Iona Silverman, Intellectual Property & Media partner at Freeths, attended a talk recently, the title of which was: Influencers, is the bubble about to burst?
It won’t surprise you to know that the short answer was, no, influencers are here to stay. However, as influencer reach soars, regulators around the world are beginning to sit up and take note. What should influencers do to stay on the right side of the line? How can brands maximise the impact of influencer content whilst protecting their reputation?
The current regulatory position
In March, the UK Advertising Standards Agency (ASA) reported that, based on a review of over 24,000 Instagram stories, only 35% of advertising was “clearly labelled and obviously identifiable as such”. The level of non-compliance was, in the ASA’s words, unacceptable. The ASA subsequently contacted all non-compliant influencers identified as part of their review, as well as a number of brands, and put them on notice that if future spot checks carried out by the ASA on any platform revealed problems, they would take enforcement action.
In June, the ASA set up a dedicated “non-disclosure” webpage on which they name any influencers who routinely fail to clearly disclose that they are advertising to consumers on social media. The list currently includes, amongst others, five ex-Love Island stars. If named influencers continue to break the rules around non-disclosure, the ASA could take out out ads against them, work with social media platforms to have their content removed or refer them to statutory bodies for possible fines.
It is clear that the ASA takes this issue seriously. It lacks the teeth it needs to impose fines, but it isn’t shy to name and shame those that don’t comply with the rules. In parallel, the Online Safety Bill introduces a new regulatory framework under which social media sites will have to remove and limit the spread of illegal and harmful content, including organic and influencer adverts. The obligation will be on platforms rather than on brands, however given the potential fines of up to £18m or 10% of global turnover we can expect social media sites to run a much tighter ship going forward, and to potentially seek to pass those obligations on to brands, in some form, via their site T&Cs.
What are the rules and how can influencers ensure they comply?
The basic rule is that an advertiser should not mislead consumers. But when is an influencer an advertiser? To answer this, we need to consider whether a) the influencer is being paid for their content or b) a third party has control over their content.
Its important to remember, that although I refer to “influencers” throughout, these rules apply to anyone posting online, including more traditional celebrities, brand ambassadors, micro-influencers or just you or I. If someone is paid for their content or is posting content subject to third party control, they are an “influencer” for the purpose of ASA regulations.
Most influencers are paid, either by way of direct financial compensation for their posts, or in the form of gifted products, freebies or discount codes.
Often brands will have a right to review or veto an influencer’s content. The brand may impose contractual obligations on the influencer governing when they can post, what they can post or what they can’t post. These all confer an element of control.
If an influencer is being paid for content or someone else has control over that content, the influencer is required to disclose that their content is a form of advertising. The most straightforward way to do this is to include #ad in a visible way alongside the content. Influencers can also use the “paid partnership” feature that is now available on most social media sites.
Note that the ASA requirement to use #ad to label content that is paid for or under a brand’s control does not apply to the Online Safety Bill, which requires any illegal or harmful content to be removed, including images or text posted to promote a product, service or brand, which may or may not be paid for. Notwithstanding the Online Safety Bill, it is common sense that influencers should never post illegal or harmful content.
What not to do
Influencers should not assume that it is obvious that they are advertising something. Using “with thanks to…” or “in partnership with” or #spon is not sufficient. Similarly, they shouldn’t hide their #ad tag below the line – it needs to be visible up front.
Even if someone is known as a brand ambassador for a particular brand, they still should be disclosing their status as an advertiser on each and every post. It is not sufficient to assume that the public will know that a brand ambassador is paid by that brand to promote their products. Disclosure is the responsibility of the brand ambassador, rather than the brand, although of course any negative PR resulting from a failure to disclose will impact both.
Additionally, influencers should not exaggerate product capabilities or performance or omit material information. For example, when promoting cosmetic products, influencers shouldn’t use beauty filters. Recently influencers for Skinny Tan Ltd and We Are Luxe Ltd used beauty filters which altered their skin tone and complexion to promote tanning products on Instagram stories. The ASA considered that, because the filters were directly relevant to the performance of the products being advertised, they were likely to have exaggerated the efficacy of the products and misled consumers materially. As such the posts were taken down.
A word on contracts
Although the ASA is clamping down on influencers themselves rather than the brands they are promoting, the brand will suffer any negative PR fallout. Brands should impose contractual obligations on their influencers to use #ad and to comply with all relevant regulations.
Brands should ensure they have robust contracts in place to control the content that their influencers post as well as the tags that their influencers use. In addition to contractually requiring their influencers to use #ad on all posts associated with their brand, brands will want contracts to address the ownership of intellectual property rights in any content, alignment of content with their values, what options the brand has if it goes wrong and the content brings their brand into disrepute, what level of exclusivity they have and whether they have a mechanism to take down any posts if required.
Brands will also want to consider tracking performance and ensuring their influencers don’t buy followers or likes. Influencer fraud is an increasingly big issue which brands should be live to.
Indemnities, which are a mechanism to claw money back from someone if they breach key terms of a contract, are less helpful in influencer agreements as influencers typically don’t have the deep pockets that corporates have. Instead brands often choose to pay influencers in instalments to keep motivation high.
As a brand you may want to consider creating a bank of precedent agreements: agreements with brand ambassadors or macro-influencers should be robust and address all eventualities, whereas agreements with micro-influencers can be shorter, setting out just the key terms.
The laws are, of course, different in every country. As a brand you may be working with an influencer based outside of the UK, and even if you are working with a UK-based influencer you can guarantee that their content will be viewed outside the UK. How, in practice, do you manage the web of overlapping jurisdictions? You’ll need to take a pragmatic view: #ad is an accepted standard for disclosing advertising that is recognised in most countries. If your influencer is big in another country you may want to consider taking legal advice in that country, however generally speaking using #ad to disclose paid content is sufficient.
As you may know, all contracts have a “governing law” clause which sets out the laws which are to be used to interpret the contract; and a “jurisdiction” clause which sets out which courts will have jurisdiction to hear any dispute between the parties. By applying English law and making your agreement subject to the English courts you are taking control of how your contract is interpreted and which courts you would need to answer to in case of a dispute.
Influencer content resonates best when it is authentic. Not only does that mean that the influencer’s genuine enthusiasm for a product comes across, but also it should be clear to consumers if they are looking at advertising. The ASA, and other regulators worldwide, are looking seriously at influencer advertising and will not hesitate to name and shame both influencers and brands that don’t follow the rules. Ignorance of the rules is not an excuse.
There are other rules that influencers should be aware of, such as ASA rules on prize draws and social responsibility. Molly-Mae Hague recently ran a giveaway which was found not to have been administered fairly and Gemma Collins has been found to have made irresponsible claims about weight loss products.
Brands should consider providing their influencers with briefing sessions to clearly set out what is required of them from a contractual and regulatory standpoint.
This article was first published by Cosmetics Business on 15 October 2021.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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