Performance Claims: Acing The 'Adequate And Proper Test ' Requirement

This article was co-authored by Brenda MacDonald

Performance claims are ubiquitous. Phrases like "new and improved,"†"consumers prefer" and "three out of four doctors recommend" bombard us as we watch†television, listen to the radio or surf the web. Performance claims are popular because†they work. As consumers, we seek out the best products and the biggest bang for our†buck. This mini-paper takes as its subject the legal rules that govern the making - and†keeping - of those promises.

In a paper of this length, it is not possible to canvass comprehensively the†issues related to claim substantiation. Rather, the purpose of this note is to plant a few†signposts to guide the advertiser's trek through some difficult legal terrain. The paper†charts a course around the snags and pitfalls that can trip up a promising advertising†campaign, setting out an analytical plan of attack that may be applied to any claim,†whether comparative, self-comparative or non-comparative. Along the way, it attempts†to dispel a few of the more widespread myths and misconceptions that advertising†counsel, both in-house and external, encounter on a day-to-day basis.

First, a few general principles. The rules of this particular game are set†out in paragraph 74.01(1) of the Competition Act (the "Act"), which provides as follows:

74.01(1) - A person engages in reviewable conduct who,†for the purpose of promoting, directly or indirectly, the†supply or use of a product or for the purpose of promoting,†directly or indirectly, any business interest, by any means†whatever,

(b) makes a representation to the public in the form of a†statement, warranty or guarantee of the performance,†efficacy or length of life of a product that is not based on an†adequate and proper test thereof, the proof of which lies on†the person making the representation; Ö

The paragraph creates an affirmative obligation on firms to substantiate all†material claims. It applies equally to claims that are comparative, self-comparative and†non-comparative. Moreover, as is the case in the United States, proactive as opposed to†post-facto substantiation is required. If an advertiser makes an objectively verifiable†claim without having conducted "adequate and proper" tests, the company has committed†a reviewable practice under the Competition Act. The fact that the claim was and†continues to be accurate is not a defense to prosecution. Akin to the "look before you†jump" principle, it is necessary to test before you advertise, even if you are confident of†the result. The other important point here is that the onus is on the advertiser to establish†adequate substantiation, not the Commissioner. Once the Commissioner has established†that a performance claim was made, the burden shifts to the advertiser to establish the†sufficiency of the tests conducted. Claim substantiation, as paragraph 74.01(1)(b)†suggests, is a serious business.

It is the more serious given the close monitoring that occurs in the†marketplace. Today's company must expect that its competitors will vigorously test the†claims it makes, particularly if the claim is comparative in nature. Since your†competitors always know more about their products than you, it is important to follow a†rigorous analytical step-by-step process before airing any ad requiring substantiation, let†alone one that uses comparatives. As the reader will note from the discussion below,†moreover, the analytical exercise we are about to discuss should be performed sooner†rather than later. Involving counsel at the drawing-board stage of a campaign can help†ensure that your marketing team's creative ideas make the jump from boardroom easel to†the television screen.

In its simplest form, the recommended approach to assessing any†performance claim consists of three basic steps: identify, classify, evaluate. The†discussion below will focus on each step in turn.

A. IDENTIFY THE CLAIMS

The first step involves identifying the explicit and implied...