The general prohibition on false or misleading advertising under the Competition Act contains two adjudicative regimes, criminal (subsection 52(1)) and civil (subsection 74.01(1)(a)), that can be used to address the same conduct – the making of a materially false or misleading representation to the public for the purpose of promoting one’s product or business interest.
Under the civil provisions (e.g., the use of tests and testimonials, warranty representations, misleading ordinary price claims, promotional contests) of the Competition Act, the Competition Bureau may investigate representations made to the public for the purpose of promoting a business interest that are false or misleading in a material respect.
Moreover, the law provides that false or misleading representations must be determined with reference to the “general impression” conveyed to consumers, as well as their literal meaning.
On May 19, 2020, the application of this civil provision proved costly for Facebook.
After a thorough investigation by the Competition Bureau into Facebook’s privacy disclosures made to users between 2012-2018, Facebook has agreed to pay a $9 million penalty after the Competition Bureau concluded that the company made false or misleading claims about the privacy of Canadians’ personal information on Facebook and Messenger. Facebook will also pay an additional $500,000 for the costs of the Bureau’s investigation.
The settlement comes after the Competition Bureau concluded that Facebook permitted some third-party developers to access users’ personal information on the platform and Facebook Messenger in a manner that was inconsistent with the claims made in the privacy policies and disclosures provided to users through the “Privacy Settings” and other pages. The Competition Bureau also concluded that third-party apps on Facebook gained access to personal information about users’ Facebook friends, even after Facebook had stated that it would stop the practice.
In addition to the settlement, Facebook has agreed not to make false or misleading representations about the disclosure of personal information. This includes representations about the extent to which users can control access to their personal information on Facebook and Messenger.
Facebook has also agreed to align the corporate compliance program being developed in response to the settlement with the Competition Bureau’s guidance on corporate compliance. In March 2020, the Bureau issued Deceptive Marketing Practices guidance to businesses on ensuring data practices are not misrepresented to consumers.
In light of the significant penalty levied on Facebook, it is important for companies operating in Canada to carefully consider whether their privacy disclosures provided to consumers accurately describe their practices. So it would be important to review your privacy policy in light of such guidance including providing consumers with clear disclosure about your practices related to consumer data, such as the data that is collected and the means of collection; the purpose for the data collection; whether data will be shared, sold or transferred to third parties; and retention policies.
Need a better understanding of competition law or the elements required when drafting or reviewing your company’s privacy policy to ensure compliance with government guidelines? Consult 4.06 Competition Law and 1.11 Confidentiality and Privacy in Finance and Accounting PolicyPro.
You can also get an IT perspective on privacy in Chapter 8 — Physical and Systems Security in Information Technology PolicyPro published by First Reference.
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