Ad Disclosure, and What Happens If You Do Not

Disclosure is the rule everyone half knows. The provisions that catch brands and creators out are the ones about testimonials and about who can now sue.

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Competition ActDisclosureTestimonialsAd Standards

Material Connections | Testimonials | Penalties | Private Actions

Why this changed recently.

Administrative penalties for corporations reach $10 million on a first order, $15 million on a subsequent one.

For individuals, the greater of $750,000 and three times the benefit derived.

Since June 2025 private parties can take deceptive marketing to the Competition Tribunal.

The public interest limb means the applicant need not be a competitor or a customer.

Quick Answer

What are the rules on disclosing paid partnerships in Canada?

Two systems apply at once. The Competition Act is the statutory one. Section 74.01(1)(a) makes materially false or misleading representations reviewable conduct, with no need to prove intent, and section 52 creates a criminal offence where the representation is made knowingly or recklessly. Both apply the general impression test, in section 74.03(5) for the civil provisions and section 52(4) for the criminal one, so what matters is the impression conveyed rather than the literal words. Failing to disclose that a post is paid can make the general impression misleading. Alongside it sits Ad Standards, the industry self regulatory body, whose Canadian Code of Advertising Standards requires disclosure of any material connection between an endorser and the entity making the product available, clearly, prominently and in close proximity to the representation. That requirement sits in Clause 7 on testimonials, operationalised by Interpretation Guideline 5, and the Influencer Marketing Disclosure Guidelines recognise hashtags such as #ad and #sponsored as adequate.

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THE DISCLOSURE RULE

Material Connections, Clearly and Close By

The obligation is to disclose a material connection between the person endorsing and the entity behind the product. A material connection is not confined to cash. Free product, a discount, travel, an affiliate commission, an ambassador role or a family relationship can all qualify.

The disclosure must be clear, prominent and in close proximity to the representation. That rules out disclosure buried after a "more" cut, placed at the end of a long caption, hidden among a block of unrelated hashtags, or shown for two frames of a sixty second video.

Ad Standards recognises #ad, #sponsored, and forms such as #BrandName_Ambassador or #BrandName_Partner, and natural language disclosure within the content itself. Platform disclosure tools are useful and are generally treated as a supplement rather than a substitute, because they are not equally visible in every surface a post appears in.

THE SLEEPER PROVISION

Section 74.02 and Testimonials

This is the provision that catches brands, and it operates independently of disclosure. Section 74.02 prohibits publishing a testimonial, or representing that a third party has tested a product, unless the third party previously made or published it, or the person obtained the third party’s approval in writing and permission to publish, and the representation accords with what the third party actually said or approved.

That has direct consequences for the ordinary practice of repurposing creator content. A brand that reposts a creator’s endorsement without written approval, or that edits it so it no longer accords with what the creator actually said, is exposed under section 74.02 whether or not the original post was properly disclosed.

The practical fix is contractual and simple: the brand agreement should contain the written approval and permission that section 74.02 requires, and should define what editing is permitted. Cutting a qualified statement down to an unqualified one is precisely the risk the provision addresses.

WHAT IT COSTS

Penalties, and Who Can Now Bring a Case

Administrative monetary penalties under section 74.1 are substantial. For a corporation, the maximum is the greater of $10 million on a first order, rising to $15 million on a subsequent one, and three times the value of the benefit derived, or where that cannot reasonably be determined, three per cent of annual worldwide gross revenues. For an individual it is the greater of $750,000, rising to $1 million, and three times the benefit derived.

The structural change that matters most is procedural. Since 20 June 2025, private parties may seek leave from the Competition Tribunal to bring deceptive marketing cases directly. The leave test now includes a public interest limb, so an applicant need not be a competitor or a customer, and the Tribunal may order payment of an amount not exceeding the benefit derived, distributed among affected persons.

The consequence for this sector is that enforcement no longer depends on the Competition Bureau choosing to act. A competitor, an advocacy organisation or a public interest applicant can bring an undisclosed material connection campaign to the Tribunal, within one year of the conduct being substantially completed.

AD STANDARDS

Self Regulation With Real Consequences

Ad Standards is a not for profit industry funded body. It has no statutory authority and its decisions are not legally binding or enforceable in court, which leads some people to disregard it. That is a mistake.

Complaints that raise a Code issue go to a Standards Council panel. If upheld, the advertiser is asked to amend or withdraw the advertising without unreasonable delay, and decisions are published as case summaries in which the advertiser may be named. Where an advertiser does not comply, media members may be alerted and may decline to carry the advertising.

So the practical consequences are reputational and distributional rather than financial. And critically, an Ad Standards outcome is not a defence to a Competition Act claim. The two systems run in parallel, and compliance with the Code is evidence of a genuine compliance system rather than immunity.

Common Questions

Frequently Asked Questions

Is #ad enough?

Generally yes, if it is clear, prominent and in close proximity to the representation. Ad Standards recognises #ad and #sponsored among adequate disclosures. What fails is placement: buried after a "more" cut, at the end of a long caption, lost in a block of hashtags, or on screen too briefly to read.

Do I need to disclose free product?

Yes. A material connection is not limited to money. Free product, discounts, travel, affiliate commissions, ambassador roles and personal relationships can all be material connections requiring disclosure.

Can a brand repost my endorsement?

Only within the limits of section 74.02, which requires that you previously made or published the testimonial, or that the brand obtained your written approval and permission to publish, and that what is published accords with what you actually said or approved. Editing that changes the substance of a qualified statement is the specific risk.

Who enforces these rules?

The Competition Bureau under the Competition Act, and since 20 June 2025 private parties may also seek leave to bring deceptive marketing cases directly to the Competition Tribunal, including on a public interest basis. Ad Standards separately administers the industry Code, which is not legally binding but carries reputational and distribution consequences.

What are the penalties?

For a corporation, the greater of $10 million on a first order or $15 million on a subsequent one, and three times the benefit derived, or three per cent of annual worldwide gross revenues where the benefit cannot reasonably be determined. For an individual, the greater of $750,000 or $1 million on a subsequent order, and three times the benefit derived.

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Ad Disclosure, and What Happens If You Do Not

What are the rules on disclosing paid partnerships in Canada?

Speak to an Entertainment Lawyer

Material Connections, Clearly and Close By

Section 74.02 and Testimonials

Penalties, and Who Can Now Bring a Case

Self Regulation With Real Consequences

Frequently Asked Questions

Get Your Disclosure Practice Reviewed

Lexaltico LLP

Ready to Talk? Start My Enquiry

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