The Legal Considerations of Live-Stream Shopping

Live-streaming shopping platforms have become particularly popular in China, with many established shopping models investing in them and implementing live video and influencer marketing into their business models. Though live shopping as a platform has yet to have a significant impact on the e-commerce scene in North America, various aspects of live commerce have been available for some time – the most notable being the rise of influencer marketing on social media platforms. With many people relying on online shopping since the beginning of the COVID-19 pandemic, there are real and quantifiable benefits to seeing products live and styled, rather than as a static image or 360 degree video on a retailer’s website. However, with the increase in live shopping come questions and concerns with respect to the various implications this new form of shopping can have on e-commerce, intellectual property, and consumer protection laws, both domestically and globally.

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, ShopThing, 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 agree to the terms of use of the platform, 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 comprehensive platforms developed in China, 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 Competition Act. 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 Ontario Electronic Commerce Act 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, Advertising Standards Canada (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 confirm 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 Personal Information Protection and Electronic Documents Act (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 important to assess:

  • 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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