Influencers and endorsement: a legal perspective for brands

Thought Leadership
Following the publication of the CMA’s recent influencer guidance on endorsements, We Are Social’s General Counsel Darryl Taylor has shared a summary of what marketers need to know.

The background
Since August 2018, the Competition and Markets Authority (the CMA) has been investigating the extent to which so-called ‘influencers’ (social media personalities, celebrities, bloggers, vloggers etc.) are disclosing the commercial deals behind their social media posts.

This is required by relevant UK law and industry codes; respectively, the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) and the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing Regulations (the CAP Code).

On 23 January 2019, the CMA published guidance material to influencers on its website and sent an advisory letter to marketing agencies and intermediaries, setting out their recommendations on compliance.

Commercial intent when working with influencers
The CMA has made clear that, when making posts, influencers should make any commercial intent or purpose behind the post clear. This means that influencers should state whether the post has been made in exchange for ‘payment’.

While ‘payment’, of course, includes money; gifts, loans of products and experiences would also constitute ‘payment’. This stands even if there is no obligation on the influencer to make a post and there is no brand/agency control over the post. Justifying ‘gifts’, but equally relevant to other forms of non-cash incentives, in its advisory letter, the CMA states that “influencers receive such gifts precisely because of their influential public profile and it is a reasonable assumption that – irrespective of any formal requirement to post – brands or businesses would not be providing them with free products or services without the hope or expectation that they might post about them”. In that regard, it’s quite hard to argue with.

Notwithstanding this, there are many other factors that might be considered in determining whether there is a commercial intent or purpose behind a post, that are less obvious. However, as a good rule of thumb, if there is any explicit or tacit agreement in place between a brand (or an agency on its behalf) and an influencer, then there is a commercial intent or purpose that needs to be disclosed within any resulting or related post.

Further, even if a post is not made for ‘payment’, past relationships between an influencer and a brand which may have encouraged an endorsement may also be considered and, therefore, a disclosure may still need to be made.

Essentially, unless an influencer has independently decided to make a post promoting a brand or its products, a disclosure should be made.

Making a disclosure
Quite how a disclosure should be made, depends on the media or platform in which the relevant post appears. The type of post – in-feed, a story, live, and so on – also matters.

Together, the CPRs and the CAP Code require an honest and obvious disclosure, which must be “transparent, easy to understand, unambiguous, timely and prominent” and “apparent without the need for people to click for more information, no matter what type of device they’re using to view the post”.

As a result, it’s clear that consumers must, without any real effort, be able to understand whether there is a commercial relationship between the influencer and a brand and be told this in a very obvious and upfront manner. This entails the use of clear hashtags such as #ad (never #spon or #collab!), the use of native tools to disclose a paid partnership (where available), prominent written or oral statements and many more. There is no one-size fits all approach – a suitable disclosure for each post needs to be considered on its own merits.

Where responsibility lies
While guidance may have been published relating to influencers, the CMA also stated in its advisory letter that “all parties in the supply chain – the brand, marketing companies, agents and the influencers that make the posts” are responsible for compliance with relevant rules and law.

At We Are Social, whenever we engage with influencers on behalf of our clients, we require influencers to adhere to our terms and conditions which establish how to disclose commercial relationships – and secure a robust sign off process on posts for our clients.

What should brands do now?
It should be noted that the CMA has not introduced any new rules or law – they have existed for some time. It is simply another warning shot to influencers and brands who have, in the past, operated without significant scrutiny.

So, what should a brand do right now? That really depends on its current approach and that of its chosen agencies. As a minimum, brands should establish or review their influencer terms and conditions and social media guidelines and question those of its agencies.

Moreover, a slight shift in mindset is required. All too often, people believe that – provided no money changes hands and/or there is no obligation to make posts – then no disclosure is necessary. Many also think that disclosures such as #spon or #collab are acceptable. The CMA has established, conclusively, that this is not the case and these ideas should now be abandoned.

While certain matters are still open for debate, such as quite how brands and agencies should approach unsolicited gifting of products or experiences, the CMA has provided welcome guidance for the industry as a whole.

This article does not constitute legal advice and therefore should not be relied upon as such.