Advertisers, businesses using marketing companies and their directors and officers today are faced with increasingly steep penalties if they fail to comply with new or amended legislations regulating marketing practices in Canada.
Since the amendments to the Competition Act in 2009 – where the monetary penalties for misleading advertising practices increased from $50,000 to $750,000 for first-time individual offenders and from $100,000 to $10 million for first-time corporate offenders – advertisers continue to face stiffer penalties for engaging in prohibited marketing practices.
On December 15, 2010, the government of Canada passed Bill C-28 (more commonly referred to and known as the “anti-spam” bill) where, in a nutshell, businesses and advertisers are prohibited from sending commercial electronic messages without consent from the recipients. When the anti-spam law comes into force, a failure to comply with the legislation may cost an advertiser penalties of up to $1 million for an individual and up to $10 million for a corporation.
Moreover, there are potential personal liabilities for officers and directors if they directed, authorized, assented to or participated in the violation, and a right of civil action by persons who allege that they are affected by a contravention of the anti-spam law.
The strict regulations and tough penalties do not end here.
On the same day, the Government of Canada passed the new Canada Consumer Product Safety Act regulating the way consumer products are packaged, labelled and advertised. Except for certain prescribed products (including cosmetics, drugs, natural health products, vehicles, fertilizers, explosives and firearms) consumer products that are governed by the legislation include products, as well as their components, parts or accessories, that may be reasonably expected to be obtained by individual consumers for non-commercial use. For example, consumer products include products for recreational and sports purposes.
The new product safety legislation imposes a number of obligations on advertisers and businesses, including the prohibition from advertising the following:
- non-compliant consumer products;
- consumer products that are a danger to human health or safety, or subject to a recall or order under the legislation;
- consumer products that are known to be packaged and labelled in a false, misleading or deceptive manner regarding the product’s safety certification or the product’s compliance with safety standards and regulations; and
- consumer products that are known to be packaged and labelled in a false, misleading or deceptive manner that may reasonably be expected to create a wrong impression that the product is not a danger to human health or safety.
Further, the product safety legislation requires advertisers and businesses advertising consumer products for commercial purposes to prepare and maintain documents as prescribed under the legislation.
Offenders of the above-mentioned requirements may be subject to hefty fines (including a fine of up to $1 million for a summary conviction) and imprisonment. Directors and officers are liable on conviction to the punishment provided by the legislation if they directed, authorized, assented to or participated in the offence.
In light of the new legislations that will soon be in force and the current laws prohibiting certain marketing practices, it is critical that advertisers and businesses fully understand their obligations under the relevant laws and change their current business and marketing practices to comply with the tougher laws.
If necessary, or if in doubt as to whether or not your business or marketing practices comply with marketing laws, you should seek proper legal advice. Ignoring the new laws will come at a cost that will be more than a slap on the wrist.