Under paragraph 74.01(1)(b) of the Competition Act, you cannot make a claim about a product’s performance, its effectiveness, or its length of life, unless you can prove that the claim is based on an adequate and proper test. In addition, the test must have been done before the claim is made.
Performance claims can take many forms, whether it is product labelling, or words, images and design elements on a website or social media. These claims can also include the keywords in website metadata or online advertising campaigns used to attract customers to a website.
To determine if a performance claim is supported by adequate and proper testing, the Competition Bureau looks at various elements related to the general impression an advertisement makes on consumers.
For example, to be considered adequate and proper, the testing must:
- be conducted before the performance claims are made
- be done under controlled circumstances to eliminate external variables
- eliminate subjectivity as much as possible
- reflect the real-world usage of a product (such as in-home or outdoor use)
- support the general impression created by the marketing claims
Marketers should avoid:
- making broad or vague claims based on testing that is only partially relevant (for example, an advertisement claims that a heat pump provides a specific level of energy savings. However, the test was conducted only in Southern Ontario, where winters tend to be much milder. Therefore, the results of the test should not be generalized to all areas of the country.)
- basing performance claims on test results that are insignificant or based on mere chance or one-time effect
- basing performance claims on studies or sales of similar products
- basing performance claims on technical books, bulletins and manuals, or anecdotal stories
You should always ask yourself: “What is the general impression conveyed by my ad?”, and review your marketing concepts where appropriate.
You should also remember to test the product before you market it.
Remedies for non-compliance
If a court determines that a person has engaged in conduct contrary to this provision, it may order them to stop engaging in such conduct, publish a correction, and/or pay an administrative monetary penalty.
For individuals, the penalty for first-time violations is up to the greater of:
- $750,000 ($1 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.
For corporations, the penalty for a first-time violation is up to the greater of:
- $10 million ($15 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenue
Having a credible and effective compliance program can provide benefits in dealing with the Competition Bureau to resolve a violation of one of the legislation it enforces. A compliance program can also help:
- reduce the risk of potentially illegal conduct
- protect your brand and reputation
- detect instances of potentially illegal conduct at an early stage
- identify when others might put you at risk
To find out more information on written opinions under section 124.1 of the Competition Act, contact the Bureau’s Information Centre toll-free at 1-800-348-5358 or online. If a written opinion is provided by the Commissioner, a fee will apply based upon the section of the Act the proposed conductor practice applies to. A written opinion is binding on the Commissioner as long as the facts submitted are accurate, and it remains binding if the facts on which the opinion is based remain substantially unchanged and your conduct or practice is carried out, as proposed. All fees and service standards for written opinions are set out in the Competition Bureau Fee and Service Standards Policy.
- Cases and outcomes
- Written opinions
- Advertising dos and don’ts
- Compliance Bootcamp: Avoiding Deceptive Marketing
- Enforcement guidelines:
- Competition Act, paragraph 74.01(1)(b)
- Substantiating performance claims (Volume 2: Deceptive Marketing Practices Digest)
- Bauer ceases certain RE-AKT hockey helmet performance claims
- Weight loss claims must be true and supported by testing