The rise of influencer marketing class actions

Over the past year, a new and unexpected wave of consumer litigation has begun reshaping the advertising landscape in the United States: class actions targeting influencer marketing practices.

What was once seen as an agile, informal, and modern form of brand promotion is now emerging as a source of legal exposure. In just a few months, plaintiffs filed five class action complaints against major brands, signaling that influencer-related claims are no longer a theoretical risk. They are becoming a tangible and expanding area of litigation.

The common thread running through all these complaints is straightforward: the defendant corporations allegedly failed to ensure influencer posts complied with the law.

Plaintiffs contend that influencers published promotional content on Instagram without adequately disclosing that the posts were paid partnerships, in that they omitted identifiers such as #ad, #sponsored, or #paidpartnership or, if they did include these identifiers, by not ensuring the disclosures were sufficiently clear or visible to consumers.

On this basis, the complaints generally advance three categories of claims: (i) statutory violations of consumer protection or competition laws, (ii) unjust enrichment, and (iii) misrepresentation.

Even if the ultimate success of these claims remains uncertain, this emerging litigation trend is unlikely to remain confined to the United States.

Canada is particularly ripe for similar litigation. Influencer marketing has become one of the most powerful and widely used advertising channels worldwide, and Canadian brands have embraced it just as enthusiastically as their American counterparts.

Reflecting this evolution, the Competition Bureau of Canada has already devoted significant attention to the oversight of influencer marketing, notably by publishing guidance and notifying several corporations of the non compliance of their advertising practices. This regulatory activity underscores that the relevant question is no longer whether, but when, similar class actions will be brought in Canada¹.

Why is influencer marketing disclosure legally required?

In Canada, the Competition Act regulates false or misleading representations made to the public, including promotional communications conveyed by any means of telecommunication, a framework sufficiently broad to capture influencer marketing practices on social media. Contravening these provisions may expose a corporation to significant monetary penalties, including administrative monetary penalties of up to the greater of $10 million or three times the value of the benefit derived from the conduct².

Furthermore, provincial consumer protection legislation governs advertising to consumers across Canada. In Quebec, for instance, the Consumer Protection Act prohibits false or misleading advertising, as well as the failure to disclose an important fact, and holds both merchants and advertisers responsible for compliance.³

A breach of both federal and provincial legislation could lead to class actions brought by consumers across the country.

How to mitigate legal risk

The circumstances giving rise to influencer marketing class actions are relatively straightforward: the influencer failed to disclose that the publication constituted an advertisement. To mitigate this risk, corporations should ensure all influencers with whom they collaborate properly and clearly disclose the promotional nature of their content.

The influencer has an obligation to disclose his or her "material connection" with a business if this connection could affect how consumers evaluate the influencer's independence from the brand, for example if he or she had:

• Received payment in money or commissions.
• Received free products or services.
• Received discounts.
• Received free trips or tickets to events.
• A personal or family relationship.⁴

Disclosure does not require elaborate measures; it must simply be clear and immediately visible to consumers. An express statement at the beginning of a post description identifying the content as an advertisement for a specific corporation will typically satisfy this requirement. Similarly, hashtags such as #ad, #sponsored, or #paidpartnership are generally sufficient, provided they are not buried in the text or accessible only after clicking "see more."

Conclusion

Influencer marketing may feel informal and modern, but the legal expectations surrounding it are firmly rooted in long standing principles of transparent advertising. As recent US class actions show, plaintiffs are ready to hold brands accountable for the way their influencers disclose paid partnerships. With Canadian regulators already active in this area, Canadian class actions are likely not far behind.

Corporations that proactively implement clear disclosure practices, supported by strong influencer contracts, training, and monitoring, will be best positioned to reduce their exposure and navigate this evolving landscape with confidence.

The authors would like to thank Simon Létourneau, articling student, for his contribution to preparing this legal update.

Footnotes