New legislation cracks down on deceptive marketing

In today's media-saturated world, there is often only a thin line between marketing and misleading, and this is something marketers have never been more aware of. As regulations become increasingly tight in categories such as food and tobacco, the margin for deception is narrowing. In other areas, the boundaries still remain unclear.

In today’s media-saturated world, there is often only a thin line between marketing and misleading, and this is something marketers have never been more aware of. As regulations become increasingly tight in categories such as food and tobacco, the margin for deception is narrowing. In other areas, the boundaries still remain unclear.

Bruce Philp, partner at Toronto-based Garneau Würstlin Philp Brand Engineering, believes that deceptive packaging has been a problem for a long time, although he says consumers are savvier than they used to be.

‘Many products label themselves as being cholesterol-free when in fact very few foods have natural cholesterol in them anyway. It’s a way of trying to make a food look noble but it isn’t really a relevant promise,’ he says.

However, under proposed new government regulations, due to be enacted early this year, food manufacturers will soon have to ensure that food labeling meets specific standards of accuracy.

Philp sees the mandatory food labeling as a potential opportunity for smart marketers to become competitive within their own categories. ‘It’s hard to imagine that’s it’s going to have a profound effect on any brands because people generally understand the difference between eating junk food or eating something healthy,’ he says.

However, he continues: ‘What it does do is introduce the possibility of a new arena for differentiation within a category. If in the course of disclosing nutritional content, a manufacturer of potato chips realizes he has a nutritional benefit which other brands lack, while his product may not compare favorably to broccoli, it may differentiate it within its own category.’

The legislation will also ensure that labeling has a clearer and more consistent look.

‘Consumers see a lot of U.S. advertising spillover which sometimes leads to confusion,’ says Laurie Curry, VP of public policy at the Food & Consumer Products Manufacturers of Canada (FCPMC). She points to one example of a recent U.S. TV ad, which talked about a particular cheese product that claimed to be cholesterol-free. Canadian consumers would go to the grocery store and be unable to find this cheese, because regulations north of the border meant that the product had to be labeled differently.

Curry adds that confusion often arises from mislabeled imported goods coming from countries where nutrient claims are not regulated, or where the regulations differ to those in Canada. Under the regulation, imported goods will be required to meet the same standards of labeling as Canadian-produced products.

While regulations governing nutrient content claims related to weight reduction have existed in Canada since 1988, the new regulations will encompass all health claims and will provide the government with stronger powers of enforcement. The information proposed for the labels includes a mandatory nutrition facts box listing 13 nutrients, while claims such as ‘high fibre,’ ‘low sodium’ or ‘fat free’ will have to highlight a specific nutrient in a food.

Such nutrition claims have in fact been regulated in the past, but have sometimes been misleading as other related nutritional information has been omitted. For example, as Christina Zehaluk, a nutritionist with Health Canada, points out: ‘You can put a label on a food product saying ‘high fibre’ and all you have to indicate is the quantity of fibre in the food. You don’t have to give the number of calories, fat levels and sodium levels so a lot of people just see ‘high fibre’ and assume this is a healthy product.’ Under the new regulations, consumers get the complete picture, Zehaluk says.

From the marketer’s point of view, Christine Lowry, VP of nutrition and corporate affairs at Kellogg Canada feels that the new regulations are long overdue.

‘Manufacturers will be able to communicate more accurately with consumers and give them clearer information about the importance of a healthy diet,’ she says. ‘What we at Kellogg will do is find a specific consumer insight and use that to give the consumer health information in a way that’s inviting to them. That’s what every smart marketer will do,’ she adds.

Thomas Pigeon, CEO of Oakville, Ont.-based Pigeon Branding + Design, estimates that brand owners will be shelling out around $5,000 per SKU to implement the changes, bringing about a total cost to the industry (and ultimately the consumer) of around $75 million.

However, despite these hefty costs, Pigeon has yet to come across any manufacturers who are unhappy about the changes.

‘Most marketers have been waiting for this legislation for years,’ he says. ‘The forward-thinking and proactive marketer will take it as a business opportunity. What this kind of activity tends to do is stir up competition in the marketplace and force marketers to think creatively,’ he adds. For her part, Lowry agrees that the benefits to Kellogg will far outweigh any costs.

Another grey area for ethical marketing is cosmetology. Some products which claim to have appearance-enhancing effects, such as anti-wrinkle creams, breast-augmenters and miracle hair-growth remedies, are not basing their claim on any scientific evidence, says one industry observer.

Deception in this area is a major issue, says Roger Lewis, a ‘chartered’ herbalist at Thuna Herbals in Toronto. ‘The more a product concerns the way you look or feel about yourself, the more you get played for a sucker,’ he says. ‘People are very vulnerable and open to manipulation when it comes to body image.’

However, consumer testimonials often make such claims difficult to dispute, and serve to protect marketers. ‘How do you debunk a claim that’s made on the basis of a testimonial?’ Lewis asks. ‘If a product makes one person feel better then surely that’s all that needs to be said. A lot of people would prefer to hear from a real person than from a marketer.’

Susan Vogt, a marketing lawyer at Toronto firm, Gowling, Strathy & Henderson, believes that the main problem lies in the different objectives of the marketer and the consumer.

‘Marketers want you to think that their product is far more unique than it really is. Their essential purpose is not to educate but to sell, and in selling there’s always overstatement,’ she says. ‘A lot of ads are technically legal and hard to prosecute but the takeaway is definitely misleading.’

Of course, there are some areas of advertising where the restrictions are so tight and penalties so severe that no marketer has any leeway to misstep. Canadian tobacco manufacturers have been battling for some time against very tight restrictions on their abilities to promote their products. And while no tobacco company would dare to make a direct health claim, one could argue that any sort of advertising designed to promote what the Canadian Cancer Society calls ‘the leading preventable cause of death, disease and disability,’ has got to be blowing smoke to some extent.

Now, in a landmark court battle that started in Quebec Superior Court on Jan. 14, Canada’s three big cigarette-makers are challenging the constitutionality of the Tobacco Act and related regulations enforced since 1997.

The companies challenging the law, Rothmans Benson & Hedges, JTI-Macdonald and Imperial Tobacco Canada, are seeking to overturn the restrictions on advertising and the obligation to print health warnings across 50% of each cigarette pack, showing graphic images such as lung tumors and diseased gums. They also hope to lift the ban on sponsorship of arts and sporting events. In 1995, the Supreme Court agreed with arguments similar to the ones currently being made and overturned earlier tobacco legislation. This case is expected to last until the fall.

‘What we are facing right now is a total ban on our ability to promote and advertise and provide useful information to our consumers,’ says John McDonald, director of public affairs for Rothmans.

Last fall, Canadian cigarette companies lost the first round of a new battle to continue using words such as ‘light’ and ‘mild’ on their packaging, as the federal government deems such words to be falsely leading smokers to believe that these products pose less risk to their health. A new rule, due to be in place this quarter, will force cigarette-makers to rename many popular brands, and may well lead to further legal challenges.

Lyne Deschenes, a researcher for the Canadian Cancer Society believes that banning these words could have a significant impact on the number of smokers. ‘Around 60% of smokers choose light or mild products, and our research shows that the majority of them choose these products because they think they are healthier and contain less nicotine and tar, but in reality they are as dangerous as regular brands.’

‘Banning these misleading words may make people stop and think before they smoke,’ she says, adding that 45,000 Canadians die every year from tobacco-related diseases. A recent PSA aimed to educate the public about the ironic nature of these words being used in relation to tobacco.

McDonald argues that the words are not deceptive or confusing to consumers. ‘The description on packaging is a very useful tool for people who want to have a milder or lower tar/nicotine level,’ he says.

Neil Blanche, Imperial’s director of marketing and communications, agrees. ‘They haven’t taken into account consumer participation. We have never made a claim that light and mild cigarettes are healthier. All this will do is make it more difficult for consumers to navigate within brand families.’

Blanche argues that Imperial wants to advertise, not to attract new smokers, but to poach market share from its competitors. ‘Our objective has always been to get market share from the other guys,’ he says. ‘There is still 30% of the market that we don’t have, so what it comes down to is being able to position your brand in the minds of smokers who have already decided to smoke, so if they are thinking of switching brands they’ll choose us.’

However, Helene Goulet, Health Canada’s director general of the tobacco control program, counters: ‘The purpose of all advertising is to sell a product or service, so any advertising of tobacco products serves as an inducement to young people to smoke.’

Goulet is confident that the court case will fail. ‘[When planning the on-pack warnings,] we followed closely the guidelines that the Supreme Court gave us in 1995, so we see no reason why the regulations should be overturned [again].’

Philp believes that the proposed new enforcement would have very little impact on tobacco brands or on the number of smokers. ‘Smokers have shown themselves to be incredibly resilient to the government,’ he says.

‘Smokers have felt under siege for some time and they just see this as a continuation of that.’