In a speech last week, the Senior Deputy Commissioner of Competition (the “SDC”) indicated that the digital economy is squarely on the Competition Bureau’s (the "Bureau") radar and that the agency will be vigilant in terms of ensuring that digital and mobile advertisements comply with the Competition Act.

Truth in Online Advertising

Recognizing that the rapid growth in e-commerce is being driven in large part by increased consumer use of apps and greater reliance on mobile payments, the SDC stated that the Bureau’s position is that “innovation in digital advertising must not compromise a consumer’s right to truth in advertising.”

In other words, the rules regarding misleading advertising apply equally to online promotional activities.  In this regard, the Bureau is focussed on misrepresentations that create a general impression to consumers that is false or misleading because the advertiser has hidden key terms that affect the price ultimately paid by consumers.

The SDC identified three types of advertising techniques that will likely draw increased scrutiny by the Bureau:

  1. Advertising that is designed not to look like a promotional message, but rather like a legitimate news story (commonly referred to as “native advertising”) or a legitimate consumer-written review (commonly referred as “astroturfing”);
  2. Advertising where consumers are presented with a price for a product or service, but not the full price until later (commonly referred as “drip pricing”); and
  3. Advertising where material terms and conditions are buried in the fine print or disclaimers.

Interestingly, the SDC also briefly spoke on Canada’s Anti-spam Law (“CASL”) which came into force earlier this year. He noted that CASL allows the Bureau to target false or misleading representations and deceptive marketing practices in the electronic marketplace, including social media, promotional emails, text messages and instant messages.

Key Takeaways

While the digital economy provides businesses (small and large) with the opportunity to effectively target cusomers, businesses must be careful how they design and implement their advertising campaigns. In particular, they must ensure compliance with not only competition law, but also privacy, anti-spam and consumer protection laws.

For example, many apps now collect important quantities of personal information and use that information in to develop targeted advertising (e.g., geo-location driven advertising) – which raises potential issues under both privacy laws and CASL (i.e., has the consumer consented to receiving targeted advertising?).

Based on the Bureau’s stated enforcement position, it is clear that participants in the digital economy take a holistic approach when assessing compliance applicable Canadian laws (i.e., Competition Act, CASL, privacy laws, consumer protection).  Further, foreign companies need to be aware that Canadian law applies equally to digital advertising directed to Canadian consumers, notwithstanding the fact that the advertising may have originated outside of Canada.