Carly Duckett, Solicitor in our commercial disputes team, discusses the recent responses issued by UK competition and advertising regulators regarding the importance of compliance with regulations by influencers and the brands that work with them.
Influencer marketing is a crucial sector of the UK advertising industry, but the Digital, Culture, Media and Sport ("DCMS") Committee has commented that "if you dig below the shiny surface of what you see on screen, you will discover an altogether murkier world where both influencers and their follows are at risk of exploitation and harm online". This statement from the DCMS Committee Chair, Julian Knight MP, followed the publication of the Committee's 'Influencer Culture: Lights, Camera, Inaction?' report which suggested that the current framework is not keeping pace with the growth of the sector and ought to be reformed.
The Advertising Standards Authority ("ASA"), the UK's advertising regulator, and the Competition and Markets Authority ("CMA"), the UK's competition regulator, have since responded to this report. The ASA monitors adverts across the UK, including those posted by Influencers, for compliance with advertising rules. The CMA enforces competition and consumer laws and can conduct investigations in relation to suspected breaches of those laws in the market. The ASA and CMA work together to ensure that consumers "get a good deal" (to use the CMA's words) and are not misled by advertising.
The ASA and CMA have affirmed the importance of compliance with regulations which require influencers to disclose advertisements to their followers, otherwise they may face sanctions.
The ASA's Response
Influencers have a more personal relationship with their followers than traditional advertising, which places those followers at an increased risk of exploitation by being misled. To combat this, the ASA requires influencers to identify posts that are advertisements, which is often done by including "#ad". The DCMS found insufficient compliance with this requirement and called for the ASA to strengthen this rule and be afforded greater enforcement powers.
The ASA identifies advertisements by its payment and control test, which considers a post to be an advert if the advertiser exerts a degree of editorial control over the post, and there is payment. The DCMS suggested that the control element of this test should be dropped to extend the posts that fall within the ASA's scope. However, the ASA consider that this element of the test prevents them from straying out with their remit and explained that the test at present still catches the majority of influencer adverts. The CMA's disclosure requirements have a slightly wider remit and are triggered by payment only, so any posts that do fall out-with the ASA's control test would be caught by the CMA.
The DCMS also called for the ASA to be given statutory powers to enforce the disclosure requirement. However, the ASA did not consider this to be necessary. The ASA currently penalises influencers who fall foul of its rules by putting them on a list of "non-compliant social media influencers", which is published on the ASA website.
In 2021, the ASA used these powers following an inquiry into compliance on Instagram stories - the ASA's report is available here. The inquiry revealed that a number of influencers were not properly disclosing ads on their stories. Therefore, the ASA wrote to the non-compliant influencers, as well as a number of the brands that featured in the undisclosed ads, notifying these influencers and brands that they would monitor their ongoing compliance and that any future shortcomings may result in enforcement action. ASA consider that its current sanctions, and the threat of naming and shaming, are sufficient and successfully secure compliance.
The CMA's Response
In response to the DCMS report, the CMA confirmed that they have obtained undertakings from Facebook in relation to its Instagram platform, which seeks to facilitate compliance with the disclosure requirements. This includes creating prompts for influencers to remind them to disclose any ads, and implementing tools that will enable brands to identify posts which promote their products and ensure that the proper disclosures have been made. This will help brands play their part in ensuring that any posts that they commission are compliant. The CMA confirmed that they are continuing to engage with other social media platforms to reach similar arrangements.
The ASA and the CMA's response reinforces the importance of compliance with advertising regulations by influencers and the brands that work with them. A failure to do so could see brands and influencers facing sanctions, including being publicly 'named and shamed', which could diminish the trust of followers and cause the brand to suffer reputational damage, thereby undermining the effect of any future online marketing.
This is just one of a number of issues that businesses must be conscious of when working with influencers to promote their brand. If you are interested in hearing more on this topic, sign up to our webinar series "Online Platforms: working with influencers" here.
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