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CMA Crack Down: Social media influencers under increased scrutiny from authorities

01/02/2019 Michael Lister, partner and May Delaney, associate, Harbottle & Lewis,

The Competition and Markets Authority (CMA) last week publicly announced the action it is taking following an investigation into concerns that social media stars are not properly declaring their relationship with the advertiser when promoting products and services. 

The CMA announced that they have already secured a “formal commitment” from 16 celebrities to clearly indicate in their social media posts when they have been paid, or otherwise incentivised or rewarded, to post about a brand or its products. 

This represents the latest development in a long running effort by the authorities to control and moderate the behaviour of advertisers and social influencers to ensure that consumers who see their posts are not misled about the reason for the brand or product endorsement. The question of how to appropriately identify a post has often caused confusion and there are great inconsistencies between the various approaches taken by brands and influencers, which gave the impression to many that further regulation or guidance is necessary. 

The key message from the CMA’s latest announcement is that it’s no longer just the advertisers that need to ensure compliance with the relevant laws and regulations. Influencers themselves now need to take responsibility for what they post or they will be investigated and sanctioned accordingly.

Under the Consumer Protection from Unfair Trading Regulations 2008 it is an offence if:

‘the commercial practice fails to identify its commercial intent, unless this is already apparent from the context.... and as a result it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise’.

When the Government first instructed the CMA to investigate with a view to improving and maintaining consumer confidence in brands, the CMA made it clear that any entity that failed to comply with such an undertaking could face civil or even criminal penalties. Since then the CMA has continued to work closely with the Advertising Standards Authority (ASA) to clamp down on brands and increasingly the influencers themselves. 

This integrated approach is demonstrated by the fact that one of the individuals that the CMA has recently secured an undertaking from is Louise Thompson, of Made in Chelsea fame. Back in July last year, the ASA banned Louise’s post promoting Daniel Wellington watches, as she had not used the label #ad to indicate that it was a paid partnership.

Despite this, in September Louise failed to disclose another post on Instagram as an advert, and was once again held to account. Louise was by no means the only high profile celebrity whose activities on social media were questioned and, with the problem becoming widespread, in September the CMA and the ASA published joint guidance on how to correctly label advertisements to try and clear up the confusion in the industry and to encourage best practice. This went beyond just including appropriate hashtags and included the following more detailed instructions amongst others:

- Influencers should not assume that the inclusion of discount codes, competitions or giveaways, or references to their own range of products is sufficient to make it clear that there is a commercial relationship between the brand and the influencer; and

- Individuals and brands must not neglect to mention past relationships, any relationship in the past twelve months is likely to be relevant to social media followers.

The CMA, in obtaining formal commitments from celebrities, has stressed that no finding has been made as to whether the influencers’ practices breached consumer law and the undertakings should not be viewed as an admission that the influencers in question were acting contrary to the law. Despite this we expect to see a relatively swift change in influencer behaviour as the threat of sanctions hangs over them and the public are becoming increasingly conscious of what influencers should and shouldn’t be posting, and are showing a growing appetite to notify the ASA if they think they have spotted non-compliance. However, influencers themselves have been using social media, perhaps unsurprisingly, to react to these latest developments. Many were keen to point out that they already viewed themselves as relatively transparent when it came to sponsored posts or gifting. 

The CMA have announced that they will next turn their attention to the digital platforms themselves, with Instagram and other similar channels likely to face the closest scrutiny. However, regardless of whether advertisers, platforms or the influencers themselves are being targeted, it is clear that we are now seeing a concerted effort by the authorities to clamp down on online activity which could mislead  consumers and over the next few months we should begin to get a clear picture as to whether the investigation and action taken has had the desired results.

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