Legal and Compliance Considerations for Sponsored Content in Canada

Legal and compliance considerations for sponsored content in Canada primarily revolve around transparency, truthful advertising, and proper disclosure of material connections between influencers and brands. Influencers and brands must comply with the Competition Act, the Canadian Code of Advertising Standards, and guidelines from Ad Standards Canada to avoid deceptive marketing practices and maintain consumer trust.

Key points include:

• Mandatory Disclosure: Influencers must clearly and conspicuously disclose any paid partnerships or sponsorships using clear language or hashtags such as #ad, #sponsored, or #partnership at the beginning of posts or videos. Disclosures must be visible before user interaction and not hidden in bios or comments.

• Material Connection: Disclosure is required whenever there is a material connection that could affect consumer perception of the influencer’s independence. This includes payment, free products, commissions, discounts, trips, or personal relationships with the brand.

• Truthfulness and Honesty: Influencer content must be truthful, non-deceptive, and based on genuine experience with the product or service. Claims must be supported by adequate information or testing, and reviews should reflect honest opinions.

• Legal Enforcement: The Competition Bureau of Canada enforces these rules under the Competition Act and can impose fines or penalties for failure to disclose or deceptive advertising.

• Contracts and Intellectual Property: Influencers should have clear agreements with brands outlining content expectations and IP rights. Registering copyrights with the Canadian Intellectual Property Office (CIPO) can provide additional protection for original content.

• Tax Obligations: Income from sponsorships, brand deals, affiliate commissions, and even free products must be reported as taxable income. Influencers earning over $30,000 annually may need to register for GST/HST.

• Ongoing Compliance: Brands should monitor influencer content continuously to ensure ongoing adherence to disclosure and advertising standards.

These considerations ensure that sponsored content in Canada is transparent, honest, and compliant with consumer protection laws, thereby safeguarding both influencers and brands from legal risks.