Public Law

Just how “spontaneous” is that celebrity’s #selfie which lavishes praise on a luxury overseas hotel? UK consumer protection regulator the Competition and Markets Authority (CMA) has secured commitments from 16 famous names, including pop stars Ellie Goulding and Rita Ora, that they will clearly identify if they have been paid, incentivised or otherwise rewarded for endorsing or reviewing products or services in their social media posts.

This comes in the wake of the CMA’s investigation into transparency of social media commercial endorsements by celebrities, which we blogged about here. The CMA had expressed concern about the extent to which online stars with large numbers of followers were properly declaring commercial relationships, and whether fans viewing the content were being misled. Consumer protection laws, which are enforced by the CMA, prohibit advertising posts from being misleading. This requires making it clear if you are promoting a product that you have not actually used first-hand, as well as not giving the impression that you are acting as a consumer when you were actually paid to endorse something.

In its new Quick Guide for Social Media Influencers, Marketing Companies, Agents and Brands, the CMA provides guidance on the different ways in which stars can be transparent about what they are promoting:
“It is not likely that there will be just ‘one way’ of explaining your relationship to a brand. The CMA takes the view that ‘Advertisement Feature’ or ‘Advertisement Promotion’, are useful descriptions, but it has seen a range of other wording, (including #Ad, #Advert, and using the ‘Paid Partnership’ tool on Instagram in addition to these hashtags), which convey the appropriate messages simply and effectively.”

Interestingly, the CMA is taking a dim view of certain practices in this arena, including:

  • using ambiguous language in a post, such as “made possible by”; “in collaboration with”; or “thanks to…”, without explaining the context
  • unclear use of hashtags, for example use of #sp or #spon to designate “sponsored post”, or #client; #collab
  • hiding the relevant disclosure (e.g. #ad, #advert) in amongst large amounts of other text or hashtags rather than clearly labelling it.

The guidelines also expressly state that any form of reward amounts to “payment”, including being sent “freebies” out of the blue by businesses.

The CMA’s approach is aligned with that taken by the UK Advertising Standards Agency (ASA) – which regulates advertising on all types of media – in the ASA’s Influencer’s Guide to making clear that ads are ads. The ASA last year issued a call for evidence on the types of labelling which would help consumers understand when online content has been paid for. Online marketing communications that are not obviously identifiable as such risk being in breach of the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing Code (CAP Code). The ASA has in recent years banned social media posts by a number of household names, such as reality TV stars Millie Mackintosh and Marnie Simpson, on that basis.

Social media advertising is big business, with the global “online influencer” market generating around £3.8 billion a year. According to a report by the Times, British celebrities can earn from £1,000-£10,000 for issuing a sponsored post on Instagram, and some £120,000-£240,000 is earned annually by the most popular British influencers on that site.

Failure to properly label commercial posts on online platforms can result in the CMA taking enforcement action against the poster and / or their brand or marketing agency. While the regulator’s investigation and issuing of guidelines has begun to shine a light on this area of Instagram, Snapchat and the rest, it is important to note that the CMA has not yet made any formal findings as to whether any specific posts or posting practices have in fact breached consumer protection law. The undertakings given to the CMA by the 16 celebrities are voluntary and are certainly not admissions of any breach of the law.

This looks set to rumble on. The CMA has announced it is “now considering the role that platforms may play” in this field, and it has issued warning letters to more celebrities, urging them to review their online promotion practices. So whether you’re a megastar or a “nano-influencer”, take a look at the CMA and ASA guidelines before you hit “send”.

Adam McCabe

Senior Solicitor at Brodies LLP
Adam is a Senior Solicitor in Brodies' market-leading Government, Regulation and Competition team. Adam has experience in advising on a wide range of public law and regulatory issues including judicial review, freedom of information, and statutory powers and duties of public authorities. Adam also provides advice and support in corporate crime matters, including criminal / health & safety investigations, prosecutions and defence of enforcement action by regulators.
Adam McCabe