Retail: Selling consumer products online to Canadians
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Even as the pandemic wanes in many areas, consumers continue to shop online more than ever, and companies have responded with a heightened focus on and investment in their online offerings to consumers. In this article, we outline some considerations for companies looking to make direct sales to Canadians through online means, whether or not they have a physical presence in Canada.
Advertising
There are several pieces of legislation in Canada that regulate advertising to the public. A key statute is the Competition Act which prohibits false or misleading representations and deceptive marketing practices. When assessing whether a representation about a product is false or misleading, the general impression conveyed by the representation, as well as its literal meaning must be taken into account. While the term “puffery” is not defined in Canadian legislation, the standard in Canada is stricter as compared to other jurisdictions; a claim must be so exaggerated that a reasonable consumer would never take it seriously to be “puffery”, and otherwise substantiation is necessary in order for the claim to be compliant in Canada. On a separate note, offering contests and sweepstakes to Canadians can trigger disclosure requirements under the Competition Act, as well as engage provisions of the Criminal Code. Contests that are offered to residents of Québec may require registration with the provincial government, although these rules have recently been relaxed when the contest is offered to residents of Québec and internationally.
Safety monitoring and reporting
Vendors of consumer products are subject to the Canada Consumer Product Safety Act (CCPSA), which includes a list of consumer products that are prohibited from being advertised or sold in Canada, and the regulations under the CCPSA define specific labelling and performance requirements for certain categories of products including children’s toys, clothing, sports equipment and household products. The CCPSA mandates the reporting of safety-related incidents to Health Canada within two days of becoming aware of the issue, whether the incident occurred in Canada or elsewhere. Products posing a safety concern can be subject to recalls or other corrective action—a new alert for a recall involving a consumer product is posted almost daily to Health Canada’s “Recall and Safety Alert” site1.
Labelling
All consumer products must be labelled in accordance with the Consumer Packaging and Labelling Act (CPLA), requiring accurate declarations of quantity, product identity, seller identity and other information. Mandatory label information must be displayed in both French and English. In addition, labels on products sold to residents in the province of Québec may be subject to additional language requirements under the Charter of the French Language. Products may be held by border services if labelling is not compliant with Canadian requirements.
Regulated products
Regulated products will have labelling requirements and advertising restrictions in addition to the general rules described above. Several categories of regulated products require pre-market approval and/or notification for sale in Canada (e.g., consumer drugs and natural health products, certain medical devices, cosmetics). Other products may have conditions associated with their advertising and sale, such as age restrictions (e.g., vaping products or fireworks). Of particular note, Health Canada has been very active in enforcement against vendors that make claims related to COVID-19 or those selling PPE and therapeutic products without the required authorization. Use of a hashtag such as #covid19 or #coronavirus is considered a health claim, and there are hundreds of ongoing and resolved advertising incidents of this nature posted to the “Health Product Advertising Incidents Related to COVID-19” site2.
Terms of sale
Provincial consumer protection laws establish implied warranties of quality for consumer goods and consumer cancellation rights for online sale agreements. As an example, in Ontario, products must be delivered within 30 days of the promised date or else are subject to a full refund. If no date is specified, then the provision is not triggered, however, consumers may be less inclined to order from a vendor without the guarantee. These consumer protection provisions cannot be contracted out of, and while generally similar, prescribed requirements will vary from province to province. Given the current supply chain constraints, companies should review their terms of sale carefully against the mandatory requirements.
Email marketing and personal information
Canada has “anti-spam” legislation (referred to as CASL) that applies to email and text communications. In general, opt-in consent is required to send electronic marketing communications, and the message must include certain sender identification and an unsubscribe mechanism. There are various exclusions under CASL where consent may be implied. Canada has federal and provincial privacy laws, such as the Personal Information Protection and Electronic Documents Act (PIPEDA), that govern the collection of personal information of Canadians, and that place limitations on the use of customer data without express consent.
Enforcement of the various regulations discussed above is highly variable and potential penalties will depend on the type and quantity of product being advertised or sold, and the nature of the seller’s business in Canada.