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Ashlee Froese is a lawyer with Froese Law, a Toronto-based branding law firm.

Love it or hate it, influencer marketing is a persuasive and pervasive method of selling products and services. For smaller local brands, aligning with an influential person on social media can increase brand awareness on a global scale quicker and cheaper than many other methods. But companies interested in influencer marketing need to be aware that slowly, but surely, the Canadian government has been ramping up its governance of the practice.

In December, the Competition Bureau sent approximately 100 letters to advertisers and advertising agencies urging them to be compliant with Canadian marketing legislation and the bureau’s directives relating to influencer marketing. This is a strong indication that the bureau will be more carefully monitoring influencer marketing campaigns, and is part of a movement by the Canadian government to increasingly regulate the space.

In June, 2018, the Competition Bureau issued the “Deceptive Marketing Practices Digest,” confirming that influencer marketing falls under the ambit of the Competition Act, which tackles false and misleading advertising. Accordingly, civil and criminal penalties could be awarded for false or misleading testimonials or endorsements that are included in influencer marketing campaigns. Influencers must disclose any relationship between the themselves and the brand they are promoting that could affect the independence of the influencer’s opinion. To date, there have not been any known fines for influencer marketing. However, with the bureau’s flurry of cautionary letters, this is likely to change in 2020.

Further indication of the intervention of law into the world of influencer marketing comes with the recent landmark case in British Columbia whereby an influencer, Noelle Halcrow, was found guilty of defaming her ex-boyfriend. Ms. Halcrow was required to pay a damages award of $200,000. Ms. Halcrow used her online platform to repeatedly defame the character of her ex-boyfriend. Her conduct was “extensive," “relentless” and “motivated by malice," which was not tolerated by the B.C. judiciary system. In fact, the presiding judge, Justice Elliott Myers, recognized the pervasive effect of the internet, stating: “The courts have recognized that the internet can be used as an exceedingly effective tool to harm reputations. This is one such case.”

Legislative and judiciary intervention in influencer marketing doesn’t spell the end of the practice, but it should spur brands and influencers to craft their marketing campaigns with care and compliance. First off, it is important to ensure that all parties are bound by an influencer marketing agreement.

Such an agreement codifies the business relationship between the brand and the influencer and should include key contractual terms, conditions and obligations. For example, who are the parties involved in the deal? What are their responsibilities? Who is responsible for the costs involved with the activation of the influencer marketing campaign? Who owns the intellectual property that is resulting from the campaign?

Another key concern that is particular to influencer marketing is the morality of the campaign and the influencer. This ensures that the influencer’s conduct does not jeopardize his/her personality that the brand is associating with. In addition, compliance with governing marketing legislation is critical and setting out in the agreement who is liable for any non-compliance should also be set out in the agreement.

After the agreement is in place, care needs to be taken to ensure all social-media posts are compliant with applicable legislation, which could include Competition Act, the Trademarks Act, the Copyright Act, Canada’s anti-spam legislation and provincial defamation laws and consumer protection laws, depending on the type of campaign.

If you are sourcing materials for the campaign from third parties, ensure that you have the appropriate intellectual property rights to use the materials. Also, ensure that the influencer includes the appropriate and sufficient disclosures to ensure that the content includes a truthful, fair and accurate account of the relationship.

The disclosure should include all pertinent information relating to the nature of the post, for example, if payment or a free product was provided. This information should be prominently placed at the beginning of the endorsement. By setting out clear guidelines, brands can avoid legal troubles and have a solid exit plan in place in case a relationship with an influencer goes off the rails.