If asked what Alexa Chung, Ellie Goulding and Rita Ora have in common, you might point to their wealth, fame and luxury lifestyles. Now they are linked together by another, far less glamourous, connection. They’ve all been targeted by the Competition Markets Authority (CMA) under its recent clampdown on ‘influencers’ endorsing products via social media posts without disclosing they were being paid by a company.
The CMA (after sending warning letters) has secured formal commitments from 16 celebrities, including the likes of Michelle Keegan, Louise Thompson and Zoella, to state clearly if they have been paid or received any gifts or loans of products that they endorse online.
This is not a new issue. We recently commented on the pitfalls faced by influencers and how they can comply with their consumer law obligations. It appears that now the CMA has woken up to the immense power held by ‘influencers’ over UK consumers. This influence is unsurprising given that the 16 celebrities targeted by the CMA command over 27.5 million Twitter followers.
Yet the sway of influencers is not solely a UK problem. In the US, the notorious ‘Fyre Festival’, where festival goers paid up to $12,500 for a ticket, was fuelled by a powerful influencer marketing campaign featuring, among others, Kendall Jenner, Bella Hadid and Emily Ratajkowski. Despite promises of luxury, gourmet food and a super-model guest list, the attendees were met with rain soaked tents, no performing acts and basic cheese sandwiches. Whilst Kendall Jenner was reportedly paid $250,000 for a single Instagram post advertising the festival, the organiser is now serving a six year jail term over the fraudulent event. Helpfully the CMA has published new guidance for influencers on how to comply with their legal requirements to consumers when promoting or endorsing products online. This is in addition to the guidance published jointly with the Advertising Standards Authority.
The new guidance says that influencers must:
- Clearly state when they have been paid, given or loaned items
Any form of reward, including money, gifts of services or products, or the loan of a product, is ‘payment’. This applies whether the influencer originally asked for the product or if they receive any freebies out of the blue. Any free hotel stays or free flights could also be considered as payment.
- Be clear about their relationship with a brand or a business
This information has to be prominently displayed so that any viewer (including those not familiar with the influencer) can easily and immediately determine the nature of the relationship from the content. If the influencer is including discount codes, competitions or giveaways, or references to their own range of products, this is not enough to make the relationship clear. Past relationships should also be disclosed.
- Be honest and transparent in what they are promoting
The law is not prescriptive about how influencers should declare their relationships with brands, especially as social media (and the devices used to access them) continues to change and evolve. However, the guidance states any disclosures of paid for content should be ‘transparent, easy to understand, unambiguous, timely and prominent’ and ‘apparent without the need for people to click for more information’.
The guidance also highlights examples of bad practice that should be avoided, including:
- tagging a brand or business in either the text, picture and/or video of a post without any additional disclosure;
- using ambiguous language without additional disclosure in a post (for example ‘thank you’; ‘made possible by’; ‘in collaboration with’; or ‘thanks to…’); and
- unclear use of hashtags, for example: using #sp; #spon; #client; #collab; etc.
- Most importantly of all, influencers should never mislead the public
Influencers should not give the false impression that:
- they are a consumer when they are actually acting for their own business purposes or on behalf of a brand or other business;
- they have bought something that was given to them as a gift or on loan;
- they have used the service or product themselves if they haven’t.
Failure to comply with the above guidelines could result in influencers falling foul of the Consumer Protection from Unfair Trading Regulations 2008. This could end in a fine, or even imprisonment in the most extreme cases, and a raft of negative and damaging publicity.