Aaron Dishy is an IPilogue Writer and a 3L JD Candidate at Osgoode Hall Law School.

The proposed Artificial Intelligence and Data Act (AIDA) would introduce greater regulation of the use and development of artificial intelligence (AI) in Canada’s private sector. On June 15^th, 2022, the Minister of Innovation, Science and Industry, François-Phillippe Champagne introduced Bill C-27, or the . Bill C-27 reiterates much of , tabled in 2020, reintroducing a modified Consumer Privacy Protection Act (CPPA) and Personal Information and Data Protection Tribunal Act (PIDPTA). However, Bill C-27 also introduced newly proposed legislation like AIDA which, if enacted, would make long advocated-for changes to Canada’s AI regulatory landscape.

AIDA would create new assessment and risk-mitigation tools for the use and transparency of high-impact AI systems. It would establish persons responsible for monitoring AI systems, such as the Artificial Intelligence and Data Commissioner — their role is to assist the Minister in the administration and enforcement of AIDA. Monetary penalties for the AIDA contraventions are also set out to enforce trust and deter the reckless and fraudulent uses of AI. In this way, Bill C-27 and AIDA would direct Canada towards harmonization with international regulatory frameworks, like that of the .

With that being said, AIDA would be more limited in scope when compared to its EU counterpart. For example, unlike EU legislation, AIDA would not apply to both public and private sectors, and all federal government institutions would be exempt.^[1] Further, EU legislation sets out specific prohibited AI practices, alongside criteria for determining the degree of risk presented by any AI system. AIDA establishes no specific prohibited AI practices and distinguishes only between high-risk AI and all other systems; complex and salient matters are left to incoming regulation.

Beyond its limited scope, AIDA may be uncertain in its delineation of provincial and federal responsibilities. For example, AIDA’s consideration of “regulated activity,” would capture many elements of AI development and use, including “designing, developing or making available for use an artificial intelligence system or managing its operations.”^[2] This language indicates the legislation is pursuant to Parliament's trade and commerce power under section of the Constitution Act, 1867. However, the federal government may also intend provinces to legislate on intraprovincial uses of AI, notwithstanding the rarity of circumstances under which such AI systems would be developed.

Lastly, attention is required of the breadth of persons AIDA considers “responsible” for an AI system in the course of trade.^[3] It holds designers, developers and managers of AI systems subject to AIDA’s administrative and operational requirements. If those parties are expected to monitor or conduct audits of consumer deployment of AI systems, assessments must be made of risk potentials and mitigation from both perspectives. Additional regulation may be required in the full consideration of such perspectives.����

AIDA remains proposed legislation and may be modified prior to implementation. However, it represents a much larger move by international legal bodies to regulate the development and use of AI. Businesses must be prepared for greater AI regulation in Canada. Thankfully, informative and responsive policy for the consideration of AI systems is also being developed, such as a by the Law Commission of Ontario. If correctly applied, AIDA should empower more Canadians to engage with trustworthy and transparent AI systems.

^[1] This may be extended to exclude provincial departments or agencies by regulation as set out in s.3 of AIDA.

^[2] See s.5(1) of AIDA.

^[3] Ibid at s.5(2).

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Photo by Jakub Kapusnak ()

Emily Chow is an��IPilogue��Writer and a 1L JD Candidate at Osgoode Hall Law School.��

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Over the past decade, the media has published several scandals about the quality and safety of the food we eat – from to . It is estimated that the counterfeit food industry

Beyond , fraudulent foodstuffs exacerbate the risks facing endangered species. Researchers found that an estimated were substituted with . Inaccurate labelling makes it difficult to track and identify what animals are at risk due to human activity; this is especially concerning given that . There are of other examples of highly substituted foods. found king scallops sold in Germany were replaced with the less valued Japanese species in 48% of samples. Another found prawn balls on sale in Singapore .

Difficult conservation policy decisions, already limited in funding, can be more effective when comprehensive data is available to inform such decisions. Oceana, whose mandate is to protect Earth’s oceans, by increasing the profitability of destructive fishing practices, undermining consumer-driven conservation efforts, and harming large-scale conservation initiatives such as quotas and restrictions.

Interestingly, food products are not the only counterfeit organic item on the market.

In 2016, An internal investigation revealed that approximately , a direct contradiction of Welspun’s appeal and promises of quality. Welspun’s intricate network of cotton suppliers, manufacturers, and retailers made sourcing the error difficult. Whether it was a mistake in labelling or a deliberate act of fraud, makes it difficult for consumers and producers alike to confirm the authenticity of an item. Luckily for Welspun, a was up to the task. In 2017, they that would allow Oritain to validate Welspun’s supply chain of home textile products.

In Oritain’s co-founder Russel Frew discussed his past life as a researcher at the University of Otago. A geochemist, Frew utilized a mass spectrometer often, which allowed him to determine the precise atomic makeup of water and soil samples gathered from across the world: a unique elemental signature for a given area. Applied to products, Oritain describes its method as

Atoms of a particular element can have different amounts of neutrons—neutral particles that do not contain an electric charge—residing within each atom’s nucleus, resulting in various isotopes. Oritain determines the relative ratios of isotopes within a sample to ascertain its origin. For instance, a sample’s . Oritain also analyzes trace elements in These can include sodium and iron derived from the composition of soils, water, and feeds. In addition to sourcing the origins of fabrics and textiles, Oritain has to combat food fraud.

The expansion of verification and traceability programs may lead to the and supply chains around the globe.

Further Reading:

Oritain Certification:

Oceana:

“What is Mass Spectrometry?” by the Broad Institute: .

Canadian Food Inspection Agency’s survey to verify the authenticity of honey samples:

“Food Fraud in Canada” published by the Arrell Food Institute at the University of Guelph:

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Live-Stream Shopping: The Basics

At its most basic level, “live shopping” can be anything from a live-streamed fashion show to celebrities reviewing sponsored products on their social media platforms, with the goal to encourage viewers to purchase the same item in real time.�� Though numerous retailers have successfully implemented live shopping tactics into their business models, few have a fully developed “live shopping platform” or sophisticated point of sale mechanisms to support their live shopping models.

A key differentiating factor between live shopping platforms and more traditional e-commerce models is the highly interactive nature of live commerce content. Think of a Facebook or Instagram live video where your favourite influencer is showcasing their newest purchase or promoting a product. Now turn that into an entire platform with a fully developed sale system, where hundreds of “shoppers” are shopping for you, showcasing how the items are styled and fit, and responding to questions you may have about the product, all live. Furthermore, live-streaming shopping platforms provide the authenticity that buyers crave. With purchases being promoted and made in real time without video editing or Photoshopping, buyers can feel more comfortable making a purchase given that that they are seeing exactly what they will get.

Many technology start-ups have invested in research and development to establish a business model that brings live shopping as a platform directly to consumers. For instance, Toronto start-up, , is a first-mover in this area. Their shoppers “attend exclusive shopping events, sample sales and warehouse deals, and livestream [their] best finds”. With ShopThing’s point of sale platform, purchasing the deal of your dreams is a simple “swipe up”.

For the buyer, live shopping is fairly simple. For the streamer, the seller, and the platform, however, various legal considerations may arise.

The Streamers, the Sellers, and the Platform: Who are they?

Aside from the purchasers, there are three major parties that may be involved in a live-stream shopping transaction: the platform, the seller, and the streamer. When looking at the relationship between the streamer and the platform, the streamers are likely required to , as well as to potentially sign an exclusivity agreement. Depending on the arrangement, the streamer may become engaged with the platform as an employee or independent contractor. When looking at the role of the seller, it is often dependent on the type of platform. With the , sellers on live-streaming platforms can often be considered a “business operator on the platform”, and the platform an “e-commerce platform operator”. The relationship between the seller and the streamer can be slightly more nuanced, with the seller potentially being a streamer and promoting their own products, or the seller engaging an independent streamer to sell their products in which joint liability may arise under certain conditions.

Relevant Legal Frameworks in Canada

Though live-stream shopping is a novel form of commerce, it is easy to see where legal issues may arise. Canada’s current advertising, marketing, e-commerce, privacy, data protection, and intellectual property laws provide a relevant legal framework for how to address the legal considerations of live commerce. However, as the market for live-shopping continues to grow within Canada, it will be interesting to see how the current regime may be adapted or interpreted for issues arising in relation to live commerce.

Advertising, Marketing, and E-Commerce Laws

The federal statute regulating advertising and marketing in Canada is the��. The Competition Act applies to both business and consumer advertising and marketing, with the Commissioner of Competition being the primary authority for enforcing the legislation. The Commissioner heads the Competition Bureau, and investigates both criminal and civil matters under the Act.

In Ontario, the administration and enforcement of consumer protection laws is the Ministry of Consumer Services, acting through the Minister of Consumer Services and the Director under the Consumer Protection Act. ��Generally, consumer protection statutes include provisions relating to unfair practices, such as deceptive or unconscionable representations, including false advertising, cancellation or cooling-off periods for goods and services sold, unsolicited goods, and gift cards. In the circumstances of live commerce, unfair practices and deceptive representations may be of increased relevance. Additionally, the further outlines implications of selling online, specifically setting considerations of commercial transactions conducted on the Internet, electronic banking and payment systems, trade in digitized goods and services, and business-to-business exchange of data.

In addition to legislation, (ASC) is the advertising industry's self-regulatory body, maintaining the Canadian Code of Advertising Standards. Through filing a complaint with the ASC, consumers can report advertisers who violate the ASC Code.

Many live-streaming platforms have gained success through providing a live commerce platform exclusively for designer sales.�� However, the Competition Act sets out volume tests to that express or implied savings claims can be substantiated against the “ordinary” or “regular” price. Therefore, it is essential to obtain adequate testing when making comparative claims with respect to pricing. This may be more difficult for live-streaming platforms, given that streamers may not be aware of the products, sales, and original prices of the products until they have already gone live. ��

Privacy and Data Protection Laws

The (PIPEDA) applies to businesses and addresses the collection, use or disclosure of personal information in the course of commercial activities. PIPEDA establishes that the personal information collected by businesses must be collected for identifiable purposes and with consent, as well as used and disclosed for the limited purposes for which it was collected. With multiple players involved in the business process of live commerce platforms, and increasing development of the technology driving the sales interface of these platforms, greater care must be taken to ensure that the requirements established by PIPEDA are met.

Intellectual Property Laws

Various forms of intellectual property laws may be relevant with live-streaming platforms, including trademark, copyright, patents, and trade secrets. Whenever you are sharing your business and ideas on the Internet, there are measures that may be taken to protect your own intellectual property. However, in the case of live-streaming commerce, it is especially important that steps are taken by the live-streaming platform and its relevant players to minimize the risk of infringing on the intellectual property rights of others.

Before sharing content or materials on your live-streaming platform, it may be :

• Whether you have the right to use or copy the materials, such as images of products, on your platform
• If the material you are sharing is trademark or copyright protected, ensuring you have obtained permission for use
• Whether you have engaged in any Internet-related agreements with web developers (or the like) that outline prohibited use of content.

What’s Next for Live Commerce in Canada?

These are just a few of the potential legal considerations that may be relevant with the rise of live commerce in Canada. Issues relating to contracting online, browsewrap and clickwrap contracts, multi-jurisdictional sales, and other matters, can develop as this new means of shopping continues to gain traction in North America. Though live-streaming shopping is a newer concept, it is possible for the seller, the streamer and the platform to still find their places under existing regimes. However, it is likely that questions and concerns with respect to the various implications that this new form of shopping can have on e-commerce, intellectual property, and consumer protection laws, both domestically and globally, will continue to surface as live commerce becomes more mainstream.

Written by Alessia Monastero, IPilogue Senior Editor and Osgoode JD alumni.

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THE FEDERAL TRADE COMMISSION

The FTC works towards protecting consumers and competition through preventing anticompetitive, deceptive and unfair business practices. Over the years, the FTC has noted the potential issues arising from the and testimonials in advertising. In early 2017, the FTC sent out to celebrities, athletes, brands, and other prominent social media figures reminding them of the necessity to clearly disclose any relationship that is present when promoting products online. These letters outlined any significant mistakes the influencers were making in disclosing their social media partnership, such as including #ad below the “more” button, hiding any sponsorship-related disclosure in a large number of hashtags, and using abbreviations that may not directly indicate to the consumer that the post is in fact sponsored (such as #spon). The FTC also issued an with respect to endorsement guides. Two years later, the FTC continues to have issues with influencers’ disclosure of associations with brands and products.

RECENTLY PUBLISHED GUIDANCE ON INFLUENCER MARKETING

Recently, the FTC published a for social media influencers regarding disclosure of their online advertisements and sponsored posts. This guidance makes it clear that any financial, employment, personal, or family relationship with a brand must be disclosed on social media. Further, financial relationships are not limited to money. If anything of value was obtained from the relationship, this can trigger the disclosure requirement.

Interestingly, the guidance document also outlines that “tags, likes, pins, and similar ways of showing you like a brand or product” are endorsements. This raises practical questions with respect to how influencers would disclose endorsements when it comes to the casual usage and functions of their social media platforms, such as a “like,” rather than a formal post where captions for disclosure are available.

As has been established in the past, the FTC outlines how influencers and marketers must disclose. Ultimately, the disclosure should be hard to miss, simple and clear, and in the same language as the endorsement itself. Recently, many social media platforms have modified their design to include a around or beside the posted photo. The FTC makes it clear that the platform’s disclosure tool may not be enough and should be used in addition to more traditional forms of clear online disclosure.

A CONTINUOUS CONCERN

With social media platforms continuously changing the functional and design aspects of their applications, maintaining applicable rules with respect to how and when advertisements should be disclosed to consumers remains a difficult task. Influencers will continue to utilize grey-area or borderline methods of disclosure in order to ensure that their posts appear authentic to their followers, which will continue to create different sets of circumstances and considerations for the FTC to evaluate with respect to disclosure.

Written by Alessia Monastero, IPilogue editor and articling student at Deeth Williams Wall LLP.

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On 18 May 2017, the European Commission fined €110 million Facebook for providing misleading information during the 2014 takeover of WhatsApp in case . Calling it a “proportionate and deterrent fine”, the Commission established that Facebook infringed the procedural obligations laid down by the EU Merger Regulation.

Most notably, this decision follows the 2016 WhatsApp terms of service and privacy update, which included the automatic linking of WhatsApp users’ data with Facebook users’ identities for advertising and marketing purposes. When Facebook notified the acquisition of WhatsApp to the Commission in 2014 under the EU Merger Regulation, which requires undertakings to provide correct information to allow a timely and effective review of the merger process, it ensured an automated matching between Facebook and WhatsApp users could not be established.

However, the Commission’s scrutiny revealed that the technical possibility of matching users’ profiles between the two platforms, which was made effective in 2016 after the terms of use update, already existed in 2014 but had not been communicated to the Commission at the time of the merger.

Although it could impose a fine of up to 1% of the company’s aggregated turnover (it could have amounted to more than €250 million), the European Commission’s assessment was mitigated by Facebook’s cooperation during the investigation proceedings, where the company acknowledged its infringement and convinced the authority to reduce the amount of the penalty. The EU’s competition watchdog concluded that Facebook negligently provided incorrect information, but the gravity of these infringements would not affect the Commission’s clearance decision regarding the WhatsApp acquisition of 2014.

The 2016 WhatsApp terms of use update has also drawn the attention of the Italian Competition Authority (ICA), which on 11 May 2017 has imposed a penalty of €3 million on WhatsApp for infringing consumers’ rights (see ICA decision ��).

First, the company was fined for undermining Article 20 of the Italian Consumer Code, most notably for infringing the ban on unfair business practices. According to the ICA, WhatsApp led users to believe they could use WhatsApp Messenger only if they accepted in full the new terms of use, including the provision of sharing users’ data with its parent company Facebook.

However, those who were already users at the time of the update could partially accept the new terms of use and still be able to use the application, but – according to the ICA – the existence of such an option had not been sufficiently represented.

On 11 May 2017, the ICA concluded a second investigation concerning the unfair nature of some contractual clauses of the WhatsApp terms of use, which were assessed as illicit since they caused a significant imbalance into consumers’ rights and obligations arising from the contract in breach of Article 33 of the Italian Consumers Code (see ICA decision ).

These clauses included inter alia a general limitation of WhatsApp liability, as well as the possibility for the company to unilaterally interrupt the service without notice, the right to introduce changes of economic nature to the terms of use without reason and the application of the Law of California.

WhatsApp has now 60 days for filing an appeal against the two ICA decisions before the Administrative Court of Lazio.

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On March 23 the European Commission organized a conference devoted to institutions, regulators, professionals and scholars from all Europe�� on .

The conference was also the occasion for the Commission to announce an .���� The existing EU legislative framework on financial services for consumers is considerable and therefore the Commission does not foresee the adoption of fresh legislation. The innovations in the retail financial services determined by the burst of Fintech require instead to enforce and adapt the existing applicable rules to the new technological scenario. Online payments, robo-advisory, P2P lending and virtual coins are only some examples of such disruption which proposes new legal challenges at all levels.

The Action Plan focuses on two main issues:

1. cross-border provision of services across the EU single market, by enhancing the eIDAS regulation infrastructure (which enables consumers to be recognized via an electronic identification system) on one hand and, on the other, by introducing common creditworthiness assessment standards;
2. consumer protection and in particular pre-contractual disclosure requirements in light of the new technologic environment.

In the context of the Action plan, the Commission launched a public consultation on ‘Fintech: a more competitive and innovative European financial sector’ (is the consultation document) to collect the stakeholders’ views on the following policy objectives that according to the Commission constitute the main opportunities, and the relevant challenges, related to Fintech:

• fostering access to financial services for consumers and businesses;
• reducing operating costs and increase the efficiency of services;
• improving market competitiveness by removing or lowering entry barriers;
• finding an appropriate balance among data sharing, transparency, security and privacy needs.

Based on the and the work of the EU Fintech task force, the Commission will propose an European strategy for FinTech, to develop and improve the most promising sector in financial services area.

The UE Commission’s interest in Fintech as a new frontier of financial services is meaningful. Also, it should be stressed that the Commission decided to focus on the characteristic areas of the European action, such as creation of an integrated internal market and consumer protection.�� To this purpose the consultation document is particularly interesting as it presents the main challenges raised by the innovations in the financial services.�� From the use of AI and big data analytics for automated financial advice and execution, to the use of sensor data for risk evaluation in the Insurtech sector, to the Regtech impact on compliance costs, to the use of DLT in financial services, to the regulatory barriers for new market entrants, etc.

According to the Commission the EU policies on Fintech should be:

1. Technology neutral – to ensure that the same activity is subject to the same regulation;
2. Proportional;
3. Integrity-enhancing with a focus on market transparency to the benefit of consumers and businesses.

In the above depicted scenario, consumers’ protection appears to be particularly challenging. An example is the pre-contractual information allowing consumers to make well-informed choices. In this respect, the spread of online services determines a growing need of simplicity in the access of information.

This aspect, however, will certainly require adapting the existing rules.�� An example of this issue is the robo-advisory, where the traditional information asymmetries are combined with significant technological information asymmetries. Do the consumer have to be informed, for instance, about the characteristics of the robo-advisor’s algorithm? How detailed should be consumer information, considering the great influence that the calculation power might have on investment choices?

A first answer to the above questions may be found in the and addressing the issue of disclosure. These guidelines, amended where necessary, might be a model for one of the action of the announced EU Fintech strategy.

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In August, the (ACCC) started proceedings against software company for its refusal to provide refunds to customers purchasing video games through its Steam online store and distribution platform. The ACCC claims that by refusing to refund in all circumstances and stating that it was excluded from statutory consumer guarantees, Valve is making misleading representations: Australian consumer protection legislation����that cannot be restricted by contract.�� Similar immutable implied guarantees can be found in consumer legislation in many Commonwealth jurisdictions, .

This is not the first time that Valve has run afoul of consumer protection groups – German consumer protection group VZBW recently brought Valve to court over users’ right to resell games purchased through Steam. , but the case illustrates the ongoing struggle between consumers and distributors of digital entertainment over rights to online purchase.��Moreover, VZBW was not a government entity, whereas the ACCC is; a regulatory agency taking action against Valve could be indicative of an increased commitment to enforcing compliance with consumer protection law.

If the ACCC prevails in court, the consequences will be felt in Canada, as Canadian courts often find Commonwealth jurisprudence persuasive in forming their opinions. The applicability of any Australian decision is likely to be further enhanced by the close similarity between the relevant Australian and Canadian consumer protection statutes. While wording of the statutory guarantees differs slightly, with the Australia Consumer Law (ACL) section 54 using "acceptable quality" and the British Columbia Sale of Good Act (SOGA) section 18(b) using "merchantable quality", both statutes include guarantees that the goods be fit for disclosed purposes. The ACL's guarantees seem to be slightly broader than those provided in the BC SOGA: under the ACL, in addition to being fit for any purpose disclosed by the purchaser, section 55 states the goods must also be fit for any purpose for which "goods of that kind are commonly supplied". Moreover, in the BC SOGA section 18(b), if the consumer is allowed to examine the goods before purchase, there is no implied condition with regard to defects that the examination would have revealed. Conversely, the ACL's section 54(4)(b)��requires that any such defects be "drawn to the consumer's attention", placing the burden on the vendor rather than the purchaser.

However, though the ACL was enacted with the intention of protecting purchasers of goods, game buyers may be less than pleased if Valve raises its famously discounted prices or introduces region-specific retail practices as a measure against financial losses incurred through refunding purchases. In the end, even if an ACCC victory in court brings about increased vigilance over online consumer protection, Valve is likely not going to be subjected to a deluge of refund requests under consumer protection legislation. Such laws only guarantee "acceptable quality" or its equivalent, which have not been defined in the context of a computer game, but likely include guarantees that the game runs on the computer systems it is made for and is free of glitches that render it unplayable. Furthermore, the actual logistics of returning a digital copy of a game complicate matters. Steam can run in an "offline mode", allowing games to be played without an internet connection. If a customer were to purchase a game, install it, then return it, he or she could potentially use offline mode or an analogous feature on another platform to continue playing the game despite having received a refund.

In the end, whether Valve wins or loses in court, the ACCC's action is yet another wake-up call to software companies and consumer protection watchdogs. As entertainment media drifts ever further from its roots in physical artifacts like CDs and cassettes, consumer protection regimes ought to evolve as well to ensure that the public is protected regardless of whether the goods they purchase are tangible or not.��The application of laws governing physical, tangible goods to digital, virtual online products will continue to be a hot topic in courts worldwide, as previously discussed in the ,��and by the ACCC��showcasing the difficulties in applying a legal paradigm of property developed for an offline world to a globally connected Internet.

Adam Chan is an IPilogue Editor and a graduate of the University of British Columbia Faculty of Law.

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Proponents of the proposal argue that extending consumer protection would give consumers a broader choice of software.�� Bruce Schneier, an American computer security specialist, that

"[t]here's no other industry where shoddy products are sold to a public that expects regular problems, and where consumers are the ones who have to learn how to fix them. If an automobile manufacturer has a problem with a car and issues a recall notice, it's a rare occurrence and a big deal - and you can take your car in and get it fixed for free.�� Computers are the only mass-market consumer item that pushes this burden onto the consumer, requiring him to have a high level of technical sophistication just to survive....�� The key to fixing this is software liabilities."

However, critics argue that extending protection would limit consumers' choices.�� Further, "creators of digital goods cannot predict with a high degree of certainty both the product's anticipated uses and its potential performance," and that extending consumer protection to software code could lead to decreased operability between products if manufacturers decide to limit how much of their code could be accessible to third-party developers.

One of the more intriguing implications of the proposal is its potential effects on open source software.�� If the proposal becomes law, open source programmers could be liable for any damage that errors in their software cause.�� Alan Cox, a programmer who was involved in the development of Linux, .�� As developers share code around the community, responsibility is collective, and thus there is potentially no way to enforce liability.�� However, , arguing that free software would not fall under a liability regime because the writer and the user have no business relationship.�� In the event that open source software does fall under the new liability regime, others suggest that additional laws be passed to protect people who distribute free software.

Clearly, the commissioners' proposal has far-reaching implications.�� Introducing liability for faulty code could be a great method to force large software companies to pay consumers for the harm their software has caused, and thus could create an incentive for those companies to write more secure and stable code in the future.�� However, it could also make open source software producers liable for the damages that result from their code, creating a disincentive for them to release freely available open source software.

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