Over the past few years, influencers have come under fire on consumer protection issues relating to the brands they endorse through social media channels.
However, the Competition and Markets Authority (CMA) is now pointing the finger at brand owners to ensure they are actively ‘policing’ influencer endorsements and advertisements. A report by the Advertising Standards Authority (ASA) stated that 65% of the advertisements it had been monitoring over the period of a month, were not disclosed as ‘paid for’ content. To counter this, the CMA, ASA and The Office of Communications (Ofcom) have joined forces to challenge so-called “hidden advertising”, with the CMA issuing updated guidance for social media platforms, influencers and brands in November 2022.
Whilst the guidance outlines six core principles for social media platforms to implement in order to comply with consumer protection regulation (namely the Consumer Protection from Unfair Trading Regulations 2008), consumer brand businesses and owners now find themselves under an obligation to police the labelling of any paid-for promotional content as advertising.
The November guidance has sharpened the focus on the responsibility of brand owners to ensure that they are actively monitoring influencer posts relating to their brands, updating policies, and responding to customer concerns. If a business identifies content that is incorrectly labelled, this should not be ignored. Instead, brands are expected to work with influencers and any third parties (such as an intermediary marketing consultant) to ensure the content is correctly labelled using tags such as “#ad” or “ad”.
In practice, this means brands must now update their policies to comply with this regulatory framework. Brands will need to make sure their contracts with influencers are clear about the rules set out by the ASA in their CAP Code, which include proactively disclosing the fact that content posted for that brand is an advertisement. The CMA is looking at brand owners to take much more responsibility for a market that they have essentially created. Therefore, even in circumstances where a brand owner does not have editorial control of the posts relating to their brand or even a formal agreement in place, they will still have a responsibility to ensure consumers are adequately protected.
This is all part of the CMA’s drive to increase enforcement relating to consumer protection and whilst a failure to get this right could cause reputational damage for brands, extensive fines are on the horizon. There were hints in the most recent Autumn Budget that 2023 will bring reforms in the area of competition and consumer law regimes, granting the CMA new direct enforcement powers against consumer protection breaches. And with such powers comes sizeable fines. Consumer protection is clearly an absolute priority for both the CMA and the government for 2023 and brand owners will need to stay alert to the fact that they too need to remain accountable and responsible to avoid these impending penalties.
Any paid for endorsements or gifts that aren’t clearly labelled as an ‘Ad’ may be in breach of consumer protection law or break industry rules on advertising