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Comments on Competition Bureau’s Draft Internet Advertising Guidelines

The following are brief comments on “Staying On-side when Advertising On-line: A Guide to Compliance with the Competition Act when advertising on the Internet.”

The Public Interest Advocacy Centre is a national non-profit organization devoted to the representation of consumer interests in matters involving public utilities, essential services, and public interest issues of broad application to Canadians. Our focus is on the protection of lower income and vulnerable consumers, and on issues not already being addressed by other public advocacy groups. PIAC has developed a strong record of consumer advocacy since its inception in 1976, and is widely recognized as an important and influential voice for ordinary consumers in a variety of marketplace issues. PIAC is governed by a distinguished volunteer Board of Directors from across the country, and is supported by member groups and donors representing hundreds of thousands of Canadians.

We have reviewed the Competition Bureau’s consultation draft and find that it sets out some appropriate guidelines for the online marketplace. We commend the Bureau on this initiative, especially the clarity with which it has expressed its intended approach to online advertising. The following are a few suggestions regarding areas which deserve further attention:

5. Representations about the Advertiser

  • “Identify the business on whose behalf the marketing or advertising is being conducted, if failure to do so would be deceptive.” This is an important guideline. However, it does not go far enough.

There are many examples of deceptive advertising via the Internet as a result of failure to identify hidden sponsors or transaction fees. For example, a website recruiting consumers for clinical trials in the USA, Dr.Koop.com, listed hospitals that were “the most innovative and advanced health care institutions across the country”, without disclosing that each listed institution paid US$40,000 to be listed, and that Dr. Koop received a 2-4% commission for products and services sold through the site. Amazon.com recommended books in online columns entitled “What’s worth reading” and Destined for Greatness”, and in email alerts to past buyers, without disclosing that publishers paid up to US$10,000 per book to obtain such listings.

Not only do sites in these cases need to identify the business on whose behalf they are advertising, they need to disclose relevant transaction fee arrangements, business relationships, and funding sources in order not to deceive consumers.

  • Add “hyperlinks” to the list of ways in which false impressions of affiliation, etc. can be created.

In addition to “representations about the advertiser”, representations about products for sale generally need to be addressed. One of the hallmarks of Internet advertising is its blending of information and advertising. In contrast to print or broadcast media, the unregulated Internet has allowed a situation to arise in which consumers are denied the kind of disclosures commonly provided in traditional media that provide them with the all-important context within which to judge what they read, hear and see. Online advertisements and paid announcements are commonly not labeled as such, and conflicts of interest are commonly not disclosed. It is critical, for consumers to be able to make informed choices, that they be able to distinguish between neutral information and advertising, sponsored content, or paid-for hyperlinks. Labeling of the latter is needed in order to prevent widespread consumer deception. We would therefore suggest the following additional guidelines:

  • Ensure that the purpose of the web site in question is clearly and honestly represented;
  • Label advertising, sponsored content, and paid-for hyperlinks as such.

Yours truly,
Philippa Lawson

Counsel

 

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