What's the issue?

As we discussed here, the Advertising Standards Authority implemented new measures earlier this year to tackle the challenge of inadequately labelled or otherwise irresponsible advertising.  The issue of hidden advertising is, however, also a consumer protection issue and the Competition and Markets Authority (CMA) has also been looking closely at this area.  In October 2020, it carried out an investigation into hidden advertising on Instagram.  As a result, Meta agreed to implement changes and new tools on the platform to make it easier for brands and content creators to comply with consumer protection requirements when posting content.

What's the development?

The CMA has published wider guidance for social media platforms, brands and content creators, to ensure they enable people to easily spot a paid-for online endorsement and that they comply with applicable consumer protection law.

Social media platforms

The CMA has set out six principles to help social media platforms ensure they comply with consumer protection law in relation to unlawful practices such as hidden advertising.  The CMA highlights Regulation 3 of the CPUT Regulations – the duty to act with professional diligence. The principles outline what the CMA believes platforms should be doing now but recognises that each platform is different and that technology is developing, so the principles are by way of guidance only. 

The CMA says social media platforms should:

• inform users that incentivised endorsements are required to be clearly identified as advertising and clearly distinguished from other content
• provide content creators with tools so they are easily and effectively able to label any content as advertising
• take appropriate proportionate proactive steps and use available technology to prevent hidden advertising from appearing on their sites
• make it simple for users to report suspected hidden advertising easily and effectively
• facilitate legal compliance by brands
• enforce terms and conditions and take appropriate action when violations occur.

Business responsibility and social media endorsements

The CMA says businesses must take responsibility for ensuring that paid-for endorsements promoting them or their products or services are properly labelled as ads.  This requirement applies to all promotional content which is paid-for, whether or not by cash, whether or not by formal agreement, and whether or not the business has any control over the promotional content.  The CMA says businesses must:

• be clear with content creators about their legal obligations and have a policy setting out brand rules on conduct
• check content creators' posts
• correct any mislabelled content, working with the content creators.  If the content creator refuses to make changes, cease working with them.

Content creators and social media endorsements

The CMA has updated its 2019 guidance for influencers, clarifying that the requirement to label ads clearly applies where people use a social media account to promote products from a brand they own (whether in whole or in part), or which employs them.

What does this mean for you?

If you are a brand or a content creator, it's essential to comply with the guidance. Even though sanctions for getting it wrong may not be financially penal, the reputational damage can be extensive.