Untrue, misleading or unauthorized use of tests and testimonials
Section 74.02 of the Competition Act is a civil provision. It prohibits the unauthorized use of tests and testimonials, or the distortion of authorized tests and testimonials. The provision also prohibits a person from permitting such representations to be made to the public. Under this provision, it is not necessary to demonstrate that any person was deceived or misled; that any member of the public to whom the representation was made was within Canada; or that the representation was made in a place to which the public had access. Subsection 74.03(5) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect.
If a court determines that a person has engaged in conduct contrary to section 74.02, it may order the person not to engage in such conduct, to publish a corrective notice and/or to pay an administrative monetary penalty of up to $750,000 in the case of a first time occurrence by an individual and $10,000,000 in the case of a first time occurrence by a corporation. For subsequent orders, the penalties increase to a maximum of $1,000,000 in the case of an individual and $15,000,000 in the case of a corporation.
This section prohibits publishing a testimonial or representing that another person has made a test as to the performance, efficacy or length of life of an advertised product, except:
- where the third person who gave the testimonial or made the test has previously published the testimonial or represented that he or she has made the test; or
- where the person, prior to publishing the testimonial or representation that a test has been conducted, has secured in writing the third party's approval of the testimonial or representation as well as permission to publish or make it.
A letter from the third party to the person does not amount to publication and, unless approval is received from the third party, the use of the letter as a testimonial would violate this provision. Furthermore, the representation or testimonial made or published by the person must accord with the representation or testimonial the third party has previously made, published or approved. An example of this would be where a quote is taken out of context, such as where a reputable lab's report of a product test is published and it expresses favourable comments or results on certain points, but these comments or results are heavily qualified. If the representation presents the favourable comments or results without the important qualifications, the representation may be in contravention of this provision.
A representation for liquid fertilizer stating that a third party had made a test, if the third party's permission had not been obtained.
2. Use of actors to portray consumers in consumer testimonials
Advertisers have inquired in the past whether the wording of the provision , "...accords with the representation or testimonial previously made, published or approved." means that a broadcast consumer testimonial can only be given by the actual consumer and that an actor may not be used to portray the consumer. They have suggested that genuine testimonials often cannot be used to promote products because of some external factor such as a camera-shy consumer. The use of actors to portray consumers in such circumstances would not give rise to an inquiry under the Act, unless:
- a cosmetic effect is being portrayed or appearance is otherwise material, as it might be, for example, in the case of an advertisement for clothing;
- the testimonial as presented in the advertisement was not given by an actual consumer; or
- the testimonial would raise any issue under subsection 52(1) or paragraph 74.01(1)(a).
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