Advertising Standards Canada (ASC) Requirements

"Truth. Fairness. Accuracy." Those are the guiding principles of Ad Standards, the body that enforces the Canadian Code of Advertising Standards (Code). First published in 1963, the Code has been periodically updated to keep pace with changes in the Canadian advertising landscape.

Recent developments, including influencer advertising, have led Ad Standards to publish additional guidance to guide and protect Canadian consumers from misleading advertising. If you run a Canadian business, your advertising must comply with the Code or risk having to withdraw or change it. The Code could also help you comply with provincial and federal laws.

In this article, we'll examine how Ad Standards works and how your business can reach its audience while remaining compliant.

What Is Ad Standards?

Ad Standards, formerly known as Advertising Standards Canada (ASC), is an independent, non-profit organization that promotes advertising self-regulation.

Ad Standards is also an advertising preclearance agency. Advertising preclearance is the process of reviewing advertising copy against industry standards and providing advice.

Ad Standards' goal

As Ad Standards' mission statement mentions, it is the only advertising self-regulatory body in Canada, with the goal of enhancing public confidence in all forms of advertising. According to Ad Standards, research has consistently shown that Canadian customers are more likely to trust advertisements from Ad Standards members:

Organizational structure and membership

Ad Standards' membership is made up of:

• Advertisers
• Agencies
• Media organizations
• Industry supporters
• Professional and research services

Members are able to use the Ad Standards Member logo, shown below, on their websites and in their corporate communications materials:

Eight directors are elected at the Ad Standards' Annual Meeting, held each spring. They represent member bodies and include one public representative.

Understanding The Canadian Code of Advertising Standards

The Canadian Code of Advertising Standards is the main yardstick against which Ad Standards measures all advertising it reviews. It's important for businesses marketing to Canadian consumers to understand these standards and what they need to do to comply.

Self-regulation, not law

The Code is not a federal or provincial law and is not intended to replace them. Instead, as the overview to the Code shows below, it complements them. Following the Code can help your business comply with the law:

Who does the Code apply to?

The code does not just apply to for-profit businesses. As seen below, the Code also defines acceptable advertising standards for nonprofits, those not involved in commercial advertising, and government agencies.

However, there are some notable exclusions:

• Political and election advertising
• Advertising from entities with "no material connection with the entity that makes, distributes, markets or advertises the product or service featured in the advertising or advertisement(s)"
• Foreign media - unless the advertiser is a Canadian person or entity
• Packaging - including wrappers and labels

Ad Standards' Key Responsibilities

The main role of Ad Standards is to uphold the Canadian Code of Advertising Standards (Code). In doing so, it aims to strengthen public confidence in Canadian advertising.

There are five main elements to its work.

1. Handling complaints

Ad Standards has procedures for handling complaints from consumers, the advertising industry, and regulators. As shown below, when it receives a complaint, it evaluates it according to the Code and Compliance Plus program. Compliance Plus programs are additional standards some industry sectors hold themselves to that are sometimes more rigorous than the Code or the law:

Ad Standards administers different complaints procedures depending on the nature of the complaint:

• General complaints: Consumer Complaint Procedure
• TV and radio ads directed to children under 12: Complaints are directed to the Children’s Broadcast Advertising Complaints program
• Online targeted/personalized advertisements: Complaints are handled by The AdChoices Accountability Program
• Food or drink advertising directed to children aged 13 or under: Administration of the Code for Children’s Food and Beverage Advertising

2. Education

Ad Standards aims to support businesses in complying with the Code by providing training and educational resources. As shown below, Ad Standards provides the following resources to support compliance:

• Library: Features publications, guides, and reports
• News: Contains the latest announcements and developments in the Canadian advertising self-regulation space
• Events: Has details of upcoming Ad Standards forums, seminars, and workshops that raise awareness of emerging issues and support Code compliance
• Scholarships: Undergraduate marketing and advertising students can benefit from two $1,500 scholarships, one for English and another for French-language institutions

3. Global exchange

Ad Standards only enforces the Code for Canada-based advertisers or Canadian advertisers based abroad. However, it is a member of the International Council for Ad Self-Regulation (ICAS), a body established in 2008. As the excerpt below shows, its goal is to facilitate the exchange of information and best practices among self-regulatory organizations:

4. Compliance Plus programs

Compliance Plus refers to programs that go beyond the standards required by the law or the Code. One example is the AdChoices Accountability Program, which focuses on transparency and consumer control around behavioral advertising, also called targeted advertising.

5. Preclearance

Advertising preclearance is one of the most important roles of Ad Standards. Advertisers pay Ad Standards to review advertising copy and provide advice in line with the code before advertisements enter circulation or production.

Expert analysts review adverts in English and French and provide recommendations to help advertisers meet regulatory requirements and avoid complaints and fines.

Ad Standards provides preclearance services for advertisements in the sectors shown in the excerpt below from its website:

Advertisements that have been reviewed and passed the preclearance process can receive the "Ad Standards Clearance Services Check Mark," which is shown below:

6. Review Government of Canada advertisements

Ad Standards also carries out a non-partisan review process for governmental advertising campaigns with a budget of more than $250,000. As shown on the excerpt from the Government of Canada website below, it is responsible for reviewing ad campaigns against the government's advertising review criteria:

Additional responsibilities

On June 28, 2023, Ad Standards began to administer the Code for the Responsible Advertising of Food and Beverage Products to Children (Industry Code). The Industry Code prohibits the marketing of food and beverages to children unless they meet specific nutritional criteria.

Ad Standards considers three criteria for advertisements directed at children under the age of 13:

• Nature and purpose of food or beverage advertised
• Type of advertisement
• When and where it will be shown

If your business targets Canadian consumers aged 12 and below, preclearance with Ad Standards could ensure your advertisements do not breach the Industry Code or other applicable laws.

How to Comply With the Canadian Code of Advertising Standards

To maintain public confidence in your business or non-profit, it is important to comply with the Code. Participating in Ad Standards' preclearance program could also help you comply with provincial and federal advertising regulations.

All advertisers must consider the following key areas to comply with the Code.

Avoid misleading advertising

Crafting an advertisement that is technically correct but in any way misleads consumers, is prohibited by Section 1 of the Code (see below). This would include exaggerated claims and visuals that misrepresent products. It is important to implement rigorous review processes to ensure advertisements cannot mislead and any disclaimers are featured prominently:

Truthfulness and accuracy

Your business must ensure that all advertisements are truthful and accurate and do not mislead consumers. While packaging and wrappers are exempt, product descriptions, pricing, performance claims, and any other information conveyed that influences consumer decision-making must also be accurate.

As shown below, Section 1 outlines that advertisements must not:

• Omit details
• Use confusing language
• Include contradictory information in disclaimers or footnotes

Evidence-based advertising

If your advertisement makes claims, you need to make sure you have the data to back them up. When discussing a product's benefits, performance, or results, Ad Standards can and will ask for verifiable evidence substantiating your claims. This could include scientific studies or clinical evidence, depending on the type of product being advertised.

Ensure you keep documentation on file to comply with Section 1(e) (see below) and if consumers, competitors, or regulators challenge your claims:

Additionally, Section 8 requires advertisers not to distort the meaning of statements by professionals or scientific authorities. As shown below, the sources quoted must apply to Canada:

Any testimonials, reviews, or endorsements must be authentic, reasonably current, and based on "adequate information about or experience with the identified product or service."

No disguised advertising

The Code forbids disguised advertising techniques, such as using a style or format that conceals the fact it is an advertisement. Additionally, your advert must make it clear who the advertiser is. Teaser adverts are the only exception to this requirement.

If your business is involved in influencer marketing, this section of the code applies to you. In the fall of 2023, Ad Standards released its "Influencer Marketing Disclosure Guidelines," which help influencers better understand their responsibilities under the Code.

As seen in the good disclosure example from the guidelines below, these include:

• Clear and conspicuous disclosures such as #ad
• Disclosures that are "independent of social medial network or channel-specific settings"
• In videos, include upfront and identifiable disclosures
• Do not include blanket disclosures

Here's an example:

Unacceptable advertising practices

The Code specifically outlines several unacceptable advertising techniques that your business must avoid:

• Bait and switch: This is the practice of offering a product at a bargain price only to claim it is unavailable and encouraging customers to purchase a more expensive alternative. Section 4 of the code prohibits this, requiring advertisers to clearly state supply limitations in the advertisement.
• Comparative advertising: Under Section 6, advertisements must not unfairly attack other products, services, companies, or advertisements or make exaggerated claims about the differences between them.
• Fears and superstitions: Under Section 11, advertisers are prohibited from creating adverts that mislead consumers by exploiting superstitions or fears.
• Advertising to minors: Section 13 forbids age-restricted products from being targeted at minors.

Unacceptable depictions and portrayals

Creative advertising can use a variety of techniques to convey marketing messages. Some of these may be distasteful to some Canadian consumers while not necessarily violating the Code.

However, Section 14 sets out the following no-go areas for advertisements:

• Condoning any form of discrimination
• Exploiting or condoning violence
• Demeaning persons, groups, or organizations
• Undermining human dignity

How to ensure compliance

The examples above are just a sample of the Code's requirements. Complying with all of them and federal and provincial laws can be daunting.

It makes sense to ensure your internal policies align with the Code and relevant laws, including data privacy laws like the Personal Information Protection and Electronic Documents Act (PIPEDA). Compliance consultants can audit your current policies and suggest improvements.
This will make your advertisements more likely to sail through preclearance and not attract complaints or worse.

Penalties for Breaking Canadian Advertising Laws

Every business targeting Canadian customers must ensure its advertisements comply with the Code and relevant laws. While the code does not have legal enforcement powers, breaking federal advertising laws could lead to hefty fines and even jail time.

Enforcement powers

Ad Standards is a self-regulatory body supported by the advertising industry. As such, it does not have legal enforcement powers. If Ad Standards upholds a complaint from an industry body or a member of the public, it cannot force the company to remove the advertisement. However, it can ask it to remove or amend it, as shown in Ad Standards' Frequently Asked Questions below:

Additionally, when Ad Standards upholds a complaint about non-compliance with the Code and Guidelines, it can and will publicly report companies that break the rules. This can be seen in the Ad Standards backgrounder below.

Possible consequences of breaking advertising laws

Both federal and provincial laws govern advertising and marketing practices in Canada. These include:

• The Competition Act: Federal law that has recently undergone three rounds of amendments.
• Provincial consumer protection legislation: This includes the Ontario Consumer Protection Act and British Columbia Business Practices and Consumer Protection Act.
• Anti-Spam Law (CASL): Federal legislation around electronic marketing.

If a business breaks a federal law, the penalties can be steep. For example, false or misleading representations or deceptive marketing practices could be criminal offenses under the Competition Act. As the excerpt from the Competition Bureau website below shows, these could result in hefty fines and even lengthy prison terms:

Ad Standards does not prevent complainants from filing lawsuits against advertisers that violate the law through the regular Canadian justice system. The following excerpt from the Competition Bureau shows that this can result in penalties of up to $1,000,000 for individuals and $15,000,000 for corporations. Additional sanctions may be imposed in the most serious cases:

Ad Standards may not have legal enforcement powers, but it can advise you on how not to break the Code and advertising laws. Preclearance services could save you and your business from making a mistake that could put you out of business and even behind bars.

Summary

Ad Standards and the Canadian Code of Advertising Standards play a crucial role in maintaining customer trust and promoting ethical advertising in Canada. While Ad Standards does not have legal powers, its self-regulatory framework is widely adhered to by Canadian businesses and helps them comply with provincial and federal advertising regulations.

The Code applies to all businesses advertising to Canadian consumers, including Canadian individuals and businesses operating abroad. Its strict guidelines ensure advertisements are truthful, accurate, and ethical. They prohibit discrimination and ensure advertising to children complies with the latest regulations.

Non-compliance with the Code could lead to customer complaints and a request from Ad Standards to withdraw or amend your advertisement. This could result in reputational damage to your business. However, potential legal consequences of breaking advertising laws include fines, lawsuits, and even criminal charges.

To mitigate these risks, businesses should ensure their internal advertising guidelines comply with the Code and relevant laws. Additionally, Ad Standards' preclearance services can ensure your advertisements comply before going live. Closely adhering to the Code can help you craft ethical, legally sound advertisements that resonate with customers and build confidence in your brand.