Canadian Code of Advertising Standards for Influencer Marketing : 
Key Clauses and Application to AI-Generated Content and Influencers

Influencer marketing has become a cornerstone of modern advertising, offering brands a direct line to engaged audiences. However, with this growing trend comes the responsibility to ensure that marketing practices are compliant with Canadian advertising laws and applicable industry codes.

Here we explore the role of Ad Standards Canada and provide a detailed look at Clauses 1, 2 and 7 of its Canadian Code of Advertising Standards (Code), which are particularly relevant to influencer marketing including AI-generated influencers.

This blog is part of our Trusted Communications practice and follows our blog Influencers: Navigating IP Ownership, Reputational Harm and the Rise of AI-Driven Avatars.

The Role of Ad Standards Canada and Non-Compliance with the Code

Ad Standards Canada is a national, not-for-profit, advertising self-regulatory organization in Canada. Its primary role is to ensure that advertising is truthful, accurate and not misleading. Ad Standards Canada administers its Code, which establishes ethical advertising practices across all media, including influencer marketing.

Ad Standards Canada also investigates complaints from consumers and competitors about potentially misleading or unethical advertisements. The Ad Standards Council reviews complaints that raise potential issues under the Code.

Non-compliance with the Code can have consequences. While Ad Standards Canada, as an industry association, does not impose fines, it can require the removal or amendment of non-compliant content of its members. Additionally, violations of the Code can also lead to complaints under the Competition Act, which prohibits false or misleading advertising and carries significant penalties.

Beyond these consequences, non-compliance can damage an influencer's credibility and a brand's reputation. In an era where consumers value transparency and authenticity, failing to adhere to advertising standards can result in a loss of trust and audience engagement.

Key Clauses of the Code

The Code outlines several principles that advertisers and influencers must follow. Three clauses are particularly relevant to influencer marketing: Clause 1 (Accuracy and Clarity), Clause 2 (Disguised Advertising Techniques) and Clause 7 (Testimonials).

Clause 1: Accuracy and Clarity

Clause 1 requires that all advertising must be accurate, clear and not misleading and claims must be supported by "competent and reliable evidence". This applies directly to influencer marketing, where influencers often share personal experiences with products or services, including by way of paid promotion.

Disclosures about material connections (e.g., paid partnerships, free products) must be clear and easy to understand. Ambiguous or hidden disclosures, such as hiding #Ad in a long list of hashtags, may not meet the clarity standard.

Clause 2: Disguised Advertising Techniques

Clause 2 prohibits advertising that is presented in a way that conceals its commercial intent. In the context of influencer marketing, this means that sponsored content must be clearly identifiable as advertising.

Influencers must disclose when they are being compensated to promote a product or service. This includes monetary payments, free products or other benefits. The disclosure must be prominent and placed within the content itself, e.g., the disclosure should appear in the caption or as a tag, not hidden in the comments or at the end of a long post.

Clause 7: Testimonials

Clause 7 governs the use of testimonials and endorsements in advertising. It requires that testimonials must reflect the genuine, current opinion of the individual providing them and must be based on their actual experience with the product or service.

Influencers must have personally used the product or service they are endorsing and must provide an honest account of their experience. Brands cannot script testimonials or ask influencers to make claims that are not true or cannot be substantiated.

Application of the Code to AI-Generated Content and Influencers

In October 2025, Ad Standards Canada released the latest version of the Influencer Marketing Disclosure Guidelines, which address application of the Code to AI-generated content and influencers. Specifically:

1. If content was generated or significantly altered using AI, this should be disclosed, e.g., #MadeWithAI or #AIcreated.
2. The fact an AI-generated influencer is not a real person does not remove the requirement to disclose material connections to brands.
3. An AI-influencer cannot provide a testimonial about a good or service that it cannot experience itself, e.g., testimonials regarding taste.
4. Best practice is to disclose that a spokesperson is virtual using the hashtags #virtualinfluencer, #AIinfluencer or #AIcreated.

Best Practices for Influencer Marketing Compliance

To ensure compliance with the Code, influencers and brands should be mindful of at least the following:

1. Understand the Code: Familiarize oneself with the Code, particularly Clauses 1, 2 and 7.
2. Be Transparent: Always disclose material connections in a clear and prominent manner.
3. Verify Claims: Ensure that all claims about products or services are truthful and supported by evidence.
4. Monitor Content: Brands should review influencer content to ensure compliance with the Code.
5. Seek Legal Advice: Consult with legal professionals to navigate complex advertising regulations and avoid potential pitfalls, including by seeking the advice of competition counsel.

Conclusion

Influencer marketing offers immense opportunities for brands to connect with their audiences, but it also comes with responsibilities. By adhering to the guidelines set out by Ad Standards Canada and the Code, influencers and brands can ensure their marketing practices are ethical, transparent and compliant with the law.

If you have any questions about influencer marketing compliance or need assistance navigating Canadian advertising standards, we invite you to contact one of the authors of this article.

Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.