Out-Law News 4 min. read
11 Nov 2022, 10:32 am
The publication of new guidance aimed at enhancing transparency over advertising online could be the precursor to future enforcement action by a UK regulator, experts have said.
Consumer law specialists Angelique Bret and Tadeusz Gielas of Pinsent Masons were commenting after the Competition and Markets Authority (CMA) published three guides, for social media platforms, businesses, and content creators and influencers, setting out its expectations around paid promotions, and detailing the roles and responsibilities of the different regulators of online advertising in the UK.
The new suite of guidance comes after a CMA investigation identified concerns that some social media influencers were not clearly disclosing when they had been paid or incentivised to promote goods or services.
Hidden advertising is considered to infringe UK consumer protection law because it can mislead consumers into believing that a person or brand, whose opinion they value or trust, organically endorses a product or service being promoted, and prompt them to purchase those products or services when they may otherwise not have. Social media endorsements that amount to adverts therefore must be clearly identified as such – for example, if the content creator or influencer has received some form of payment, including gifts, for endorsing a product or service, or if they endorse a brand they own or are employed by.
By highlighting the need for platforms, businesses, and content creators to proactively tackle hidden advertising, the CMA is also signalling its willingness to take enforcement steps and pursue suspected consumer law breaches
Angelique Bret said: “The CMA’s three-pronged strategy to provide clear guidance on consumer protection law compliance involving hidden advertising is a cumulation of the regulator’s scrutiny of social medial endorsements that has run for over four years. It also builds on previous commitments the CMA has extracted from social media platforms and influencers to address consumer protection concerns.”
“The CMA has produced practical guidance covering the entire social media endorsements ‘ecosystem’, spelling-out its expectations on what consumer law-compliant adverts should look like and the respective responsibilities of the parties involved for ensuring legal compliance. By highlighting the need for platforms, businesses, and content creators to proactively tackle hidden advertising, the CMA is also signalling its willingness to take enforcement steps and pursue suspected consumer law breaches,” she said.
Tadeusz Gielas said: “Currently, the CMA must take court action to determine a breach of consumer protection law. However, the UK government is proposing to bolster the CMA’s consumer protection enforcement powers and align them with the much stronger powers the CMA already has to enforce competition law. Such new powers would enable the CMA itself to decide a legal breach without going to court, and to impose maximum penalties of 10% of the business’ annual global turnover for non-compliance.”
Bret and Gielas also said the publication of the new guidance highlights the increasingly close collaboration between the CMA and other UK regulatory authorities concerned with online advertising, including the Advertising Standards Authority (ASA) and the Committee of Advertising Practice (CAP) – the body that writes the advertising rules that the ASA oversees compliance with. It also recognises that digitisation of the economy means that a multi-disciplinary and multi-agency approach may be needed to effectively address emerging consumer protection, competition, and other regulatory issues.
The CMA said that TikTok, YouTube, Twitter, Snapchat, Pinterest and Twitch had engaged constructively on the development of the new guidance for social media platforms. That guidance is shaped around six “compliance principles” which the CMA has said are designed to help platforms comply with their “duty to act with professional diligence” under UK consumer protection regulations.
Perhaps the most striking principle is the one that encourages platforms to facilitate legal compliance by brands.
The CMA said platforms should “take proactive steps to raise awareness and understanding among brands of your terms of service, policies and any other information relating to incentivised endorsements, and encourage brands to check that content which endorses them is properly labelled as advertising”. Examples provided by the CMA suggest that this might involve notifying brands where content has been flagged as being suspected hidden advertising or providing functionality to brands to enable them “easily to review content that mentions their brand, and then request action if necessary”.
The CMA also expects platforms to inform users about the need to clearly identify incentivised endorsements as advertising and to clearly distinguish it from other content, ensure content creators are provided with tools to easily and effectively label content as advertising, as well as enforce their terms and conditions – including by applying sanctions against users – in relation to hidden advertising. The regulator has endorsed the use of technology for preventing hidden advertising from appearing and it wants platforms to make it easy for users to report suspected hidden advertising.
The CMA’s guide for businesses is designed to raise brands’ awareness of their responsibilities in relation to tackling hidden advertising. It said brands must “act with professional diligence” to make sure that content promoting their brand is properly labelled as advertising when it results from their marketing activities and is being published on their behalf.
Brands are urged to be clear with influencers who they pay or send gifts to that they must ensure the influencers label their posts in an obvious way – and take action where this does not happen, such as by asking influencers to remove or amend posts to accurately reflect the commercial relationship.
The CMA’s guide for content creators and influencers contains practical guidance on how to clearly label posts to identify them as ads. All labels must be clear, prominent and easy to understand, and timely – it is not considered sufficient merely to tag a brand in a post, use discount codes or affiliate links. The use of the hashtags #Ad or #Advert are recommended, while others such as #gift, #gifted, or #spon, are considered ambiguous.
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