Social media is reportedly rife with influencers promoting or reviewing products or services without disclosing compensation or other consideration that they’ve received for such endorsements. The Competition and Markets Authority (CMA), the UK’s consumer protection regulator, is stepping up efforts to combat such undisclosed endorsements.
Following a ruling against an influencer marketing company, Social Chain Ltd, the CMA has warned 15 companies and 43 “social media personalities” who used Social Chain to publish content on social media that they could be in breach of UK consumer protection laws.
As we have discussed many times in Socially Aware, the advertising landscape has undergone a dramatic transformation over the past decade. The rise of social media and ever-increasing levels of Internet access across the world have made social media advertising a strong challenger to more traditional—and expensive—advertising methods, such as television advertising.
Of course, there is nothing novel in companies seeking to use celebrities to attract attention to and create excitement for their brand messages. But what has changed is the medium; when a consumer follows a celebrity on YouTube, Instagram, Facebook, Snapchat or Twitter (especially a social media personality who has become famous as a result of being on YouTube, Instagram, etc.), it’s not always easy to distinguish between a genuine opinion and an advertisement.
According to the CMA, between March and July 2015, 19 marketing campaigns that Social Chain arranged involved undisclosed advertising. The regulator believed that various ads posted to Twitter, YouTube and Instagram may have been difficult for readers to “distinguish from other posts, conversations and jokes they appeared alongside.”
Social Chain accepted the CMA’s ruling and has agreed that all future campaigns will be clearly distinguishable from other social media content, in accordance with the UK’s Consumer Protection From Unfair Trading Regulations 2008.
What constitutes advertising?
The CMA is concerned with “paid-for” advertising. The CMA interprets this term broadly; payment, for example, may include nonfinancial remuneration such as free samples, tickets or access to membership services.
A second key element is the degree of editorial control that the business supplying the product or service has over the content of the social media post or other endorsement. Behavior by a company that could indicate a sufficient degree of control includes supplying language that is to be partially or entirely reproduced verbatim by the social media influencer.
On the other hand, if a company provides a celebrity with a number of free samples of a product, and the celebrity subsequently posts an endorsement of such product on social media entirely on his or her own volition and using his or her own words, then that would not be considered by the CMA to be an act of “advertising” that product. (Of course, in other countries, it may be that a regulator would reach a different outcome in this scenario.)
How can advertisements be made distinguishable from other types of content?
The CMA has advised that an advertisement must be clearly identifiable to consumers. One method would be to make an explicit reference to the fact that the content is an advertisement. Simply writing “ad” or similar language in the description would suffice. Although such an explicit reference is not essential (e.g., it may be clear from the context that a post is an ad), adopting this method would certainly be the safest way to avoid attracting the CMA’s attention.
The CMA also recently announced a ruling against clothing retailer WoolOvers for “cherry-picking” more favorable customer reviews for publication on its website. Over the period from December 2014 to November 2015, WoolOvers staff were instructed to approve only a selection of reviews, and none below 4 stars. This resulted in almost half of the reviews it received during the period going unpublished. In publicising its ruling the CMA made clear that it’s important that when consumers read reviews on a company’s website they are given the complete picture. In particular, critical reviews must be published as well as those that praise the company’s products and services.
Following these two rulings, the CMA has issued updated guidance on online reviews, and an open letter to marketing agents and their clients about their obligations under consumer law concerning endorsements and reviews.
These CMA rulings, which reinforce previous guidance and enforcement actions from the UK’s advertising regulator and recent guidance on endorsements and reviews from The International Consumer Protection and Enforcement Network (a network of consumer protection authorities from nearly 60 countries), should be a reminder to brands and marketers, once again, that, no matter how creative or cutting-edge their UK social media campaigns are, they remain subject to advertising standards.
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For guidance regarding online marketing under U.S. law, please see these earlier Socially Aware blog posts: FTC Enforcement Action Confirms That Ad Disclosure Obligations Extend to Endorsements Made in Social Media and Influencer Marketing: Tips for a Successful (and Legal) Advertising Campaign. For more regarding potential legal issues in connection with online reviews, please see the following posts: A Negative Review May Be Protected Activity Under U.S. Employment Law; The Right to Give One-Star Reviews; and Frying Small Potatoes: Will Amazon’s Pursuit of Individual Fake-Review Writers Pay Off?.