We've all seen that Instagram post of a famous celebrity pictured with their new favourite brand or product with a caption explaining how much they love it. However, what is not always clear is whether that celebrity is being paid to advertise the product in question or whether it is a genuine endorsement.
The Competitions & Markets Authority (CMA) has recently written to a number of celebrities and influencers regarding social media posts that it is investigating to determine whether they are misleading.
The CMA's power to address such breaches or potential breaches of consumer law derives from its powers under Part 8 of Enterprise Act 2002, which allows it to use enhanced measures to enforce various pieces of legislation. Its investigation is pursuant to the Consumer Unfair Trading Regulations 2008 (the CPRs), which prevent traders from presenting misleading or false statements about products which may lead to individuals entering into a transaction which they may not have chosen to do. One area of concern relates to the use of false information regarding any statement or symbol in the direct or indirect sponsorship or approval by the trader of the product. A trader is defined widely under the CPRs and could capture celebrity influencers who are given products by brands to use and blog about even if they are not paid in cash for the post.
The Advertising Standards Authority (ASA) has released guidance to address some of the issues around social media advertising and is looking to publish further guidance and rules in the future. However, it is widely acknowledged in the industry that a gap in regulation exists in relation to paid for and endorsed social media posts, with some describing it as the 'wild west'.
As the rise of vloggers, social media stars and Insta-famous influencers continues, there is an increasing concern regarding the messages being sent to consumers – particularly younger consumers who may not appreciate that their idols or celebrity crushes are being paid to endorse products. This issue hit the headlines during ITV's reality programme 'Love Island', as it was generally accepted that the show's celebrities would go on to make significant sums of money from paid-for endorsements.
Made In Chelsea star Louise Thompson recently apologised after receiving a warning from the ASA over an Instagram story she posted, which was an advert promoting a beauty brand. Ms Thompson said she was unaware that the hashtag "#ad" should have been included in the post about a brush, believing her 1.1million followers would be aware she was being paid for the post because it included a promotion code.
What happens next?
The CMA is asking for the public's comments on its current investigation and examples of social media posts they considered misleading, and it will report on its findings later this year.
In the meantime, any brands who are looking for influencers to post regarding their products may want to take a good look at the ASA code to ensure that their posts are clear where they are paid for advertising.
If the CMA's activities in the gambling sector are anything to go by, we could see the CMA targeting repeat offenders and publishing guidance requiring compliance from the entire industry with the threat of significant sanctions for non-compliance. Watch this space.