The key issues being considered are whether influencers are identifying any commercial relationships clearly and accurately - i.e. making clear where they are being paid, or otherwise rewarded to promote, review, or otherwise endorse goods or services - and whether consumers are being misled.
The CMA is asking for consumers to provide input on their interactions with such social media posts, and is set to provide an update at the end of 2018.
Potential impact for the advertising industry and social media platforms
This is not a new issue. The fundamental regulatory requirement that ads must be obviously identifiable as ads has, for some time, been tripping up those who engage in more informal online forms of marketing.
In 2015, the CMA called for information regarding unclear paid-for endorsements; published a report, and obtained undertakings from two marketing companies in respect of undisclosed advertising in online articles and blogs.
As part of the report, further investigations were foreshadowed if evidence of breaches was found.
However, as noted in the ASA's 2017 annual report, the vast majority of ads about which complaints are upheld are now online ads, and there has also been a huge increase in the use of influencers by brands in recent years.
Until the industry acts, the spotlight of the CMA will be on it.John Wilks and Claire Sng at DLA Piper
As a result, the risk of harm to consumers appears only likely to grow. The recurrent nature of the problem was illustrated recently with the second ASA ruling in three months against the same celebrity, ‘Made in Chelsea’s’ Louise Thompson, who failed to use a clear label for her promotional Instagram posts.
This new CMA investigation highlights the need for the industry as a whole to re-look at labelling of posts and for platform providers to ensure they are providing easy tools for making labelling clear.
Until the industry acts, the spotlight of the CMA will be on it.
Similarly, the advertising regulator, the ASA, launched its own call for evidence in March 2018 in respect of people's understanding of labelling of online ads; this project is still ongoing, but could result in further advertising rules being introduced.
Reputational threat and practical pointers
The ASA has made clear that it considers both the influencer and the brand responsible for posts that breach the rules (even if the brand had no direct control over the content).
Brands and influencers who flout the rules do not only run the risk of the ASA publishing a negative adjudication, and resultant press coverage.
In addition, where sufficiently serious consumer law breaches are occurring, there is also a potential risk of criminal sanctions including fines and/or imprisonment.
As such, brands must have systems in place to ensure:
• Marketing communications are clearly identifiable, clearly labelled (eg #ad, #spon) and identify the true nature of the relationship;
• Influencers are complying with the rules;
• Written policies and approvals procedures are in place, abided by, reviewed and updated regularly backed up by contractual requirements (as appropriate) and training.
John Wilks is a partner and Claire Sng is a senior associate at DLA Piper
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