Focus On

Competition Bureau cracks down on deceptive marketing claims of COVID-19 prevention or treatment

Thursday, May 07, 2020 @ 12:20 PM | By Cristin Schmitz

Canada’s Competition Bureau has issued an express “warning” — admonishing businesses to “review your marketing and labelling, and take immediate action to comply with the law” that prohibits false or misleading claims — or face possible legal action.

The bureau announced May 6 that it is “actively monitoring the marketplace” and taking action to stop businesses making false or misleading claims that their products and services can prevent, treat or cure COVID-19.

“As concerned Canadians take steps to protect themselves and their loved ones during the pandemic, they need accurate information so they can make informed decisions,” Competition Commissioner Matthew Boswell said in a May 6 statement. “We urge all businesses to ensure their marketing complies with the law — including any claims made about the performance of their products — or face potential legal action by the Competition Bureau.”

The bureau said it has already issued direct compliance warnings to a variety of businesses across Canada to stop potentially deceptive claims, including herbal remedies, bee-related products, vitamins, vegetables or other food and drink products can prevent COVID-19 infections. Compliance warnings have also been directed to businesses making claims, without having first conducted the legally required testing, that certain UV and ozone air sterilization systems, as well as certain air filters or air purifiers, will effectively kill or filter out the COVID-19 virus.

The bureau said its compliance warnings so far have included an unnamed major national retailer, and businesses in British Columbia, Alberta, Saskatchewan, Ontario, Quebec and New Brunswick.

“Most of the businesses have taken corrective action, pulling products that raised concerns from their shelves or stopping the claims,” the bureau said.

The Competition Bureau stressed that businesses face “severe financial penalties and jail time if their marketing practices do not comply with the law.”

(Under the Competition Act’s civil enforcement regime, a court may order a person to cease the activity, publish a notice and/or pay an administrative monetary penalty of up to $750,000 for an individual and $10 million for a corporation. For subsequent occurrences, the penalties increase to a maximum of $1 million for individuals and $15 million for corporations. Where a person has made materially false or misleading representations about a product to the public, the court may also: order restitution, which requires the person to compensate consumers who bought the products; and issue an interim injunction to freeze assets in certain cases.)

The Competition Bureau advised businesses to:
  • Know the law: The Competition Act prohibits false or misleading claims about any product, service, or business interest. This includes both the literal meaning of the claims and the general impression they create. The Competition Act also prohibits any performance claims that are not backed up by adequate and proper testing, which must be conducted before the claims are made. Such testing must also be conducted on the product being sold (not on a “similar” or “comparable” product); must reflect its real world usage (such as in-home use); and the results of the tests must support the general impression created by the claims. The Textile Labelling Act and the Consumer Packaging and Labelling Act also prohibit false or misleading claims on the labels of consumer textiles and prepackaged products.
  • Conduct “a comprehensive review” of their marketing practices to identify any claims that could reasonably be associated with COVID-19, including claims on websites, social media and product labelling, as well as keywords in website metadata or online advertising campaigns used to attract customers to their websites.
  • Correct immediately any potentially false, misleading or untested claims and ensure their marketing practices comply with the law.
  • Maintain a corporate compliance program.

The bureau noted that it is co-ordinating with Health Canada — which has not yet approved any product to prevent, treat or cure COVID-19— as well as with other Canadian and international law enforcement entities.