In November 2022, the Competition and Markets Authority (“CMA”) published a suite of new and updated guidance for social media platforms, brands and content creators, in order to ensure compliance with consumer protection law regarding paid-for online endorsements.
The CMA is the UK’s competition regulator and is primarily responsible for promoting effective competition for the benefit of consumers, however the CMA also has responsibility for enforcing consumer protection legislation.
Social media platforms
The CMA has published 6 key compliance principles in its guidance to social media platforms to assist them with tackling hidden ads and complying with consumer protection law. The principles are the result of a previous review conducted by the CMA into social media platforms, following a consumer enforcement investigation in January 2019 regarding concerns that social media content creators were infringing consumer law by posting hidden advertising online.
These principles represent what the CMA considers platforms should be doing to comply with consumer protection law, and will likely reduce the risk of future enforcement action if social media platforms comply with the guidance.
The 6 key compliance principles require social media platforms to:
1. Inform users that incentivised endorsements are required to be clearly identified as advertising and clearly distinguishable from other content – platforms should ensure users (especially content creators) are aware that hidden advertising is not allowed on the site, and the likelihood of consequences for breaching this rule;
2. Provide content creators with tools so they are easily and effectively able to label any content as advertising – platforms should make it easy for all content creators to label their content as advertising in a way which is clear and prominent, regardless of the device used;
3. Take appropriate, proportionate, proactive steps and use available technology to prevent hidden advertising from appearing on its site – platforms are required to proactively detect suspected hidden advertising, prevent it from appearing and hold content creators to account if hidden adverts still appear;
4. Make it simple for users to report suspected hidden advertising easily and effectively – platforms should provide an effective means for hidden advertising to be reported (e.g. via a specific tool or contact address);
5. Facilitate legal compliance by brands – platforms should take proactive steps to facilitate legal compliance by brands, including raising awareness and understanding of the platform's terms of service and policies; and
6. Enforce its terms and conditions and take appropriate action when violations occur – platforms should take enforcement action to encourage compliance with and enforce its terms of service. Platforms should not ignore evidence of hidden advertising.
Content creators and social media endorsements
The CMA has published updated guidance to content creators on how to ensure they avoid misleading consumers with hidden advertising, expanding on previous guidance published in 2019.
The updated guidance applies where a content creator has been incentivised to post (i.e. including through money, commissions, discounts, gifts and sponsorships etc.), and reiterates that misleading customers through hidden ads and inaccurate labelling may be in breach of consumer protection law and industry rules on advertising.
Content creators must ensure all commercial content are correctly labelled as ads, and should ensure that all labels are clear, prominent and easy to understand. The CMA have advised that labels such as “Ad”, “Advert”, and “Advertising” are likely to be transparent and unambiguous, whereas vague terms like “gift”, “sponsored”, “affiliate” and "made possible by” for example are unlikely to be clear and should be avoided.
Brands
In addition to guidance for content creators, the CMA has also released guidance to businesses that engage content creators in order to promote the business’ products, brand or services. This can include promotion via social media posts, reels, endorsements, competitions, gifts and other forms of online content.
The CMA makes it clear that businesses have a responsibility for ensuring that paid for endorsements (which is a broadly defined concept that also includes gifts to content creators in exchange for promotional content) which promote them or their products or services are properly labelled as “Ads”. This is still the case even if the business in question does not have editorial control over the content.
The CMA has advised on steps that businesses can take to ensure they, and the content creators they work with, comply with the law. Businesses are encouraged to:
1. Be clear with content creators – businesses should ensure content creators are aware of their legal obligations to label promotional content as ads (particularly in relation to free gifts sent by the business to the content creator);
2. Check content creators’ posts – businesses have an obligation to confirm that promotional content that refers to the business is labelled as an ad. Where content is published on the businesses’ behalf, the business may be held responsible if it is held to be misleading.
Businesses are encouraged to liaise with content creators to rectify content that has not been appropriately labelled, and to consider no longer working with content creators who repeatedly fail to correctly identify promotional content as ads. The guidance also contains an example of a video endorsement, which the CMA considers would comply with the requirements of consumer protection law.
Key Takeaways
There appears to be increased regulatory scrutiny by the CMA regarding hidden advertising on social media and the potential for consumers to be misled as a result. It is important therefore that businesses, brands and content creators take note of the CMA’s suite of new and updated guidance in order to ensure compliance with consumer law and advertising regulations regarding paid-for online endorsements, and to avoid potential enforcement action for breaching these rules.
If you'd like to discuss or have any queries about the CMA’s guidance, please contact Helen Scott-Lawler or another member of Burges Salmon's Commercial team.
This article was written by Ebony Ezekwesili.