Case study July 21, 2021

Media liability claims case studies

We have a look at three examples of media liability claims.


Coupon catastrophe

A Canadian integrated marketing agency specializing in the delivery of brand experiences engaged a client that produced environmentally friendly personal care products. This client asked the agency to create a marketing campaign for them which included the design and distribution of a coupon for $3 off one of their products.

The client designed and executed the campaign but inserted an incorrect barcode on the coupon. The barcode indicated to the cashier that the coupon was for $1 off, rather than the $3 agreed. What made matters worse was that the error was not found until millions of coupons had already been launched.

As a result of the error, the agency’s client experienced lower sales than planned, leading to financial loss. It was anticipated that the coupon redemption rate would be 40%, and the redemption projection would be $705k. Instead, the redemption rate was less than 20% of what had been projected and this was deemed the fault of the agency. Luckily, the agency had a media policy with CFC, which paid $250,000 in defense costs and settlement of the claim.


Animation accident

A UK based visual effects company (specializing in animation sequences and motion graphics for commercial advertisements and music videos) hired a post-production company as a subcontractor to produce a computer-generated cat on their behalf. The cat was to be used in a television commercial they had been commissioned to produce for a gaming company. A version of the cat was created by the subcontractor, which included claws. However, the visual effects company did not tell the subcontractor that their end client had specifically requested a cat without claws, so the work needed redoing.

The visual effects company claimed against their CFC media policy for the extra work that the postproduction company was required to do in editing the cat, so additional costs were incurred in rectifying this mistake to prevent a larger breach of contract claim. The claim was settled for circa £25,000.


Risky Reputation

A university magazine wrote a story about a psychologist who specialized in dealing with gender dysphoria, and worked in a clinic focused on gender identity for children and adolescents. The magazine alleged that the psychologist was involved in conversion therapy, which is illegal in the province the magazine was published in. The magazine also published a testimony from a former patient and an independent report which mentioned several complaints about the psychologist.

The psychologist sued the publication for defamation as the remarks discredited his professional reputation, and he lost his job over the allegations as a result. The client’s CFC media policy paid circa $40k in defense costs and an additional $25k in settlement at the mediation with the psychologist.