ASC to crack down on paid social media endorsements

A crackdown is finally coming on sponsored bloggers and influencers in Canada in the way of new rules that will require full disclosure of any paid endorsements or mentions of products and services.

The new guidelines, by Advertising Standards Canada, will come into effect by early 2017. They apply to bloggers and individuals who use social media—including Twitter, Instagram, Facebook and Snapchat—to talk up companies and their brands in exchange for remuneration of any kind.

“Endorsement or testimonials must disclose any material connection between the endorser, reviewer or influencer and the entity that makes a product or service available,” says Janet Feasby, vice-president of standards at ASC. “If there is a connection, it must be clearly and properly disclosed in proximity to the representation of the product.”

Canada lags the United States in implementing such disclosure rules: The U.S. Federal Trade Commission, concerned that consumers were being misled by supposedly independent individuals who were being paid by companies to endorse their brands online, enacted guidelines in 2009. The FTC has the power to fine violators, as it did in 2011 when it hit a Nashville-based instructional DVD maker with a $250,000 (U.S.) penalty.

The government agency is now looking at tightening the rules since many bloggers and influencers are skirting them by burying or otherwise obfuscating their disclosures.

“If consumers don’t read the words, then there is no effective disclosure,” an FTC official recently told Bloomberg. “If you have seven other hashtags at the end of a tweet and it’s mixed up with all these other things, it’s easy for consumers to skip over that. The real test is, did consumers read it and comprehend it?”

Feasby says Advertising Standards Canada decided to update its guidelines after receiving a complaint about sponsored content. Unlike the FTC, the ASC is a self-regulating body and not a government agency so it will not have the ability to issue fines.

The ASC, which has been administering the Canadian Code of Advertising Standards since 1963, instead asks violators to cease their offending actions. In the case of refusal, the organization asks the medium on which the offending ad ran to block its recurrence. “It’s very rare that someone does not comply,” Feasby says.

Fine-issuing power would likely lie with the Competition Bureau, Feasby adds, which does not yet have formal rules requiring blogger and influencer disclosure.

The Competition Bureau says lack of disclosure by bloggers and influencers could fall under its rules against misrepresentation and false advertising.

“Creating representations that appear to be the authentic experiences or opinions of impartial third parties is sometimes referred to as astro-turfing, a type of conduct that the Bureau has taken action on recently,” says spokesman Phil Norris.

One case of such action came last year, when Bell Canada was fined $1.2 million for having employees post fake reviews of its apps.

“Ultimately, whether a particular representation is false or misleading in a material respect is determined on a case-by-case basis,” Norris says.

Citing confidentiality, he could not confirm whether the Bureau is currently looking into any potential violations.

This article originally appeared at CanadianBusiness.com.