The Competition & Markets Authority (‘CMA’) recently concluded its investigation into the marketing practices of online influencers, with a number of famous faces pledging to make it clearer to their fans when they’ve received an incentive to endorse a product.

The Investigation

The investigation, which began in August 2018, examined whether celebrities and social media personalities are being transparent about the incentives they receive for endorsing products in their online posts. As part of the investigation, the CMA asked consumers to complete an online survey to aid them in building a more complete picture of how spending decisions are influenced by celebrities modelling, reviewing and endorsing goods or services. Simultaneously, the CMA directly contacted a range of influencers with questions about their relationships with the brands they endorse online.

The CMA discovered a widespread trend of influencers failing to properly declare to their followers when they were being rewarded for featuring products from commercial partners. Not only does this practice have the potential to deceive consumers and unfairly influence their buying habits, it may also breach consumer protection laws.[1]

Outcomes

The most headline-grabbing outcome of the investigation is that the CMA has secured undertakings from 16 high-profile influencers, including Rita Ora, Ellie Goulding and Alexa Chung, in which they commit to clearly label paid-for posts to make it obvious that they’ve been incentivised to endorse or review a particular product. And it’s not only monetary payments that trigger a disclosure obligation for the influencer – consumers must be made aware even if the influencer has merely received a free gift or a product loan from the relevant brand.

In addition to securing these undertakings, as a result of the investigation the CMA has issued a new ‘guide for influencers’ aimed at ensuring they are aware of their obligations under consumer protection laws, and setting out how they can be more transparent with their followers.

Comment

The new guidelines go further and provide more detail than those previously published by the CMA in collaboration with the Committee of Advertising Practice (‘CAP’), and they contain some important points to note:

  1. Previous guidance seemed to leave the door open for influencers to endorse ‘freebies’ (received unexpectedly) without flagging to users that they had received the product for free. This is because previous guidance has referred to a disclosure obligation being triggered only where there is a “commercial relationship” between the influencer and the brand, or where a celebrity has accepted some form of payment “to endorse something”. In circumstances where a celebrity has decided, in the absence of any request or order from the brand, to endorse/review a particular product received for free, it is arguable that there is no “commercial relationship” to be disclosed. However, it is now clear that the CMA believes any form of incentive (even if provided with absolutely no conditions attached) to endorse a product must be revealed to consumers. The undertakings secured in this latest CMA investigation require influencers who are promoting/reviewing a product to make clear whether they have received any payment (which includes a gift or even a loan of a product) from the relevant brand in the preceding year.
  1. The new guidance for influencers (available here) provides some much-needed clarity on what the CMA deems to be adequate disclosure of an underlying incentive. In particular, influencer habits such as merely tagging a brand within a post or hiding labels like “#ad” at the end of a long series of hashtags within their posts are held up as examples of inadequate disclosure. The CMA also comments on Instagram’s “Paid Partnership” feature; the message being that, while this is a useful tool, it should be used in combination with other labels such as “Advertisement Feature” or “#ad”.
  1. It seems that the CMA may soon turn its attention to how social media platforms can do more to ensure their users are not misled or deceived by endorsements from their favourite celebrities. With no other detail or context, a statement on the main investigation page explains, “The CMA is now considering the role that platforms may play.”

It is important to note that, although aimed at influencers who may have little awareness of consumer protections laws, the new guidelines are equally relevant to brands, ad agencies and other intermediaries involved in the online publication of so-called “native advertising” (i.e. unobtrusive advertising that blends into its surroundings). It will be interesting to see how noticeably the practices of online influencers change under the new guidance and the undertakings secured, and what approach the CMA will take when addressing the role of platforms in the coming months.