It's mid-December, and the holiday season is in full swing: streets are aglow with twinkling lights, you can't turn on the radio without being reminded what Mariah Carey wants for Christmas and—most importantly—retailers nationwide are decking the halls with holiday advertising.

As we prepare for the most wonderful time of the year, brands and advertisers are devising special offers and promotions aimed at captivating holiday shoppers. This year, with rising prices and economic uncertainty making shoppers cautious, businesses are unleashing bold creativity to win over holiday buyers.

But amid the holiday sparkle, businesses must navigate complex legal terrain. In Canada, holiday campaigns must balance the pursuit of consumer attention and goodwill consumer with laws like the federal Competition Act and provincial consumer protection rules. To help your offers shine bright, here are five key legal tips to keep in mind.

Gifts and giveaways: Offering freebies and "gifts with purchase"

Giveaways, free gifts with purchase and similar offers have long been used by merchants to attract consumers and show off their holiday spirit.

However, such offers can raise a surprising number of legal considerations. The specific requirements applicable will depend on how each offer is structured and promoted. But in many cases, merchants must consider the following if they want to avoid receiving a lump of coal from a regulator or a class action attorney:

  • "Free" must actually mean free. An item given away for "free," "at no cost," as a "gift" or similarly presented as something for which the consumer will pay nothing must actually cost the consumer nothing. This means that there cannot be any cost directly associated with obtaining this item, nor baked in elsewhere to cover the price of this "free" item.

For example, a company offering a "free gift with purchase" cannot increase the price of the item that must be purchased to receive the gift to cover the cost of these "free gifts."

  • Giveaways can impact an item's ordinary selling price. As we've previously reported, it is critical that any sale or discounted price be based on an ordinary selling price, established based on either the Time Test or the Volume Test, as set out in the Competition Act. But some giveaways, such as "buy one get one free"-type offers, can impact the ordinary selling price of a product.

For example, if a "buy one get one free" offer lasts long enough, what was previously considered the ordinary selling price for one item may eventually become the ordinary selling price for the two items. At the least, such an offer would need to be factored into the calculation of the ordinary price.

  • Offer terms must be clearly and properly disclosed. Any conditions, restrictions, eligibility criteria or other terms governing an offer must be disclosed to consumers.

For example, if there is a maximum of one free gift with purchase or if the offer is valid only online rather than in store, this must be clearly stated to consumers.

A quick note on alcohol: While it flows freely at many holiday gatherings, several provinces impose restrictions on its promotion, free giveaways or sales below minimum pricing. If your holiday offer involves alcohol—be it discounts, gifts or ads promoting it—consult legal counsel to ensure your plans comply with the rules. And remember, whether you're sipping eggnog or sparkling wine, always drink responsibly!

Tis the season to compare: Using price match tactics

Holiday shoppers are always hunting for the best deals on gifts for loved ones. To draw them in, many retailers use price-matching strategies, promising to match or even beat competitors' prices.

Such offers are not prohibited in Canada, but merchants wishing to promote such policies must proceed with caution. Notably, any such offer must be accompanied by a clear and easily understandable set of terms that lay out all applicable terms, conditions, restrictions, exclusions and limitations.

For example:

  • Does the program apply to products sold by any competitor, or only those located in close physical proximity to your business?
  • What about online offers from competitors located in other jurisdictions, or who sell in other currencies?
  • What proof must the consumer provide in order to take advantage of the offer?
  • Are any goods or categories of goods excluded from the offer?
  • Is there a limit on the number of items the consumer may purchase at the matched price?

Overall, the terms of the offer must clearly explain how it works, what qualifies and the steps needed to take advantage of it.

Merchants must also be mindful of the language used in promoting such offers—paying particular attention to titles, slogans or any other calls to action. For example, a slogan like "we'll beat any price" literally means any price—so it can't be used if the offer only applies to a few key competitors. In short, all promotional language must align with the offer terms and avoid misleading consumers or creating false impressions.

Merry and bright collaborations: Working with influencers

As social media and e-commerce play an increasingly central role in the lives of Canadian consumers, more brands are turning to influencer marketing to broaden their reach and engage with shoppers in fresh, dynamic ways. Promoting holiday campaigns through influencers has become a common strategy—but it comes with several legal considerations, including:

  • Ensure proper disclosure. Any "material connection" between a brand and an influencer must be properly disclosed. In the past, many brands have considered that merely including "#ad" in a post was sufficient. But as social media platforms become increasingly complex, so too do disclosure requirements.

    For example, the manner of disclosing a "material connection" with a brand will vary depending on whether the content is a video, or a static social media post. In some cases, simply stating "#ad" won't cut it. Also, consider what happens to the disclosure if the message is well received, and viewers share it with others or on different platforms. What if you gifted a product to an influencer but didn't pay them any money?

    These questions and more are addressed in the Ad Standards Influencer Marketing Disclosure Guidelines, which answer these questions and more. Brands should ensure that any influencer content complies with these updated Disclosure Guidelines.
  • Consider your contract. The relationship between a brand and an influencer is a business relationship. As such, it is critical that it is governed by a solid contract. In addition to the typical contractual provisions, influencer agreements should address items such as the extent of the brand's approval rights over the influencer's content, any exclusivity requirements or restrictions on the influencer's right to work with your competitors, and ownership/intellectual property rights in any content created- as well as your existing intellectual property!

    The contract must also clearly stipulate the influencer's disclosure requirements (see above—remember as the advertiser, these are your obligations as well!). Another critical aspect to consider is the morality clause. As we've previously indicated, brands should ensure that these clauses are drafted in broad and general language, in order to permit them to sever ties with an influencer who may bring disrepute to the brand.

Ringing in refunds: Crafting return and exchange policies

We've all been there—you give or receive a gift that doesn't quite hit the mark. Do retailers have to accept returns or permit exchanges when consumers want to bring back gifts gone wrong?

Under Canadian consumer protection laws, retailers are not, in most cases, required to offer refunds or exchanges if a consumer changes their mind about a purchase. But if a business does choose to offer a return or exchange policy, it must respect it. This means that any and all conditions, limitations or restrictions that apply to such policies must be clearly stated therein.

For example, if certain goods cannot be returned, if there is a time limit on returns, if goods must be unopened should a consumer wish to exchange them or if the consumer must have their original receipt, this must be set out in the policy. Moreover, where a merchant who operates brick-and-mortar retail locations and also sells products online, any differences between the rules governing the return of products purchased in store versus online must be clearly stated.

Gift cards under the tree: Consider the specific rules governing prepaid cards

For the person who is impossible to shop for, or the shopper who has left everything to the very last minute, gift cards can be a great option. For the merchants offering these cards, however, there are various requirements to consider. Nearly all Canadian jurisdictions regulate gift cards expressly. The requirements applicable vary from one province to the next, but can generally be summarized as follows:

  • Various information must be disclosed to the consumer prior to the sale of a gift card. The mandatory disclosures vary between jurisdictions, but typically require a merchant to state all conditions, restrictions and limitations that apply to the use of the card, as well as telling the consumer how to check the balance on the card.
  • The disclosures mentioned above must in most cases be made clearly and in writing. Some provinces require that certain information appear on the card itself; it would not suffice to disclose this information only in a contract or in other documentation accompanying the card.
  • In Quebec, if the remaining balance on a card is $5 or less, a merchant who is a party to the card must provide a refund equal to this value if the consumer requests.
  • All provinces prohibit the expiry of the value on gift cards in most cases. Most provinces do however provide for limited exceptions to this rule. For example, Ontario provides that gift cards issued for a "specific good or service," for a charitable purchase or by a prescribed "financial institution" are not subject to the prohibition on expiry dates.
  • In many jurisdictions, it is prohibited to charge fees for the purchase or use of a gift card, subject to limited exceptions. For example, in the case of cards that permit the consumer to obtain goods or services from several independent merchants (as opposed to cards that can be used only at one specific retailer), Quebec provides that fees may be charged for the activation of the card, as well as for its non-use, subject to conditions and limits set out in the consumer protection regulations.

As we've seen, pulling off successful holiday offers takes more than just tinsel and mistletoe – it requires navigating a winter wonderland of legal rules and regulations. If the rules have you tangled in holiday lights, Gowling WLG's Advertising and Product Regulatory team can help guide you to the 'nice' list this holiday season!

And with that, happy holidays to all, and to your promotions, a smooth flight!