The British government agency that regulates advertising, the Competition and Markets Authority (“CMA”), recently sent a wave of warning letters to British celebrities and other social media influencers, including Rita Ora, Alexa Chung, Ellie Goulding, and Rosie Huntington-Whitely. This move directly echoes the action of the U.S. Federal Trade Commission (“FTC”), which in 2017 sent a wave of warning letters to American influencers, including Kim Kardashian, Jennifer Lopez, Drake, and Heidi Klum. In both the U.S. and more recent U.K. actions, influencers were reminded of their obligations to clearly disclose when posts are sponsored, including posts incentivized by gifts or free goods or services. However, the CMA warnings may carry a bit more weight – each of the influencers who received the CMA letter agreed to change their practices, and if they fail to comply going forward, could face hefty fines or even jail time.
Contemporaneously with its warning letters, the CMA also released guidelines for influencers, which are largely similar to the FTC endorsement guidelines, released in 2009 and updated most recently in 2017. In both cases, the guidelines require conspicuous disclosures. Among other things, the CMA and FTC both recommend the use of hashtags such as #ad or #sponsored, while noting that use of those hashtags may not be sufficiently conspicuous if they are “buried” at the end of a long string of hashtags. This alignment of U.K. and U.S. influencer policy may be helpful to celebrities who may have significant fan bases in both areas.
The CMA’s recent action is another step in the global trend toward scrutinizing the behavior of influencers, rather than the brands who pay them. When use of influencers first became a widespread method of advertising, the brands were generally the “deeper pockets,” and the more likely target of regulatory action. However, as influencers grow in sophistication and financial strength, the balance of power between influencer and brand is no longer so clear, and either party may be targeted.
Moreover, “influencer culture” finds itself under heightened popular scrutiny recently with the release of two documentaries about the now infamous Fyre Festival. Fyre was promoted as a luxury music festival on a private island on the Bahamas, but turned out to be disastrous on a number of levels, with all concerts cancelled and ticket holders put in emergency evacuation tents with little or no food or water, instead of the luxe accommodations they were promised. Fyre Festival was promoted exclusively – and widely – via social media influencers, including models and celebrities who did not disclose that they were paid to promote the festival.
Brands using influencers to promote their products should, at a minimum, require their influencers to conform to the applicable rules in any agreements or influencer policies, and have a monitoring program in place to ensure compliance. Proper training of marketing teams and the influencers themselves can mitigate much of the risk of influencer programs.
Both brands and influencers have obligations to ensure appropriate disclosures, and in today’s fast-paced social media environment it is more crucial than ever that both sides remain mindful of those obligations. If you have any questions concerning this or any other issue concerning your business’s marketing efforts, do not hesitate to contact Kate Dennis Nye or another member of Neal Gerber Eisenberg’s Intellectual Property group.