As much as marketing’s creative aspects can seem freewheeling at times, there are many rules, regulations and guidelines that all marketers need to follow. We sat down with lawyer Andrew DiLullo of Listrom DiLullo Professional Corporation.
The first question we asked Andrew was, “Why does marketing need to be regulated?” To which he suggested, “In North America, to combat snake oil claims”.
For those unfamiliar with the concept, here’s a brief history:
In the 19th century, oil from Chinese water snakes containing high levels of omega-3 was used to relieve joint pain and inflammation. When Chinese labourers immigrated to California at the height of the Gold Rush, they brought this oil with them and sold it to their fellow mine workers. As the demand for snake oil grew, so did the hordes of opportunistic salesmen hawking fake versions of their making, as well as the claims of what it could cure. With no evidence at all to support any of their claims, these salesmen resorted to various fraudulent promotional tactics, including elaborate (although fake) demonstrations and paid actors posing as happy customers giving glowing testimonials. Because of this, the term “snake oil salesman” became synonymous with anyone selling fake products or making false claims about their products.
Andrew went on to tell us that marketing regulations exist to ensure that marketers tell the truth, are clear in their claims and are fair to the general public, which includes making sure the general public consents to marketing activities. In his own words, “The public should always be able to trust, at least to a minimal degree, that the marketing they’re receiving is honest and reliable.” There has always been an expectation that companies would embellish on their own products and services. Andrew told us that the legal term for this is “puffery”. So we had to ask, “Where is the line?” According to him, marketers cross a line when they start making false measurable claims. He went on to explain that measurable claims are information about a product or service that a potential user should be able to rely upon. For example, when advertising healing crystals, if the claims are made that are not quantifiable, they are usually considered puffery and should be left alone. But if an advertiser attempts to make the claim that their crystals can cure people of the COVID-19 virus, that is considered a measurable claim that an impressionable customer might rely upon, and could therefore be regulated (and penalized) by advertising laws.
Advertising law has always existed to some degree (in Canada it would have been imported from the UK). According to Andrew, one early example is the term “baker’s dozen”. Originating in medieval England, it was punishable by law (with punishments including fines or even flogging) for bakers to cheat customers by overpricing undersized loaves of bread. As many bakers at the time didn’t have scales to weigh their dough, it was extremely difficult to ensure consistency in the sizes of their goods, so they would give a little extra just to be safe. Thus the baker’s dozen - 13 (one extra than a standard dozen) was born as a way to combat misleading advertising (and avoid punishment).
Andrew explained to us that here in Canada, marketing regulations fall under the Canadian Competition Act, which became a statute in 1985 and has been constantly revised since. The Commissioner of Competition is in power at the federal level, with different equivalents for each province. There are also private self-regulatory advertising bodies (each with their own compliance adjudicator and pre-clearance mechanisms), including Advertising Standards Canada and The Canadian Marketing Association, to maintain a code of best industry practices to guide ad production. If you are ever unsure about whether or not your production is compliant, we recommend checking with a lawyer who is familiar with advertising law. They will provide you with a professional opinion that you can rely on and may even be able to assist you in engaging with higher-level organizations. As the regulations differ from location to location, we recommend familiarizing yourself with the regulations specific to the areas you plan to advertise in. Please also keep in mind that here in Canada, Quebec has its own set of rules (as does marketing to children, alcohol, and pharmaceuticals) that are unique due to Quebec’s status as a civil code jurisdiction, unlike the rest of Canada.
Today, we have two broad channels of marketing: traditional and digital. We were curious about the difference in regulations between the two, which is harder to regulate and why.
We were informed that for traditional marketing, the regulations are more logistics-focused. In addition to messaging guidelines, there are physical guidelines that don’t exist in the digital world such as how many ads there can be per km, ensuring they don’t impede access to structures, etc. Every mode and method will have its own rules associated with it. For example, billboards can only be posted under municipal bylaws, they can’t compromise structural integrity or be too distracting to drivers. In some ways, more traditional, physical ads can be more difficult to regulate due to lower visibility in a centralized database, which can make regulations harder to enforce.
Digital marketing is an entirely different animal. As Andrew put it, “Primarily, regulations surrounding digital marketing are about ensuring that ads aren’t so prolific that they end the use of the internet as we know it. Because we know what the end result should look like - an internet that is not full of spam - we can tweak the regulations accordingly as we go and new developments arise.” The Canadian Anti-Spam Legislation (CASL) regulates texts, emails and other forms of online communications, and the collection of consumer information falls under privacy law. There are more complexities to regulating digital marketing than traditional marketing because the master's tools can dismantle the master's house, which is to say that the same technology that developed spam can also redirect it.
One of the biggest issues currently facing digital marketing is privacy. “People expect a certain level of privacy. While the definitions may vary from person to person, generally, people don't expect strangers to know more information about them than has been voluntarily shared (for example, what information is available in the phone book). They also don’t expect one piece of information to be able to lead to more,” Andrew told us. However, with the advent of the surveillance economy business model, this basic balance has been blown up. The initial assumption was that as long as a company was not directly collecting info, privacy was being maintained. But as we now know, this was not the case (*cough*cookies*cough*). This created a need for more regulations around privacy because technology and algorithms make it too easy to use basic information to form a more complete picture of someone. Using enough information, algorithms are able to make statistical inferences to use these estimates to connect to known information. In order to preserve basic privacy, people need to be given the option to opt out of this. Regulations are constantly changing because the people (or more likely companies) attempting to make personal information collected useful to them keep coming up with new and more clever ways to collect this data, which is a violation of privacy.
Continuous conversation between the public, the government, other regulators and companies is necessary to maintain the balance and try to get as close to pre-internet privacy as possible (with the necessary updates to match the new realities of current society). When it comes to protecting privacy, the standards are higher because smaller failures are less acceptable.
At this point, we had to ask, “What kind of consequences are we looking at for violating these regulations?” According to Andrew, the answer depends on which regulation you’ve violated and what harm has been done as a result. In less severe cases, the consequences are fines or cease and desist letters. Since the Federal Canadian Competition Act is powered by the criminal code, severe breaches can incur criminal charges. At the provincial level, contracts can be voided based on misrepresentation, meaning that the money that the ad or campaign producer was expecting to receive for their work will no longer be paid.
The penalties for violating regulations of digital marketing tend to be more severe than for traditional marketing due to the amount of time people spend on the internet. Not only does this create more incentive to monitor, but because failures of enforcement and breaches of compliance in this area hit so many people in a short amount of time, the severity of the penalties needs to match the severity of the damage caused.
Sources:
https://www.listromdilullo.com/
https://bulmanwealth.com/investment-management/a-quick-history-of-the-snake-oil-salesman/
https://www.britannica.com/story/why-is-a-bakers-dozen-13
