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Think U.S. Regulators Are the Only Ones Policing Influencer Marketing? Think Again.

The Competition and Markets Authority is the British government agency that regulates advertising. According to reports, it recently sent numerous warning letters to British celebrities and other social media influencers. The warnings mirror those sent in 2017 by the Federal Trade Commission to influencers.

In tandem with the warning notices – demanding advertising practice modifications, or else – the CMA released guidelines for influencers. They are remarkably similar to the FTC endorsement guides.

Clear and conspicuous disclosure of material connects are at the top of the regulatory investigation and enforcement list. Both regulatory agencies also recommend the “clear and conspicuous” use of hashtags such as #ad or #sponsored.

The CMA guidance was published in January 2019 and stresses honesty and transparency in what is being promoted. “People need to know if influencers have been paid, incentivised or in any way rewarded to endorse or review something in their posts. It’s important that they make this clear to their followers. This includes when a product or service has been given to them for free.” The guidance also states, “[t]his needs to be clearly stated when a product, brand or service is tagged, linked or endorsed in any way.”

Any form of reward, including money, gifts of services or products, or the loan of a product, is “payment” – whether it was originally asked for or it was sent it out of the blue (e.g., “freebies”). Influencers receive freebies because of their high public profile and because brands or businesses hope they might post about them in return. Influencers that have not purchased a product or service, but received it free, must make this clear.

Past relationships with a brand should also be disclosed. Marketers should never give the impression that they are just a consumer when they are actually acting for their own business purposes, or on behalf of a brand or other business. Never state or imply that something was purchased when it was provided for free, and never express or imply that a service or product was used, when, in fact, it was not.

There is a clear global trend developing to regulate not only brands, but the influencers that are paid by them. The Fyre Festival fiasco has only brought more international attention to the power of influencer marketing.

According to the Pew Research Center’s Social Media Use in 2018, 73% of adults in the United States use social media. For 18 to 29 year olds, 80% use some form of social media. Other studies have shown that influencers deliver 10 times the return on investment that traditional digital advertising provides.

Influencers are now flexing their muscle, too.

Consider this issue surrounding the monetization and intellectual property ownership of influencer content. Specifically, copyright infringement allegations brought by an influencer against global media company PopSugar for interfering with brand relationships by purportedly copying photos, posting them elsewhere and removing links.

Brands should consult with an experienced FTC defense lawyer about implementing preventative social media risk management programs, including contracts, social media polices, training protocols and monitoring systems. Both brands and influencers are responsible to ensure that proper disclosures are made to consumers, and for considering that each social media platform is unique.

Contact the author at rnewman@hinchnewman.com if you are interested in learning more about the CMA influencer guidelines, the FTC endorsement guidelines or the development of solid social media compliance programs.

Information conveyed herein is for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information contained herein without seeking the advice of an attorney. Attorney advertising.

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Richard B. Newman

Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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