Competition watchdog investigating celebrity and social media endorsements #spon #af #ad

22 October 2018

Author: Niamh Magee
Practice Area: EU and Competition

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Frequent users of social media platforms such as Instagram, Twitter and Facebook will be familiar with the hashtags “#spon”, “#af”, “#ad” etc. used by prominent social media influencers/bloggers and celebrities.

For those of us that are unfamiliar, these hashtags are used to indicate that the “influencer” has been paid or otherwise rewarded to endorse the product, place or experience referred to in their post. In particular, “#af” or “#affiliate” means that the product is accompanied by an “affiliate link” and if you purchase the product via that link, the influencer is rewarded through a percentage of the profit, typically 5% to 10%.

Consumer protection laws (specifically the Consumer Protection from Unfair Trading Regulations 2008) require sponsored posts to be labelled as such so that the public knows the views expressed in the post are not entirely neutral.

The Competition and Markets Authority (CMA), the UK competition watchdog, is now investigating concerns that influencers may not be complying with these obligations and could be misleading their followers.

When announcing this investigation, the CMA commented “If [social media stars] do not label their posts properly, fans or followers may be led to believe that an endorsement represents the star’s own view, rather than a paid-for promotion. They are more likely to place trust in that product, as they think it has been recommended by someone they admire.”

As part of its investigation, the CMA is keen to hear from consumers in relation to their experiences with sponsored posts, in particular, where a product has been bought due to a social media endorsement.

The CMA is working closely with the Advertising Standards Agency (ASA) in this investigation. The ASA has its own code of practice in this area and has not been afraid to take enforcement action, for example, taking action against Made in Chelsea star Louise Thompson for failing to disclose that a post, which including a special discount code for a popular brand of watches, was sponsored.

If the CMA finds that practices by social media stars break consumer protection laws, it can take enforcement action by seeking a court order. Breach of a court order could ultimately result in the imposition of an unlimited fine or a potential jail term.

An update on the investigation is expected by the end of the year.

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