Canadian Lawyer InHouse

JANUARY/FEBRUARY 2018 32 INHOUSE I n d u s t r y S p o t l i g h t brand or product. The connection also must be "clearly and prominently" displayed in "close proximity" to the representation. The existing statutes in the Competi - tion Act prohibiting deceptive marketing practices apply equally to online promotion and this area of advertising is being watched closely by the federal Competition Bureau, says Josephine Palumbo, deputy commis - sioner of its deceptive marketing practices directorate. "This is important for the Bu- reau. There is a lot of activity on the digital space," says Palumbo. The best-known case in this area involv- ing the Competition Bureau to date was a settlement reached with Bell Canada in the fall of 2015. Certain employees were en- couraged to post positive online reviews for Bell mobile applications without revealing they worked for the company. The practice is known in the advertising industry as "as- troturfing" in that it conceals what it is in- tended to look like a "grassroots" campaign of positive comments about a product. Bell stopped the conduct and in its set- tlement with the Competition Bureau it agreed to pay an administrative monetary penalty of $1.25 million, as well as enhanc- ing its compliance program. The settlement with Bell was also ben- eficial in that it helped clarify some of the rules around online endorsements for other marketers in Canada, says Burtley Francis, a partner at Stewart McKelvey LLP in Halifax. "As a lawyer, it is always good to have a case to point to," says Francis, whose practice in - cludes marketing and advertising compliance. While it is accepted that any material connections with influencers must be dis- closed, the application of these principles on social media can be complicated, given the range of platforms. "It is more on the imple- mentation side that you might get bogged down," notes Francis. In part, he says, that is because it is difficult to know in advance just how broad the consumer market might be for an endorsement transmitted through social media. "What is problematic is the reach. With traditional media, that is easy. Once you go on social media, there may be people with no physical connection to the advertiser," he notes. To ensure best practices, he says, it is advisable to follow recent directives issued by the Federal Trade Commission in the United States. "The FTC has been at the forefront. It is really good in terms of proac - tive guidance," Francis says. That view is echoed by others in this field in Canada, including Steve Szentesi, a Toron- to-based competition and advertising lawyer. "The FTC guidelines are updated for the digital age," he says. As well, if a Canadian marketer has any kind of U.S. customer base, then its online advertising must comply with the FTC requirements, says Szentesi. One of the documents recently issued by the FTC is very detailed and specific, even to the point of acceptable words for spon - sored tweets or Instagram posts. Using something like #ad is considered good prac- tice, while #ambassador is too ambiguous. The type of disclosure that is acceptable also depends on the social media platform, notes Amanda Branch, an associate at Bere- skin & Parr LLP in Toronto. If a paid in- fluencer is reaching a social media audience through a YouTube blog or other types of video, that could impact what is required, she says. "It may not be the case that disclosing once is going to be sufficient," says Branch. For Snapchat or Instagram stories, the FTC suggests superimposing disclosure on the images. "Disclosure shouldn't be buried. It should be easily noticeable," Branch states. The many different ways to market on so - cial media also requires lawyers in this area to have a certain amount of technological knowledge, says Bate. "It is important for counsel to understand the applications and how things should be disclosed," she adds. Another aspect that can potentially be confusing is when the influencer is a rec - ognized celebrity. Interpretation guidelines issued by Ad Standards state that any "mate- rial connection" by an endorser to a product must be disclosed, unless it is a recognized celebrity and the connection is one that con- sumer would "reasonably expect" to exist. The definition of celebrity might not be that clear anymore in the social media world though, given that some influencers such as Lilly Singh, the YouTube personality from Toronto who is number two on the latest Forbes list, is extremely popular and wealthy. The best practice here is to err on the side of caution, Francis suggests. "If they are not a celebrity in the traditional sense of the word, you should disclose," he says. Entering into an endorsement relation - ship with a non-traditional celebrity may also put more of an onus on the marketer to protect itself from any action by regulators, says Hearn. "It is incumbent upon the ad- vertiser to lay out the expectations in plain English," he explains. These agreements, adds Branch, should also make clear where things such as the disclosure hashtags should appear on social media posts by an influencer. The Competition Bureau has not been as public as the FTC in terms of guidance or prosecutions in this area, but Szentesi says he would not be surprised if an ongo - ing investigation results in a prosecution or settlement in the near future. "I suspect the Bureau will bring a large enough case to act as a deterrent," he says. While the Bureau does not make public the details of an ongoing investigation or if one even exists, Palumbo says it has been ac - tive when it comes to social media influenc- ers and in ensuring compliance with adver- tising regulations. It was part of an online investigation by the International Consumer Protection and Enforcement Network in the fall of 2016 that focused on influencers and social media mar - keting practices. "The Bureau has a robust compliance framework. It includes enforce- ment, outreach and advocacy," says Palumbo. To ensure that a financial relationship with a social media influencer does not attract the attention of regulators, marketer should follow some straightforward disclosure practices, she says. "It should be visible. It should be easy to read. It should be close to the endorsement. Put it all out there," she states. IH The FTC has been at the forefront. It is really good in terms of proactive guidance. BURTLEY FRANCIS, Stewart McKelvey LLP

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