this approach allows for easy application of best practices to new platforms as they appear. The following are key guidelines and examples of proper disclosure practices:

• Dos and Don’ts of Disclosure: Disclosure is necessary and must be clear, conspicuous and broadly understood. For example, it is recommended to use widely accepted hashtags that establish a material connection, such as #ad or #sponsored. Ambiguous hashtags such as #collab or #promo should be avoided.
• Examples of When to Disclose: Disclosure is necessary when an influencer receives compensation, free products or any other benefit. It applies to sponsored posts, affiliate marketing and refer-a-friend programs.
• Specific Examples of Disclosure by Post Type: The guidelines provide detailed examples for various post types (e.g., stories, videos, blog posts). For example, in an Instagram story, when an influencer unboxes a new gadget, they should clearly mention any brand collaboration.

These guidelines are a living document, and compliance requires full context of each communication. 

Influencer Marketing and the Competition Act

Influencer marketing is subject to the Competition Act, which prohibits deceptive marketing practices. Influencers should be transparent about any connections they have with the products or services promoted.

Influencers must disclose any material connections that could shape how consumers perceive their independence from a brand. Material connections include receiving payment, free products or services, discounts, free trips or event tickets, or a personal or family relationship.

Best practices for disclosing material connections include the following:

• Make disclosures highly visible and prominent in the content;
• Ensure disclosures are clear, using plain language and avoiding ambiguity;
• Disclosures should be visible without requiring users to click or tap to expand the post, especially on multiple social media platforms;
• Consider the context of the audience’s experience with the content, ensuring both audio and visual disclosures are included when necessary;
• Linking to brands, posting discount codes, or using affiliate links may not suffice as disclosures; and
• Base reviews and testimonials on genuine experiences, avoiding broad claims without evidence to support them.

The Competition Bureau enforces laws against deceptive marketing practices. Compliance with the Competition Act is essential for advertisers and influencers alike. By adhering to these guidelines, influencers can maintain transparency and integrity in their marketing practices, aligning with legal requirements and consumer expectations.

Regulatory Compliance

In addition to compliance with the Competition Act, influencers and advertisers must consider additional regulations. Failure to comply with these regulations can result in legal consequences and reputational damage. Some examples include compliance with the following:

• Personal Information Protection and Electronic Documents Act (PIPEDA): As advertisers collect and use personal data from their audience, they must adhere to privacy laws such as PIPEDA. This includes obtaining consent for data collection, ensuring data security and handling sensitive information responsibly.
• Canadian Anti-Spam Legislation (CASL): Advertisers must be cautious about electronic marketing to avoid potential anti-spam law risks.
• Canada Revenue Agency (CRA): Generally, online content published by social media influencers is considered a taxable supply. When such supplies exceed $30,000 over four calendar quarters, influencers are required to register for, collect and remit goods and services taxes (GST/HST) to the CRA.

Conclusion and Takeaways

Navigating the legal complexities within the dynamic realms of digital content creation and influencer marketing is paramount for advertisers. Understanding and adhering to a range of legal considerations are important steps in protecting interests and achieving success in this ever-evolving landscape. Advertisers must proactively assess their strategies to align with these guidelines and ensure legal compliance, safeguarding their reputation and maximizing growth opportunities.

The Sports, Media & Entertainment Group at Aird & Berlis LLP will continue to monitor developments regarding influencer marketing and advertising. Please contact a member of the group if you have questions or would like more information.