The Competition and Markets Authority (CMA) has launched an investigation into concerns that social media stars are not properly declaring when they have been paid, or otherwise rewarded, to endorse goods or services.
Effectively, what it wants to find out is whether influencers are correctly identifying and highlighting when they've been paid by a brand to advertise a product OR when they've been gifted or thanked in some other material way.
As part of its investigation, the CMA has written to a range of celebrities and social media influencers to gather more information about their posts and the nature of the business agreements they have in place with brands.
Why has the CMA launched this investigation?
The CMA is the government department responsible for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. Crucially, they enforce a key piece of legislation (The Consumer Protection from Unfair Trading Regulations 2008 or CPRs) that prohibit using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable to the consumer.
It's clear that the CMA are concerned that many posts do not identify if there is a paid/gifted relationship with a brand, but they can only assess the extent of the problem by conducting an investigation and finding out directly from the public whether they have been misled.
Why not the ASA? Aren't they the official advertising regulator in the UK?
Yes, the ASA does regulate advertising in the UK but it does so by applying (amongst other pieces of legislation) the CPR's. So, if there is a (in this case suspected) widespread breach of the CPR's, the CMA can step-in and conduct an investigation. Once it has assessed the extent of the problem, it can work with the ASA, or delegate responsibility to the ASA and their sister body CAP, to resolve the matter. Or the CMA can take enforcement action itself through the courts.
What are the consequences of a CMA investigation?
In 2015, the CMA commenced investigations into fake reviews and non-disclosure of paid endorsements. Four companies signed undertakings agreeing to abide by the CPR's. The CMA also wrote to 15 related businesses and 43 social media personalities that published related content, to warn them that arranging or publishing advertising that is not clearly labelled may result in them breaching the law. That letter stated:
Misleading readers or viewers falls foul of consumer protection law and could result in enforcement by either the CMA or Trading Standards Services, which may lead to civil and/or criminal action.
Can we respond to the CMA investigation?
The CMA is currently only asking the public to share their experiences, via an online survey. Businesses such as ad and PR agencies, social media agencies, talent management firms and brands have not been invited to comment as yet. However, the ASA is also currently conducting a project to explore the labeling of social media posts and although the deadline for the call for evidence has passed, there may still be opportunities to contribute as the project progresses.
How can we ensure our influencers' posts are compliant?
Know the rules! You may not need to know the minutiae of the CPR's or the CAP Code but there are other sources of information and training on the rules surrounding disclosure. The CMA doesn't provide direct advice on this matter to businesses but CAP does have guidance notes on disclosure and transparency, as well as all other issues covered by the UK Code of Advertising (the CAP Code).
Hashtag Ad Consulting provides in-house training to social media agencies and brands on the advertising rules. With 13 years experience of investigations and compliance at the ASA, our bespoke training covers correct disclosure, hashtags, gifting v payment, affiliate marketing, competitions & giveaways etc ... all aimed at giving your team and their influencers the confidence to produce innovative compliant marketing.
For more information about compliance training, audits of your current influencer catalogue or support with an ASA investigation contact Rupa Shah